Innovate for Growth: preventing the ERDF cliff-edge 

We believe SMEs (small and medium enterprises) are the lifeblood of our local economies. That’s why our members use the European Regional Development Fund (ERDF) to support SMEs in their local areas.

When the UK lost access to the ERDF in 2023, this vital lifeline to support for SMEs risks being cut off.

Without it, new SMEs may struggle to start up or grow, and existing businesses may fail. That’s why we have campaigned for government support to address the ERDF cliff edge. 

News: 2 March 2023 

University Alliance, alongside a coalition of 314 SMEs and 16 member universities, sent a letter to the Chancellor of the Exchequer Jeremy Hunt on Monday 27th February, asking him to address the withdrawal of European Regional Development Fund (ERDF). The ERDF, along with all European Structural Funds, runs out at the end of March 2023. 

What is the European Regional Development Fund?   

The European Regional Development Fund (ERDF) is one of the European Union’s Structural Funds. It is intended to help tackle regional disparities across Europe.  

What is the purpose of the ERDF?  

It helps to create economic development and growth, providing support to businesses, encouraging new ideas and supporting regeneration.   

The funding from ERDF is used to support SMEs, spin outs, research projects, social enterprises and other ventures in regions throughout the UK.   

How does the ERDF support SMEs?  

ERDF funding is leveraged by universities across the UK to support SMEs in their local communities grow and innovate. University Alliance members estimate they have supported over 15,000 SMEs in their local areas to start-up and grow since the ERDF was introduced, making significant contributions to their local economies. 

Universities UK have estimated that £556 million of ERDF funding has be used for this kind of work since 2014.

Services available to SMEs include expert advice and guidance, office space and facilities, access to key business networks, access to the expertise of researchers and research-backed courses on business growth and management. And of course, a huge part of this provision is funding – covering initial start-up costs and other expenditures that can prove challenging to early-stage businesses.  

ERDF have facilitated the growth of my business by helping to offset the significant start-up costs required to launch a brand-new product into the market.  

This support will enable me to provide employment opportunities to people who may otherwise not have had them and help inspire entrepreneurs across the country.”  

Managing Director of a small engineering design business.  

“The Ad:venture scheme has helped my business start on the right footing. As a small start-up there would be no other way for me to get this kind of free support.”

Editor at a small Freelance design business  

Why are SMEs so important to local economies and communities? 

SMEs are the lifeblood of our local economies, and should be supported to start-up, innovate and grow to protect economic growth in all regions of the UK.  

  • At the start of 2021 there were 5.5 million small businesses in the UK (with 0 to 49 employees), 99.2% of the total business. SMEs account for 99.9% of the business population (5.5 million businesses).  
  • SMEs account for three fifths of the employment and around half of turnover in the UK private sector. 
  • Total employment in SMEs was 16.3 million (61% of the total), whilst turnover was estimated at £2.3 trillion (52%). 
  • Employment in small businesses (with 0 to 49 employees) was 12.9 million (48% of the total), with a turnover of £1.6 trillion (36%) 
  • 95% of small employers have taken at least one worker from a labour market disadvantaged group in the last 3 years.  

The Federation for Small Businesses has reported that small businesses are ‘remarkably’ likely to make generous contributions to their local communities, support local education providers and employ those ‘furthest from the labour market’.  

Why are ERDF funded programmes so essential for SMEs? 

University Alliance has collected over 250 testimonials from SMEs highlighting how essential ERDF funded programmes have been for them. Many SMEs have stated that their businesses would not exist had they not had the support enabled by the ERDF – either struggling to grow due to financial limitations at the start of their development, or indeed brought to an abrupt end during the COVID-19 pandemic:  

“I was helped with a growth fund initiative, which transformed my business by enabling me to produce work which I was able to charge a premium for. Equally the more efficient economies of scale that came from these practice improvements fed back into even more time to develop better work. Without the help from this fund, I’m certain my business would not have survived Covid.”

April Young, Designer  

“The KEEP+ funding [a programme run by the University of Greenwich] has been critical in allowing us to develop our business – it is not hyperbole to say that we would not exist and we certainly would not be growing at the rate we are, unless we had benefitted from the Keep+ intervention. I am extremely grateful to the programme.”

Director of a small business  

“Without the funding, coaching and support, my business wouldn’t exist, its as simple as that.”

Kirsten Antoncich, Clinical Director, Positive Progress  

What’s the problem?   

Following Brexit, the UK will no longer have access to funds via the ERDF. The funding will officially run out at the end of March 2023. There are a huge number of projects and initiatives that rely on it to be fully functional.   

There are currently no direct replacements for the ERDF. The government have created the UK Shared Prosperity Fund, which is intended to aid in the levelling up agenda and for use in localities across the UK to invest in: communities and place, support for local businesses and people and skills.  

