Billions of euros in public funding go unused each year. This startup wants to end grant bureaucracy 

Every year, billions in grant funding go unused by companies. Small and medium-sized enterprises (SMEs), in particular, often forgo applying for grants due to bureaucratic hurdles and limited resources. 

Berlin-founded SectorPi is tackling this challenge with an AI-powered platform streamlining public funding applications. Initially focusing on Germany, the startup makes accessing grants easier and more efficient for companies of all sizes.

I spoke to CEO Victoria Hoffmann to find out more. 

With deep domain experience in the European startup and VC ecosystem, Hoffmann has viewed the region's public funding inefficiencies first-hand.

"They're all for innovation and digitisation. But in the end, public sector processes are super manual."

She recalled:

"I oversaw Western Europe, where diverse stakeholders — startups, corporations, research institutions, NGOs, and government entities — faced a common challenge: securing public funding for R&D and innovation projects. 

We have so many unused, billions of unused public funding because it's so hard to attain it.

For example in Germany, we have over €81 billion in R&D spending in companies annually. A significant portion of these investments could be funded by grants if access were simplified and, therefore, trigger even more investments in innovation."

However, grant applications are screened manually. Often, a two-step process is involved. The initial review, focusing on a summary, might take around 15 minutes per page. 

"A thorough examination of the entire application by one person can take hours or even days in case of large consortia applications. Imagine the scale of this challenge when faced with hundreds or thousands of applications."

Even worse, in many instances, funding is limited to future projects, and you can wait 6 to 12 months to find out if you are accessible before you can even begin your project.

Additionally, it takes several weeks or even months for applicants to complete the applications before submitting them. The funding processes create an administrative workload not only for the public sector but even more so for the companies.

With SectorPi, companies can efficiently plan and manage their R&D activities in line with EU funding regulations, automatically calculate project costs, generate necessary documents and reports with a single click, and apply for relevant R&D grants — all within one platform.

Key features include AI-driven real-time assessment, which instantly checks all entries for compliance with funding criteria, significantly improving application success rates. An automated reporting tool creates all necessary documents with a single click, reducing administrative effort considerably. 

“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. Due to our automated processes, we can offer extremely competitive pricing, working purely on a success-based fee.”

The platform is complemented by experienced funding experts who support the entire process, carefully review applications before submission, and provide assistance with inquiries or appeals – ensuring a smooth process and maximum chances of success.

A consultant is not always the answer

The complexity of grant applications often leads companies to rely on consultants who in turn, according to Hoffmann, apply manual processes, and for just their guidance, you pay 10 to 20 per cent of the funding received."

"This money should go to innovation." 

While it may seem appealing to shell out for a consultant, Hoffmann cautions, "you'll still end up doing the bulk of the work yourself anyway.

"They will maybe write the text for you, and guide you through the process, but it also takes several meetings with grant consultants; you need to fill in Excel files, Word documents, and so on, and it takes many hours to explain the grant consultant what you are doing and how much it costs - working with our 24/7 platform is much more efficient and if needed we are there to help."

And the pain is not over once you receive the money. Hoffmann describes the associated project reporting that goes with funding as "horrendous”.

"But with our automation software, we already save up to 60 percent of the time compared to manual consultancies. And we’re working to bring that figure up to 95 percent."

German businesses: claim your R&D tax incentives with SectorPi

For starters, SectorPi is focused on the German market, specifically R&D tax allowances, a government incentive designed to stimulate research and development activities within German companies.

Eligible companies, regardless of size or industry, can claim a tax-free subsidy of up to 25 per cent (or 35 per cent for SMEs) on qualifying R&D expenses, including staff costs, equipment depreciation, and contract research fees.

To benefit from this program, companies must annually apply to the German Certification Office for the Research Allowance and submit the certificate to the tax authorities. 

Hoffmann notes:

"For many companies, it's not realistic to wait for a year until they can finally begin their R&D, but the tax allowance is the only instrument out there that already subsidises all incurred or accrued projects. It always makes sense to look at this program if you have costs incurred.

That's why we started with the R&D tax allowance. 

You don't have any specifications on industry, size, profit or whatever. All companies are eligible. Essentially, you only have to meet two criteria. It's on the innovation and the technical risk part."  

So far, introductory calls with just 150 potential customers have resulted in a conversion rate of 20 per cent. A further 60 companies want to talk about later-stage funding.

"The feedback is overwhelmingly, "Finally, someone's building something like this!"

While the company's entry point is public funding applications, in the long term, it has its set goal of further reducing administrative waste for companies. And if there's anywhere notorious for administrative waste, it's Germany — and no doubt elsewhere in Europe.