For aerospace, defence, security and space businesses, innovation is rarely optional. Whether developing next generation platforms, improving system resilience, or advancing dual-use technologies, sustained investment in R&D underpins competitiveness and long-term growth.
Yet too often, funding is approached tactically, reacting to individual opportunities or cost pressures rather than forming part of a deliberate, long-term strategy. In a sector characterised by long development timelines, complex supply chains, and highly regulated customers, this reactive approach can limit both growth and resilience.
Forward thinking businesses are increasingly recognising the value of a joined-up funding strategy that aligns innovation objectives, commercial milestones and available funding mechanisms over multiple years. That’s where funding specialists like ForrestBrown can help. They are part of a growing band of ADS members who provide professional advice and solutions in specialised areas. These business services companies know the intricacies of our sectors and have the experience and expertise to make a difference.
Senior Business Development Manager at ForrestBrown, Tom Wood, said:
“Despite ambitions to make the UK a defence industrial superpower, securing funding in the short to medium term remains a real challenge for many businesses. ForrestBrown helps defence companies convert security‑sensitive innovation into robust, defensible R&D claims, supported by a security‑cleared team that understands the realities of defence supply chains. We’re also experts in identifying grant and loan funding opportunities that can help bridge the gap between development and delivery.”
Below, ForestBrown outline some of the key characteristics and outline an effective approach to innovation funding.
A sector shaped by long horizons and complex delivery models
Aerospace and defence businesses operate under conditions that can make funding strategy particularly challenging:
- Extended development cycles, often spanning many years from concept to deployment.
- Contracted or collaborative R&D, involving primes, tier one suppliers, SMEs or academic partners.
- Highly complex supply chains, with innovation distributed across multiple entities.
- Regulatory and customer scrutiny, particularly where work is linked to government or defence contracts.
These characteristics mean that innovation activity, and their associated costs and risks, may not be confined neatly within a single accounting period or legal entity. As a result, businesses that plan funding on a project-by-project basis can struggle to optimise the support available to them.
Moving from reactive funding to strategic planning
A more effective approach is to treat innovation funding as a strategic enabler, not a one-off benefit. This means understanding how different forms of support can work together across the lifecycle of a programme or technology roadmap, for example:
- Grants to de‑risk feasibility or prototype development.
- Innovation loans to support late-stage development, scale-up and commercialisation.
- R&D tax relief to recover eligible historic technical expenditure, strengthening cashflow and investment planning.
- Patent Box to reduce the tax rate applied to profits derived from patented IP.
Used together, these mechanisms can help smooth investment peaks, improve resilience during development phases and support sustained innovation rather than isolated breakthroughs. This holistic approach to funding is increasingly important in maintaining R&D investment through periods of policy uncertainty.
Contracted R&D and the importance of clarity
One area that can be particularly complex in aerospace and defence is contracted out R&D. With innovation often carried out across consortia or supply chains, businesses need to be clear about:
- Who is taking the commercial risk.
- Who controls and directs the R&D activity.
- How IP and outcomes are managed.
These factors are critical when assessing eligibility and defensibility for funding and reliefs, particularly R&D tax relief, and should be considered when contracts are drafted and reviewed. Early planning helps ensure that commercial arrangements support, rather than undermine, access to innovation incentives.
Building resilience in uncertain times
Forward planning is not just about maximising funding, it is also about building resilience. In an environment of geopolitical uncertainty, supply chain disruption and evolving regulatory expectations, businesses that understand their funding options are better placed to prosper.
A clear funding strategy allows leadership teams to make informed decisions about:
- When to accelerate or pause development.
- How to allocate innovation spend across programmes.
- How to balance customer‑funded work with internally driven R&D.
For ADS members operating at the intersection of technological change, global politics and government policy, this clarity can be a significant competitive advantage in an otherwise uncertain world.
Looking ahead: supporting ADS members through practical insight
To help aerospace and defence businesses put these principles into practice, ForrestBrown will be hosting a series of dedicated workshops for ADS members, focused on building forward looking innovation funding strategies.
These sessions will explore:
- How different funding mechanisms can be combined effectively.
- Common pitfalls in contracted out R&D – and how to avoid them.
- Practical steps to improve planning, optimise benefit and mitigate risk.
The first session provides an up-to-date overview of the UK innovation incentives and reliefs landscape.
- Thursday 4 June, 2026
- Book here
ADS Business Services Network
With the complexities of running a business, outsourcing essential support and securing specialist advice can accelerate your growth and help build resilience.
Introducing the Business Services Network, collectively showcasing our service provider members. They can help streamline operations, save costs and minimise risks.