Though this is a positive piece of funding, it is a replacement for all EU Structural Funds, of which there were many. The wider remit of the UKSPF means the specificity of ERDF is not being fully replaced and there is less available to support successful R&I projects.  

There is a ‘funding cliff-edge’ for the SMEs, social enterprises and other initiatives that rely on ERDF.  

Our ask 

UUK have proposed that a portion (£170m or 6%) of the UK Shared Prosperity Fund be ring-fenced specifically to provide funding for the continuation of university-led ERDF R&I projects across the UK to 2024-5. We believe this is a sensible solution that will allow us to continue to provide the support that is so essential to local businesses.   

In the longer term, a more sustainable approach to funding this work needs to be found.  

See our full letter to the Chancellor, including all signatories and testimonials from SMEs, here. 

Selected Testimonials

Charles Joynson, Managing Director, WAVEDATA LTD

“The Keep+ ETDF funding helped us to understand what our customers want us to do next. Without this and the research it funded we could have gone in the wrong direction.”

Abhishek Nakhate, Founder, Zoom Abroad

“The Keep+ program has played an instrumental role in the research and development of our company and most importantly helped us develop a state-of-the-art technology product that will touch millions of businesses and add significant value to the country’s economy. As an SME, such support is transformational. A program like this must be supported in all possible wills and intentions.”

Kemi Madumere, Director, Brighter Futures Foundation

“[Our] research project…with the University of Greenwich was pivotal in us getting a better understanding of how companies and society as a whole can better support adults with learning disabilities in the work force, in terms of getting jobs and access services in the community. 

“There is still so much work to be done and learnt which can only be done with the support and expertise of universities such as the University of Greenwich, who can’t support projects like this without sufficient funding.”

Divia Bhatnagar, Co-founder, Medical Intelligence Group

“Keep+ funding…has been instrumental to our organisation which is focusing on reducing diabetic foot ulcers which are life threatening wounds for those with diabetes. Thanks to the keep+ support we were able to develop a bespoke patient mobile application which lies at the heart of our technology…hearing that this funding is being withdrawn will inhibit organisations like ours” 

Kimberley Montgomery, CEO, Novlr Ltd

“ERDF Funding has been instrumental in the changes we’ve been able to make to see a step change in our growth. We would not have been in a position to take a risk on R&D without it.”

Chloe Donovan, Managing Director, Natural Building Systems

“As a start-up company with limited resources our KEEP+ project allowed us to tap into a rich and diverse pool of academic knowledge which has helped accelerate our product research and development.”

Martin Horsman, Managing Director, CONNETICK LIMITED

“The ERDF funds have been a key contributor to my business growth over the recent years. The University of Derby have provided various support to our local business community…  

The expert advice, networking, informative events and funded workstreams have been an important aid in protecting and growing our businesses. it is clear that businesses still desperately need this ongoing support.”


“Without the Keep+ grant, I would not have been able to build my late payments app that will benefit 1000s of SMEs who suffer the impact of late payments everyday. Keep+ provided the vital funds needed to prove concept.”

Kirsten Antoncich, Clinical Director, Positive Progress 

“Without the funding, coaching and support, my business wouldn’t exist, it’s as simple as that.”

John Baker, Managing Director, Drugloo International

“The ERDF funding has been of immense assistance to us. It has enabled our company to prepare better for marketing and meeting international clients’ expectations. Without that assistance we would not have been able to introduce our company products and services internationally.

The funding has ultimately enabled us to secure new export markets for our products. Additionally, we have been able to employ two new members of staff as a direct result.”

Director of a small business

“ERDF funding was central to the development of our business. The knowledge, expertise and mentorship provided to empower entrepreneurs like myself has been priceless.

It seems to me more important than ever to be encouraging innovators into business… Whatever the cost of such programs to run, the value they deliver in supporting the next generation of new businesses in their area cannot be overstated.”

Sridevi Kalidindi, Founder and CEO, Klip Global Ltd

“The KEEP+ funding was instrumental in Klip Global being able to complete the initial phases to start as a business. We are now providing crucial wellbeing and development services for employees paid for by their employers and individuals who are self-paying – keeping them healthy and in work.

I strongly advocate for KEEP+ funding to be continued so other companies can start up and develop much needed services, tackling some of the challenges of our times.”

Director of low carbon manufacturing business 

“ERDF funding has allowed us to accelerate our business’s innovative proposition and test our first product. We have now raised a total of £1M in investment and grants thanks to the exploitation of our ERDF grant results.”

