Why Public Funding Is More Relevant Than Ever for Product Developers
Developing new products is expensive - anyone who has tried it knows this. Between concept development, prototyping, engineering and series readiness, costs accumulate quickly, becoming a genuine barrier especially for smaller companies, start-ups and research institutions. On top of that comes a second, often underestimated challenge: finding the right partners. Anyone with an idea typically only covers their own field- and needs external expertise for everything else: industrial design, engineering, manufacturing, materials, prototyping.
Public funding programmes address exactly these two problems. They not only ease financing, but also create structures in which partners from industry and research collaborate in a binding way. And crucially: design is explicitly eligible for funding - provided it forms part of a technical innovation process. At PROJEKTER, we have guided several such projects over the years and learned what really matters. This article offers an honest overview of the current options and explains why the seemingly complex application process is well worth the effort.
The Two Most Important Funding Instruments for Product Developers in Germany
1. ZIM: Central Innovation Programme for SMEs
The ZIM is Germany's largest national funding programme for research and development in the SME sector. It is administered by the Federal Ministry for Economic Affairs and Energy (BMWE) and is open to all technologies and industries - meaning almost any type of technical innovation can be funded, whether in mechanical engineering, medical technology, consumer products or bespoke solutions.
Since 1 January 2025, a new and improved ZIM framework has been in effect. The conditions have improved noticeably:
- Individual projects funded with up to €690,000
- Cooperative projects (e.g. company + research institution) with up to €560,000 per partner and up to €3,000,000 total project volume
- Funding rates of up to 55% of eligible costs for smaller companies
- Feasibility studies are now eligible for up to 12 months
- Market launch services can be applied for up to 18 months after project completion
- Applications have been fully digital via the German Funding Centre (Förderzentrale Deutschland) since November 2025
The ZIM does not fund series production, but covers the entire development phase leading up to it – and that is precisely where the design component sits. Concept work, form development, ergonomics, prototype development: all of this can be eligible within a ZIM project, provided it is embedded in a technical development process.
Our Case Study: The Collux Nanoparticle Automat
Until 2020, we developed the Collux Nanoparticle Automat in collaboration with the Chair of Technical Chemistry at the University of Duisburg-Essen and CryLas GmbH from Berlin - a compact laboratory device for producing colloidal precious metal nanoparticles via laser ablation. Applications range from pharmaceuticals and medical technology to energy storage.
Our role was strategic from the outset: we were responsible not only for design and ergonomics, but also for overall project management and the product side in its entirety.
From the joint requirements specification through UX process matrices and cardboard mockups to adapting the design for a more powerful laser system, we accompanied every phase of development and brought together the perspectives of research, engineering and manufacturing.
The project concluded with two functional prototypes, a patent application and the foundation for a later spin-off. A result that would not have been possible without ZIM funding and the structured collaboration between all three partners.
2. Research Allowance (Forschungszulage): The Tax-Based R&D Funding Instrument
Alongside classic project funding, there is a second instrument that product developers often overlook: the Research and Development Tax Allowance (Forschungszulagengesetz, FZulG), introduced in 2020. It is available to all companies subject to taxation in Germany - regardless of industry, legal form or company size.
The Research Allowance is not a traditional grant, but a tax credit: companies that document eligible R&D expenditure receive a portion of those costs back from the tax authorities - even in loss-making years (in which case it is paid out directly).
Current conditions (as of 2026):
- Funding rate: 25% of eligible expenditure, rising to 35% for SMEs on application
- Maximum assessment basis: €12 million per year per corporate group (from 1 January 2026, previously €10m)
- Eligible costs: R&D personnel costs, contract research (70% of contract value), depreciation on R&D-specific fixed assets
- New from 2026: Flat-rate overhead provision – an additional 20% on eligible direct project costs, with no individual proof required
- Self-employed individuals: recognised hourly rate increased to €100/hour from 2026 (previously €70)
- Since 2025: credit against quarterly corporate tax advance payments is possible
A key advantage over ZIM: the Research Allowance is a legal entitlement, anyone who meets the requirements receives it. There is no competition, no limited budget. This makes it especially predictable for planning purposes.
The process runs in two stages: first, a basic assessment notice is obtained from the Research Allowance Certification Authority (BSFZ). The funding application is then submitted to the relevant tax office.
Can ZIM and the Research Allowance Be Combined?
In principle, yes - but not for the same costs. ZIM and the Research Allowance are mutually exclusive for identical expenditure within the same project. In practice, however, different project components or phases can be allocated across both instruments. Careful planning and advice in advance is essential here.
What Makes a Good Funding Project?
Not every idea is eligible for funding, and that is a good thing. Programmes like ZIM require demonstrable technical innovation content and realistic market potential. This may sound like bureaucratic gatekeeping, but it is in reality a quality benchmark: sharpening a project until it is fundable also sharpens it for the market.
What speaks in favour of a successful funding application:
- The product solves a technical problem in a new way not yet established in the market
- There is a clear development pathway from idea to series readiness
- Cooperation partners bring complementary expertise (e.g. design studio + university + manufacturer)
- Commercial exploitation is realistic and documented in a comprehensible way
Our experience shows: the effort involved in a ZIM application is moderate compared to other programmes – as long as you know what is expected.
Why Design Is a Funding Topic - and Often Underestimated
In the context of funding, design is frequently perceived as cosmetic. This is a misconception. Industrial design is an integral part of technical development processes: it defines how a product feels, how it is used, how it can be manufactured and ultimately how marketable it becomes. Integrating design only after the engineering phase is done costs double - in time, money and missed optimisation opportunities.
Within ZIM, design is eligible when it is functionally and technically justified: ergonomics, materials selection, manufacturing optimisation, prototype development - all of this is part of the innovation process. The Research Allowance applies similar criteria: the design work must form part of an R&D project and must not constitute purely routine series design.
What We Offer: From Idea to Funded Project
We have been working as a design studio for product development and innovation for more than 20 years – and in that time we have successfully guided not only products, but also funded projects, from start to finish. We know the processes, can assess the effort involved and help formulate applications together with you.
Our services in the context of funding include:
- Assessment of whether your project is eligible for funding
- Support in selecting the right programme
- Joint application preparation (ZIM, Research Allowance and others)
- Taking on project management for cooperative projects
- Integration into our network of research institutions and industry partners
- Guidance throughout the entire development process - from idea to production
Every project is different. But exploring the possibility and starting a conversation is almost always worthwhile. Even if direct funding turns out not to be available, we know the right partner and are happy to make an introduction.
Get in touch - we look forward to hearing about your project.
