When should a company move from grants to investment?

How to know when grant funding has done its job and equity is the next right step.

**Quick Answer**

You move from grants to investment when the *commercial* risk, not the *technical* risk, has become the binding constraint. Grants exist to de-risk technology. Equity exists to scale a proven commercial model. The transition rarely happens cleanly — most healthy UK innovators run both in parallel for several years.

**Signals you are ready for investment**

- A working product with paying or actively-piloting customers.
- Repeatable commercial motion (sales cycle, channel, unit economics).
- A 12–24-month plan that needs working capital, not just R&D capital.
- Founders comfortable with the dilution and governance that come with equity.

**Signals you are still grant-stage**

- The next milestone is technical (prototype, pilot, certification), not commercial.
- The proposition is not yet defensible to a Series A investor.
- A grant or innovation loan would unlock the next milestone for less dilution.

**Sequencing in practice**

Most UK deep-tech companies follow: Innovate UK Smart Grants and R&D Tax Relief → SEIS → Innovation Loans for late-stage R&D → EIS for commercialisation → British Patient Capital-backed VC for scale. Each rung is sequenced, not chosen.

**Common Mistakes**

- Raising equity to fund what a grant would fund — wastes dilution.
- Relying on grants past the technical-risk stage — slows commercial momentum.
- Treating R&D Tax Relief as growth capital — it is a relief, not a runway.

**Conservative Note**

This is editorial guidance about sequencing. Specific tax, dilution and investor decisions should be taken with a SEIS/EIS-specialist accountant and qualified corporate-finance adviser.