Boast found that while CxOs focused on essentials in 2024, they missed out on opportunities for non-equity funding, leaning on working capital and credit in face of inflation, talent, and macroeconomic uncertainty.
VANCOUVER, CANADA, October 24, 2024 – Boast, North America’s leading provider of R&D and tax credit intelligence, has published the 2024 edition of their annual R&D Benchmark Report, showing that businesses paid a price for putting dedicated R&D on the backburner in the face of market uncertainties over the past year.
The 2024 R&D Benchmark Report includes a survey of more than 500 CXOs in R&D-focused organizations across North America to baseline how businesses are funding innovation and product development. As it turns out, many executives have been squarely focused on the essentials for their business in the face of major macroeconomic uncertainties in 2024—namely, inflation—forcing many teams to reconsider their best laid plans, while leaving little budget for risk-taking, leading to missed growth opportunities—including non-equity funding through tax credits.
For many teams, this included taking a more conservative approach to R&D in 2024, with fewer resources dedicated directly toward R&D, and fewer companies tapping into non-equity capital sources like grants and tax credits. Working capital remains the main source of funding year-over-year, but debit/credit lines have emerged as the secondary avenue among the majority of CXO respondents—with 42% of respondents leveraging debit/credit in 2024 vs only 38% in 2023.
This is further reflected as non-equity funding in the form of Tax Credits and (especially) Grants saw the biggest dips YoY, with Tax Credits falling from 39% (#2) source of funding in 2023 to 36% (#3), and Grants dropping from 32% (#5) to just 27% (#5) in 2024.
“Broadly, while many CXOs still dedicated budget to R&D in 2024, they weren’t engaging in as much grant- or credit-worthy activities, and are probably paying the price for this conservatism in the long-run,” Boast CEO Imad Jebara says. “While holding off on new R&D may seem like a ‘penny-wise’ strategy to ride out the markets and news cycle, pausing or scaling back R&D actually locks teams out of government funding opportunities that could be critical to stretching their product and innovation runways.”
In a similar vein, CXOs were much more concerned with forecasting and talent retention in 2024 versus 2023. While this is likely also a result of inflation, fears around lending and interest rates—as well as venture capital and private equity lending trends across the past 12 months—are also likely contributing to the “shoring up” mentality among the CXOs polled.
Interestingly, the solution to many of these struggles may actually lay in pursuing and funding even more R&D.
Not only can eligible, truly innovative activities unlock sources of capital that can extend operational runways (while of course fueling stronger products), but leveraging tools that can help align key sources of data and impart immediate, actionable insights may allow teams to work smarter without extending resources.
Check out Boast’s analysis in our 2024 R&D Benchmark Report EBook or read the full results in our 2024 R&D Benchmark Report Results document.
