Manchester tech scale-up receives support from GC Business Growth Hub to expand the team and take R&D tax solution global.
RDvault’s “fully-automated R&D tax engine” is empowering North West SMEs to recover millions in unclaimed R&D tax credits. Its automated solution saves businesses time and money and avoids the need to use expensive tax advisors or accountants to prepare annual claims.
R&D Tax Credits are a government incentive designed to reward companies for investing in innovation and are a valuable source of cash for businesses to reinvest in accelerating R&D activities, staffing and ultimately improving productivity.
Companies developing new products, processes, services, or enhancing existing ones, are eligible for R&D tax relief of up to 33% of eligible R&D costs from HMRC. Generally, if a company spends money on innovation, it can receive either a cash payment and/or a Corporation Tax reduction.
The UK has one of the most highly incentivised R&D schemes in the world, but many businesses are still not taking advantage of the scheme. SMEs are often unaware of the HMRC scheme, or do not perceive their activities as qualifying for the scheme, whilst others are often too daunted by the complexity and costs of the claims process.
Shoayb Patel, an engineering graduate and chartered accountant who had helped businesses recover over £100m in R&D tax claims in his career, set out to develop a software-as-service solution to the issue and launched RDvault in 2017.
For the past two years RDvault has received advice and support from the GC Business Growth Hub’s Innovation team as it journeys from Manchester to international growth. Shoayb talks to the Hub about what drives him – and where he plans to take the company next.
Our economy thrives on innovation with the UK plc spending over £38bn on R&D in 2019. However, this equates to just 1.7% of GDP, which is sadly lower than in comparable countries like France (2.2%), the US (3.1%) and Germany (3.2%), and with the current 2019 OECD average of 2.5%, the government has set an ambitious target of reaching 2.4% by 2027.
Entrepreneurs with innovative ideas for new products or services start businesses, create jobs and help companies and consumers find solutions to the issues they need help with.
But R&D isn’t just about people in white coats doing cutting edge science in laboratories. It’s obvious a company developing a new AI algorithm to detect a blood disease would be considered as R&D, but what about a brewer developing a new IPA beer? or a cheesemaker optimising a cheese manufacturing process? That’s research and development qualifying for R&D tax credits too.
The government is, of course, keen to support these R&D initiatives so offers tax relief and credits to companies engaged in such endeavours. But aside from the problem of companies not realising they can claim, it can also be an expensive and cumbersome process to prepare a claim.
When I set up RDvault I wanted to find a way to make it easier for firms to make a claim – so they didn’t have to turn to high fee charging accountants and drown in a sea of spreadsheets, documents and emails. My vision is to become the world’s leading R&D claims platform and empower businesses to claim these government funds easier and at a lower cost.
The existing process is complex and expensive and there are several key pain points in the claim making process. At the same time the adoption of cloud accounting was really taking off, and it became obvious to find a way to harness that ecosystem with a view to automating the process as much as possible. Without the need for specialist skills, this information can be automatically extracted from book-keeping software and ERP systems to produce a report for onward submission to HMRC.
Our innovative platform enables a company to extract, collate and prepare all the relevant information necessary to submit their own claim digitally to HMRC, without the need for using a traditional and often time-consuming and expensive boutique/accountant.
The platform syncs with accounting software such as Quickbooks and Xero, leaving the user to simply select the relevant R&D costs for each claim. The software calculates the eligible R&D costs for each project, the total claim value and also provides users with live R&D costs for which advance loans can be offered through our partners. The platform workflow helps users develop their technical narrative to substantiate the claim to HMRC.
We’re proud to have hundreds of satisfied customers who’ve realised they don’t have to approach R&D tax credit experts to make a claim, accessing money they had previously missed out.
The GC Business Growth Hub has been there at our side for the past two years of our business journey, and their Innovation team has been pivotal, connecting us with a range of business support services, finance and networking and promotional opportunities.
Firstly, we were connected with the Business School at Salford University and collaborated with us on an Innovate UK bid. We established that GC had previously carried out a survey with its members concluding that half of all qualifying R&D companies in the Greater Manchester area had never applied for R&D tax credits – even though 80% were eligible and had developed new products and services.
That survey inspired us to get in touch with the Growth Hub in the first place, so that we could access their wealth of information to catapult us into scaling up and growth. Working with them has been crucial for us.
When we first set up RDvault we were successful in obtaining venture capital investment from Deepbridge Capital in the NW, which helped us to turn our Proof-of-Concept prototype into an MVP that we could use with customers.
Recently we have been appraising investment opportunities to scale the business and the Growth Hub’s Access to Finance team has assisted us by introducing us to regional VC funds and institutions. We’ve also worked with the GC Angels to refine our position for the next round of investments.
The Growth Hub has provided feedback developing our pitch deck to investors, giving us appraisals and positive critique of our suite of documents. Their advisors have a wealth of experience and we were humbled and appreciative of the feedback we received from them, which has helped us to attract the attention of high calibre and high net worth investors.
We went on to pitch in front of angel investors through GC Angels and from this pitch we were presented with an offer of investment from a prominent North West VC fund, while other start-ups who presented at the pitch have since become users of RDvault.
We have also become a Growth Hub Trusted Advisor partner enabling us to showcase our product offering to other businesses collaborating with the Hub that have subsequently used our services. Being approved by the Hub as a ‘Trusted Advisor’ has also helped us to raise the awareness of R&D tax credits by circulating useful information in its newsletter.
Working with the Growth Hub has given our platform exposure within the North West with RDVault recently having been announced as one of the five North West Regional Winners of Tech Nation's Rising Stars competition, which recognises the region's most innovative tech companies.
We believe our product can be adapted to work in different markets because many countries operate similar R&D investment incentive schemes, and our ambition is to offer the product into other geographic locations.
This means we are working closely with the Department of International Trade and Innovate Edge teams – both delivered in the NW by GC.
Our efforts are now focused on growing the team and launching more functionality into our platform by adding further AI/ML automation. We have an ambitious road map ahead of us and are currently in the process of raising a Series A round of investment with a view to realising this vision, and we look forward to having the continued support of GC by our side.
If you’re an SME in Greater Manchester that has the ambition, capacity and drive to grow, the Hub’s specialist Innovation Advisors are here for you. They’ll help you identify the key things needed to become innovative and guide you on your own journey.