What Is Innovation Funding? – Definition and Significance
Innovation funding refers to the totality of all governmental and supranational measures aimed at supporting the innovation activities of companies, research institutions, and founders. It is a central instrument of economic and location policy.
For Austrian companies—particularly SMEs—innovation funding is a strategic lever: it reduces the financial risk of innovation projects, enables access to external expertise, and accelerates the implementation of innovation strategies. When used correctly, funding can make the difference between an idea in the drawer and a successful business model innovation.
The funding landscape is broadly diversified and includes direct financial grants, tax incentives, favorable loans, consulting subsidies, and access to infrastructure and networks.
The Austrian Funding Landscape at a Glance
Austria is among the countries with the most comprehensive innovation funding in Europe. The key players:
- FFG (Austrian Research Promotion Agency): Central point of contact for business-oriented research and innovation funding. Offers programs from basic research to market launch
- aws (Austria Wirtschaftsservice): Promotes startups, growth, and innovation through grants, guarantees, and equity. Particularly relevant for startups and scaling
- State funding: Each federal state has its own economic development agencies with regional programs—e.g., Vienna Business Agency or SFG (Styrian Business Promotion Agency)
- EU funding: Horizon Europe, ERDF structural funds, and other programs offer additional opportunities for international cooperation
- Research premium: Tax incentive that grants 14% of R&D expenditures as a tax credit—automatically, without application
Key Funding Programs for SME Innovation
| Program | Funding Body | Funding Type | Suitable For |
|---|---|---|---|
| Basic Program | FFG | Grant + Loan | R&D projects across all industries |
| Innovation Voucher | FFG | Up to €12,500 grant | Initial research collaborations |
| aws Innovation Protection | aws | Grant for patent costs | IP protection, patent filing |
| KMU.DIGITAL | WKO/BMDW | Consulting funding | Digitalization, SME digitalization |
| aws Preseed/Seed Financing | aws | Up to €800,000 grant | Deep-tech startups, venture building |
The Research Premium: 14% Tax Credit
The Austrian research premium is one of the most attractive tax-based R&D instruments in Europe:
- Amount: 14% of recognized R&D expenditures as a direct tax credit (negative tax possible)
- Application procedure: Via FinanzOnline, after confirmation by FFG of the scientific quality
- Eligible costs: Personnel costs for R&D staff, material costs, costs for contract research (up to certain limits)
- No minimum revenue: Even startups and young companies without profits benefit
Many companies—especially SMEs—do not utilize the research premium even though their activities would be eligible. Even the systematic development of new business model patterns, digital business models, or AI strategies can be recognized as R&D.
Submitting a Funding Application: 5 Steps to Success
- Survey the funding landscape: Identify all relevant programs for your project. The FFG funding finder database and the aws website provide good overviews
- Define your project: Formulate your innovation project clearly—with objectives, milestones, budget, and the expected degree of innovation. Tools like the Business Model Canvas help with structuring
- Check eligibility: Ensure that your project meets the funding criteria—particularly the innovation content and commercial exploitation
- Prepare the application: Create the funding application according to the guidelines. Pay attention to a clear presentation of the innovation, market potential, and implementation competence
- Submit and follow up: Submit the application on time and keep all documents ready for evaluation
Practical Tips for Successful Innovation Funding
- Plan early: Begin funding planning during the innovation process phase “concept development”—not when funds are running low
- Use combinations: Different funding programs can often be combined (e.g., FFG Basic Program + research premium + state funding)
- Seek advice: Professional innovation consulting and innovation coaching are often eligible for funding themselves and significantly increase the chances of success in application submission
- Documentation from the start: Keep an R&D diary and document all activities comprehensively—this facilitates both the application and subsequent accounting
- Leverage networks: Clusters, chambers of commerce, and innovation centers offer free initial consultations and networking with funding bodies
Innovation Consulting as a Funding Multiplier
Professional innovation consulting can significantly increase the return on funding:
- Funding strategy: Which programs are optimally suited to your project? Which combinations maximize the funding amount?
- Application preparation: Experienced consultants know the evaluation criteria and formulate applications to send the right signals
- Project design: Sometimes a project can be structured to better fit the funding criteria—without changing the project content
- Innovation management: The consulting itself is often part of innovation management and can be funded through programs like KMU.DIGITAL
Optimize Your Use of Innovation Funding
We support you in identifying suitable funding programs and successfully submitting applications. Often our consulting is itself eligible for funding—ask us about the possibilities.