Toby Kress, Programmes Director, Plus X

“Over the past 3 years Plus X has partnered with the University of Brighton who deliver the ERDF funded BRITE programme. Over this time we have supported 115+ SMEs to innovate and grow, creating high value jobs, local economic opportunity, increasing private investment and launching new products and services into the market.”

Director of a small recruitment business 

[The university support programme] has helped us grow the business from 2 people working from a coffee table at home, to a 9 person strong local business employing locally based people, 1 intern from Coventry University and an Apprentice Digital Marketeer.

All would have been potentially unachievable or taken longer (if at all) without the support.”

Anna Wanczyk, Independent Graphic Designer, CZYK Design

“The Accelerate programme [at Leeds Beckett University] has been so valuable to me and my business, all the lessons have been useful and the access to a business mentor has helped me tonnes.

It’s so great that things like this exist to help people build the businesses of the future.”

Nazar Amso, CEO, Advanced Medical Simulation Online Limited

“Advanced Medical Simulation Online Limited has benefited significantly from its collaboration with CEMET [at the University of South Wales] in that we were able to convert a vision for future remote education and training of technical skills into a proof of concept product.

We believe it’s organisations like CEMET that would prove to be pivotal to the creation of a sustainable digital future and establish Wales as the “Silicone Valley” of Great Britain. Funding is highly recommended!”

Managing Director of Spexx Digital 

“Spexx has benefited greatly from the support provided by this funding. We have had both broad and specific support, from getting our business structure right for our business, to getting one to one sales training and practice, which has helped to grow our business.

We have also been signposted to grant funding which helped us to update our IT resources enabling improved efficiency and productivity. It would be a terrible loss to SME’s like ourselves, that need guidance and support in order to flourish and create both employment and taxable profits, which will ultimately benefit the local and national economy.”

Gemma Hallett, Founder, MiFuture  

“Without CEMET we would not be able to explore innovating ways to improve our technology. As a start-up on a shoestring budget, access to a team like CEMET’s is instrumental in us still being here today.

I have no doubt their talent, skills and understanding of emerging and enabling technologies set us on a trajectory to still be operational. So many tech businesses will fail without this type of intervention; start-up founders cannot afford this level of skilled staff to test innovative features, and I’m certain I couldn’t find this level of skilled staff in the local talent pool.

A resource like this allows us all to benefit from expertise we are essentially locked out of.”

Brenda Etchells, Director, Carduus Ltd

“As a solo business owner looking to grow her business I received so much value and benefit through being part of the Accelerate  programme [at Leeds Beckett University] – particularly the allocation of a mentor who really helped me stay focused on my growth plan.

Now 4 years in, and I am running a successful, viable business contributing to the local economy.”

Director of small tech business

“Support from innovation funding such as the ERDF has been instrumental in enabling my business to develop new concepts and ideas that I simply would not have had the resources to implement without the help of the universities and the funding provided by ERDF.

Without their support, my business would have ceased to exist.”

Director of small production company

“I have benefitted greatly from programmes and organisations that were supported by ERDF funding through helping support and fund the business and prototyping stages within my company.

I was able to develop my main product and business structure through these programmes and with the funding they provided, which has been a crucial turning point within the overall development of my business.

Without these kinds of funding and support opportunities, I believe funding options will become extremely competitive and may become bias towards certain industry sectors, leaving the ecosystem unbalanced.”

Wendy McCristal, Director, The Mental Wealth Company

“Starting a small business just before the beginning of the COVID-19 pandemic could have spelled the end of my business. Having free access to training that helped me to grow my business, network with other small business owners AND find new clients meant that my business not only survived the pandemic but tripled its turnover and quadrupled its profit.”

Heather Wright, Operations Manager, Writing East Midlands CIC

“We are a community interest company where the majority of our turnover is grant funding. The impact of imminently losing European funding with no replacement structure to replace it will be felt across the whole economy not just higher education.”

Deborah O’Donovan, CEO, Chater Smart

“Joining the ERDF funded ENSCITE programme [run by the University of Derby] helped Chater Smart to shape the strategy, mission and vision we needed to relaunch our early-stage business. 

Having worked for many years in London, as the founder of Chater Smart I returned to Derbyshire to launch a business that will provide local jobs and supplier opportunities as I strongly believe in the importance of levelling up the UK economy. 

Female founders and business owners in particular need to be able to access this sort of ongoing business support since we are statistically unlikely to receive external investor funding.”

Founder of jewellery creation business

“I have benefitted greatly from programs and organisations that were supported by ERDF funding through helping support and fund the business and prototyping stages within my company.

I was able to develop my main product and business structure through these programs and with the funding they provided, which has been a crucial turning point within the overall development of my business.

Without these kinds of funding and support opportunities, I believe funding options will become extremely competitive and may become bias towards certain industry sectors, leaving the ecosystem unbalanced.”