If you’re focusing solely on survival and not your arrival out the other side of this pandemic, it might be time to change tack. Over the past two months, we’ve been working with an array of start-up founders, ASX-listed businesses with R&D programs and trusted experts in grants, incentives and innovation. Some clear themes have emerged.
So whether you’re coping day-to-day; hustling to respond to the fast-changing circumstances; or have locked in a new opportunity, learn what we’ve discovered about successful R&D during the pandemic.
Innovation in the ascendancy
Radium Capital and SmartCompany recently polled more than 350 businesses owners, managers and entrepreneurs. Almost 60% of respondents said innovation is very important, with almost 40% either spending more on R&D or starting to spend on R&D for the first time due to the pandemic.
Innovation is a term that is bandied around and has become a bit of a buzzword. So much so that many people have been left wondering what innovation is. This is important because whether your innovation meets the Australian Tax Office eligible R&D criteria could make the difference between accessing the R&D tax incentive and R&D financing or not.
At its core, innovation is an idea put into action. Importantly, it must add value by solving a challenge that meets customer needs and generates revenue for a business.If you have those key elements of an idea, a solution to a challenge and adding value to customers and your business, then you’ve likely got some eligible R&D going on.
It may seem counterintuitive that it’s prime time for innovators when the economy has fallen into an abyss. But the countless unforeseen challenges that have emerged due to the virus and its economic impacts are creating new demands. It’s clear that innovation is more important now than ever. As we face massive disruption to most aspects of our way of life, these testing times mean big opportunities.
Power of the pivot
It’s hard not to notice the media coverage of Australian businesses that have pivoted their operations in the response to the COVID-19 crisis.
It’s a trend we’ve noticed with Radium Capital clients too. And not surprisingly, it’s particularly pronounced among healthcare and manufacturing sector businesses, which have seen upticks in demand for Radium Advances of more than 160%.
There’s no winning formula or one size fits all-when it comes to pivots. They can be big or small.
Pivots in action
Take Radium Capital client, Sydney-based biotech Recce Pharmaceuticals. Recce has developed a new class of synthetic antibiotics that targets superbugs. Recce has pivoted towards the battle to treat and defeat coronavirus, in particular antibiotic resistant bacterial infections critically ill COVID-19 patients are suspected of contracting in hospitals.
It also recently announced the successful treatment of Influenza A in mice. A development that signals its patented antibiotic, Recce® 327, may work against viruses too. Welcome news as the world battles the deadly coronavirus.
In addition to pivots, R&D is definitely continuing for start-ups at different stages and growth phases—despite the pandemic. Some businesses, including Radium client and smart home technology leader Quantify Technology, are hitting the accelerator to capitalise on opportunities the current climate has created. COVID-19 has highlighted the infection control benefits of the smart technology Quantify offers. Before coronavirus, it was making inroads into the aged-care and assisted-living sectors, but now its voice-activated technology is increasingly seen as a must-have. There is also growing interest in its products from consumers looking to retrofit their homes and businesses.
But there’s no escaping that for many R&D start-ups, COVID-19 hasn’t served up a tidy opportunity. Instead it has delivered an existential threat. To assist, we’ve been granting eligible businesses prompt access to capital using our Radium Advances. This has stabilised their cash flow and kept them afloat when traditional capital sources dried up. Now many of these businesses either want to, or need to reframe their offerings and how they approach innovation mid-pandemic.
Rediscover your purpose
COVID-19 is likely to be with us for many months, maybe years, and businesses are having to rethink their strategy on the fly. There’s no ‘how to guide’ for what lies ahead. But here are a few things to consider that may help you chart a course through the crisis.
If you plan to pivot your research or your business, think back to the reasons you originally launched your venture and what you set out to achieve. That is your business purpose.
Explore new opportunities that align with your organisation’s core purpose and values. This will give you a better chance of success. Always play to your strengths. Mid-pandemic is not the time to explore opportunities that you can’t transfer any of your current skills to. Distilleries that switched from manufacturing spirits to manufacturing hand sanitisers are a great example. They’re making completely new products for new markets, but they’re still using existing skills and resources.
Aim to think both short-term and long-term. Don’t go hell for leather developing something that has no longevity beyond the pandemic. But if you do want to seize a timebound opportunity, make sure any operational changes you make are ones you can pivot back from once this crisis has passed.
The economy looks set to surface from forced hibernation in stages. That means your business can ride the coattails of one these reopening phases.
Focus on what’s important and sustainable
Once you have an opportunity in your sights, how do you get the capital to invest in R&D and make this much-needed innovation happen?
It’s important to understand that while resources are limited at the best of times, during a crisis they’re not only limited; they become uncertain too.
Take a laser-like focus to addressing the most important short-term and long-term issues your business is facing. Then make the capital you do have work as hard as possible.
Radium Quarterly Advances are a great example of this. They make your R&D capital work harder because they trigger additional refunds. So for the same annual investment, you can either spend more on R&D or raise less capital. This type of financing is cash flow friendly too. The only security Radium Advances typically require is the R&D incentive refund itself. So with no upfront fees and nothing to pay until your full refund arrives, you’re never out of pocket.
When it comes to capital, target it so you’re positioning and securing your business strategically into the longer term.
The key takeaway from the pandemic is this. You need to be taking steps now that keep the doors open, but also ensure you make it through this crisis and are around for years to come.
Remember right now isn’t forever
Australian businesses and businesses around the world were immersed abruptly into the current economic crisis by COVID-19. While the situation seems bleak now, it’s worth remembering that the pandemic will not last forever.
The economy looks set to surface from forced hibernation in stages. And that means your business can ride the coattails of one these reopening phases.
If you’d like more insights into using innovation to boost your ROI despite the COVID-19 crisis, you can check out our SmartCompany webinar on this topic.
And of course, at Radium Capital, we’re here to provide funding for eligible companies that are continuing to innovate, or are looking for strategies to help with cash flow and capital. So please feel free to get in touch on 1800 723 486 if we can help in any way.