Every year, a substantial portion of grant funding intended for businesses remains untapped, particularly affecting small and medium-sized enterprises (SMEs). Bureaucratic challenges and limited resources often prevent these companies from applying for available grants. Addressing this issue, the Berlin-founded startup SectorPi has developed an AI-driven platform aimed at simplifying the public funding application process. Initially targeting the German market, SectorPi aims to enhance accessibility for companies of all sizes seeking grants.
CEO Victoria Hoffmann shares insights into the motivation behind SectorPi, drawing on her extensive experience within the European startup and venture capital landscape, particularly her tenure at EIT Digital – a European Union initiative designed to encourage digital innovation and entrepreneurship. "They’re all for innovation and digitisation. But in the end, public sector processes are super manual,” she stated in an interview with Tech.eu.
Hoffmann's observations reveal a common hurdle faced by diverse stakeholders including startups, corporations, research institutions, non-governmental organisations, and governmental bodies: securing public funding for research and development (R&D) and innovation projects. She highlighted the staggering figure of over €81 billion allocated annually by German companies for R&D, noting that a significant share of this funding could be accessed through grants if the application process were made less cumbersome. "We have so many unused, billions of unused public funding because it's so hard to attain it," she remarked.
The current manual screening process for grant applications often involves a two-step approach, with initial reviews taking up to 15 minutes per page and comprehensive evaluations potentially extending for hours or even days, particularly for larger consortia. Additionally, Hoffmann pointed out that many funding opportunities are only available for future projects, leading to waiting times of six to twelve months for applicants to ascertain their eligibility before initiating work.
SectorPi's innovative platform offers an efficient means for companies to plan and manage R&D activities in alignment with EU funding guidelines. Key functionalities include the ability to automatically calculate project costs, generate necessary documents and reports with a single click, and apply for relevant R&D grants all within a singular interface. Hoffmann noted the effectiveness of AI in this realm, stating, “We see a great use case for AI here, as it enables us to significantly save applicants’ time and effort while boosting success rates in parallel.”
A notable feature of the platform is its real-time compliance assessment capability, which checks all entries against funding criteria, thereby enhancing the likelihood of successful applications. Furthermore, the automated reporting tool considerably decreases the administrative burden involved in the application process.
Hoffmann articulated her disapproval of the prevalent reliance on consultants for grant applications. “This money should go to innovation," she asserted, explaining that while hiring consultants may seem beneficial, they still necessitate substantial input from the companies. "You'll still end up doing the bulk of the work yourself anyway," she advised. In contrast, SectorPi offers a more streamlined experience, with its platform operational 24/7 and additional support readily available when needed.
The reporting obligations following the receipt of funding are often described as cumbersome, with Hoffmann noting that with SectorPi's bespoke automation software, companies could potentially save up to 60 percent of the time traditionally required compared to manual processes, with plans to increase this efficiency to 95 percent.
SectorPi specifically targets the German market with a focus on R&D tax incentives, which provide eligible companies a tax-free subsidy of up to 25 per cent, or 35 per cent for SMEs, on qualifying R&D expenditures. Companies interested in this financial support must apply annually to the German Certification Office for the Research Allowance and subsequently submit the relevant certification to the tax authorities.
Hoffmann clarified the advantageous elements of the R&D tax allowance program, asserting, “It always makes sense to look at this program if you have costs incurred.” The eligibility criteria are broad, encompassing all industries and company sizes, provided that certain innovation and technical risk conditions are met.
Early interactions with potential clients have yielded a conversion rate of 20 per cent, with an additional 60 companies expressing interest in later-stage funding discussions. “The feedback is overwhelmingly, 'Finally, someone's building something like this!'" Hoffmann noted, signalling a positive response from the market.
While SectorPi is initially focusing on public funding applications, the company envisions a longer-term ambition to reduce administrative waste across businesses, particularly in Germany and potentially extending to other European countries known for bureaucratic inefficiencies.
Source: Noah Wire Services