Up to £175,000 for UK AI Startups and SMEs – Innovate UK Frontier AI: SME Champions, Phase 1

Innovate UK, part of UK Research and Innovation (UKRI), is offering grants of up to £175,000 to support UK micro and small businesses developing innovative artificial intelligence (AI) and machine learning (ML) technologies.

The Frontier AI: SME Champions, Phase 1 competition has a total funding allocation of £3.1 million and aims to help ambitious UK businesses demonstrate the technical feasibility of advanced AI innovations with strong commercial potential.

Projects must have eligible costs between £150,000 and £250,000, with grants covering up to 70% of eligible costs for micro and small businesses or 60% for medium-sized businesses.

Applications close 11 November 2026 at 11:00am.

Here's what you can expect:

• Up to £175,000 in grant funding for eligible micro and small businesses

• Up to £150,000 for eligible medium-sized businesses

• A share of £3.1 million in total competition funding

• Support for feasibility studies and industrial research

• Funding for developing novel AI and machine learning technologies

• Opportunities to validate technical innovations and demonstrate commercial potential

• Support for creating proof-of-concept prototypes

• Potential progression to further funding phases, subject to selection and approvals

What projects can be funded?

Projects must focus on developing genuinely innovative AI or ML technologies and align with at least one of four priority themes.

1. AI-Enabled Health and Life Sciences

Innovations improving healthcare, medical research and life sciences.

Priority areas include:

• Predictive healthcare

• Medicines discovery

• Medicines manufacturing optimisation

• Genomics and multi-omics

2. Advanced Materials with AI

Projects using advanced AI technologies to improve materials research and development.

Priority areas include:

• AI-powered materials prediction

• Generative models and optimisation

• Physics-based machine learning

• Materials discovery and simulation

• AI-enabled manufacturing optimisation

• Advanced materials characterisation

3. Secure AI for National Security and Defence

Projects developing advanced AI capabilities for secure and resilient systems.

Priority areas include:

• Autonomous decision-support systems

• Advanced AI reasoning

• Multi-source data analysis

• Resilient AI systems

• Edge intelligence

• Secure AI architectures

4. AI Safety and Assurance Technologies

Innovations improving the reliability, security and safety of advanced AI systems.

Priority areas include:

• AI safety testing

• Runtime verification

• Autonomous system controls

• AI evaluation environments

• Detecting and preventing AI failures

• Safety assurance technologies

Who can apply?

The competition is open to:

• UK-registered micro businesses

• UK-registered small businesses

• UK-registered medium-sized enterprises

Applicants must work independently rather than as part of a consortium.

Key eligibility requirements

Applicants must:

• Be a UK-registered SME.

• Submit only one application per organisation.

• Have total eligible project costs between £150,000 and £250,000.

• Deliver a project lasting between one and three months.

• Start the project by 1 April 2027.

• Complete the project by 30 June 2027.

• Carry out funded project work in the UK.

• Intend to exploit the project's results in the UK.

• Spend most of the funding within the UK.

• Demonstrate genuine technical innovation in AI or ML.

• Have a credible route towards commercialisation and scale-up.

Subcontractors are not permitted.

What types of innovation are eligible?

Projects must develop novel AI or machine learning technology rather than simply apply existing AI tools.

Innovations should involve advances in areas such as:

• AI model architecture

• Training methodologies

• Core learning algorithms

• Core control algorithms

Projects must begin at Technology Readiness Level 1–3.

Successful proposals must demonstrate:

• A clear technical challenge

• Evidence of innovation

• Measurable technical objectives

• A route to defensible intellectual property or competitive advantage

• A credible market opportunity

• Potential for future commercialisation

What cannot be funded?

The competition does not support projects that:

• Simply integrate existing AI tools into business processes

• Rely on existing third-party AI models without substantial technical innovation

• Focus mainly on routine software development

• Lack clear technical novelty

• Do not demonstrate a measurable feasibility challenge

• Have no credible route to commercialisation

• Lack a defined market opportunity

• Focus primarily on hardware development where AI is secondary

• Do not align with the specified competition themes

How much funding is available?

Total Competition Funding: £3.1 million

Eligible Project Costs: £150,000–£250,000

Micro and Small Businesses

• Up to 70% of eligible project costs

• Maximum potential grant: £175,000

Medium-Sized Businesses

• Up to 60% of eligible project costs

• Maximum potential grant: £150,000

Applicants must fund the remaining proportion of their project costs.

The amount awarded depends on project eligibility, assessment and available competition funding.

What must successful projects deliver?

By the end of Phase 1, projects must produce:

• A proof-of-concept prototype or critical technical component

• Evidence demonstrating the innovation's technical feasibility

• A clear validation methodology

• Measurable technical results

• Evidence of technical novelty

• A rationale for future scaling

• A technical white paper outlining project findings

Successful Phase 1 applicants may be invited to apply for Phase 2 funding.

Phase 2 is expected to support further development of demonstrators, with eligible project costs potentially reaching £1 million.

Progression is not guaranteed and depends on future competition approvals and project outcomes.

How does the application process work?

Step 1 – Review the Competition Guidance

Applicants should read the eligibility, scope and funding requirements.

Step 2 – Register Online

Create an account or sign in through the Innovate UK Innovation Funding Service.

Step 3 – Prepare the Application

Applications must include:

• Project details

• Technical innovation and objectives

• Evidence of intellectual property and defensibility

• Market opportunity

• Project team and resources

• Development and validation plans

• Project finances

• Expected project impact

Step 4 – Submit Supporting Documents

Applicants may need to provide supporting documents, including technical diagrams and project team CVs.

Step 5 – Submit Before the Deadline

All application sections must be completed and submitted through the online funding portal.

Key dates

Applications Opened: 1 October 2026

Application Deadline: 11 November 2026 at 11:00am