Before applying for Tekes financing, you need to know how Tekes’ money can be used.  When you apply for financing, you will meet with your Tekes representative to come up with your own spending plan, which will dictate what you’re allowed to spend Tekes’ money on. It’s been described by the entrepreneurs I’ve talked to as a flexible enough system as long as you confirm new expenses not included in your plan with your Tekes representative before spending any money. Last month, Elina Arpponen gave an example of not including travel costs in her original plan, but luckily she was able to re-allocate expenses with just an email to her representative.

As mentioned earlier in this series, Tekes doesn’t give you money upfront to spend. Tekes reimburses entrepreneurs’ receipts that stick to the funding plan laid out with their Tekes representative. But generally speaking, Tekes money can be used for any costs associated to research, development, and innovation activities. These include costs like:

  • Salaries
  • Indirect personel costs
  • Overheads
  • Travel Costs
  • Materials and Supplies
  • Cost Of Equipment
  • Outsourcing Services

I included a similar list of what you can’t spend money on is included at the bottom of the post.

I got the chance to talk with Teemu Yli-Hollo about how they’ve used their Tekes funding at Audiodraft, a startup that crowdsources music and audio to be used in creative projects. Yli-Hollo he tells me that he’s seen a huge change in how Tekes financing can be used. “We are using Tekes financing to develop our platform further and add a new feature to it, and actually do some test marketing on that feature. This type of ‘lean development’ style is getting into Tekes, and that’s definitely a positive thing.”

Many entrepreneurs may be surprised to hear that Tekes now encourages 20% of R&D costs to be spent on test marketing, which can be outsourced. Tuomas Henttonen from Tekes tells me that this is because it’s essential to get customer feedback as early as possible to develop prototype in the right direction. Apparently before you couldn’t get these costs approved, which is why Yli-Hollo thinks it’s such a big positive shift in Tekes’ thinking to actually have these costs encouraged. Audiodraft is outsourcing some of their product testing costs to both Finnish and American companies, but says it hasn’t been a hassle so far getting things approved from different countries (although their project is still ongoing, meaning they have not gone through the project’s final audit).

“They actually worked with us really hands on. It was great since we’ve been having conversations with our representatives at Tekes for quite a while, and during that time we’ve been figuring out the right timing for our project,” continues Yli-Hollo. “This came down to the status of our company and our plans going forward, and we really wanted to fit the Tekes project into our plans. It was definitely a good thing we had a representative there to help us choose what type of project to pick, and help us see what kind of opportunities there are within Tekes that would be a good fit for Audiodraft.”

At the beginning of this year Audiodraft moved to the United States. Lately they’ve spent a lot of time with production companies in Los Angeles, and Yli-Hollo says the have some great news coming out sometime later this month. The company saw a great success in 2011 by holding a crowdsourcing contest for the Nokia tune, which is one of the most recognizable tunes in the world. Through Audiodraft, Nokia picked a winner by spending a fixed amount of money, generated hype about their product, and thousands of people were able to submit their own tune or collaborate through Audiodraft. The company now boasts 16 000 sound designers from over 90 countries, meaning anyone looking for a new sound or song can draw from a high skill level and diverse background.

Find out more about this topic at the General Terms And Conditions of R&D Projects, or get in touch with a Tekes representative to see what they can do for your company. And if you’ve got a web or mobile company that you would like to quickly get on the market, be sure to take a look at Tekes Tempo.

And as promised, ineligible costs include:

  • Entertainment expenses, donations, stipends or grants;
  • Costs related to production, advertising, marketing or sales, such as travel, brochures, advertising
  • Expenses, exhibitions or trademarks;
  • Financing costs;
  • Patenting costs for large companies;
  • The recipient’s funding share for a project implemented in a research organisation funded by Tekes;
  • Costs that include other public funding;
  • Any financing, administration, insurance, repair, maintenance or equivalent costs arising from
  • Acquisitions financed through a part payment agreement;
  • Costs (administration, financing, insurance, repair or equivalent) related to machinery and equipment
  • Rental that have arisen during the duration of the project to the extent that they exceed the equivalent purchase price;
  • Costs not included in the project plan.

Hear it from startups
This series of posts is sponsored by Tekes and produced in co-operation with ArcticStartup to share experiences from startups about their funding experiences.

Interested in the fast turnaround of Tekes Tempo?
Find contact details, information on the program, and how to apply on their about page.