Problem-Solution Fit: Your Key to Unlocking Grant Funding

Learn from real-world examples how to define your problem-solution fit (PSF) and secure grant funding to fuel your innovative startup's growth.

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Megan Williams
June 11, 2024
Problem-Solution Fit: Your Key to Unlocking Grant Funding

What do funders crave above all else? A clear problem-solution fit (PSF).

They want to see a laser focus on a real-world issue paired with an innovative answer that solves it elegantly. Fancy features and futuristic designs are fine, but without a compelling PSF, your idea will struggle to win grants or investment.

At Grantify, we've seen hundreds of grant pitches – some sparklingly clear, others tangled messes. We know what works and what doesn't.

In this guide, we'll use real examples from winning Innovate UK grant proposals to show you how to find your PSF. 

You'll learn how to ditch the 'product-first' mentality, spotlight the problem, and craft a compelling narrative that makes funders believe your innovation is the game-changing solution the world needs.

Problem-Solution Fit: What it is and Why it Matters

Problem-solution fit (PSF) is the elegant dovetailing of a well-defined problem with a solution that feels inevitable – the missing puzzle piece the market never knew it needed. It's the core element that transforms an interesting idea into a fundable business.

Sometimes well-marketed products with weak PSF can generate buzz and snag impulsive investors or crowdfunding pledges. But grant assessors, who guard the purse strings of public money, are immune to hype. 

Bodies like Innovate UK scrutinise applications for rock-solid PSF. This isn't to dampen your ambitions – innovative grant applications must be daring – but the ambition has to be channelled into solving a specific, undeniable problem.

A clear product-solution fit demonstrates to funders that:
  1. You deeply understand your target market.
  2. You've identified a genuine pain point or unmet need.
  3. Your innovation plugs that gap seamlessly.

Why focus on ONE problem?

Although solving multiple problems sounds like better value for money, grant assessors favour proposals in which a single, compelling problem is paired with a perfectly tailored solution. This creates a narrative arc that's both emotionally resonant and factually solid. It paints a clear picture of the market gap you intend to fill and how your innovation will transform lives or industries. 

If your solution offers multiple benefits, that’s great, but a scattered approach to explaining the core unmet need, even if well-intentioned, can dilute your impact and muddle your message.

What Does Poor Product-Solution Fit Look Like?



Construction projects face delays, cost overruns, and supply chain disruptions due to poor communication and inefficient on-site coordination.



A real-time project management platform with 3D modelling and augmented reality, allowing for visualisation of building plans on-site, remote collaboration, and early identification of potential conflicts to improve resource allocation and workflow management.

At first glance, the problem-solution pairing above sounds reasonable – and it may even touch on real issues faced in the construction industry. But on closer inspection, there are three distinct problems and four solutions, each a significant undertaking in its own right.

To a seasoned grant assessor or a shrewd private equity investor, especially those lacking specialised knowledge of the industry, this proposal would likely appear scattered and unfocused.

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It’s all about spinning that water-tight Problem-Solution Fit narrative. A clearly defined problem, a solution that solves it perfectly, and stating exactly who that product is for: a tripod that can’t fall over.
Testimonial Author
Adam Hopkins
Senior Funding Consultant, Grantify

Product-Solution Fit Examples from Recent Innovate UK Grant Funding Winners

Project: Video processing innovation (£169,420) (See full abstract).
Problem: The proliferation of digital video content, exacerbated by the need for multiple versions of the same content ("versionitis"), leads to excessive storage costs and carbon emissions.
Solution: A SaaS that creates IMF (Interoperable Master Format) files from traditional videos, reducing duplicate content and offering substantial cost and carbon savings of ~70% for IMF use and ~50% for adaptive bitrate (ABR).
Project: A water-soluble computer (£339,418) (See full abstract).
Problem: E-waste, largely due to non-biodegradable electronics components, significantly contributes to global toxic waste, causing severe health issues and economic burdens.
Solution: A 90% biodegradable, energy-efficient computer that is an environmentally friendly, easily disposable alternative that reduces waste and recovers valuable materials.
Project: Quantum computing in healthcare (£161,422) (See full abstract).
Problem: Healthcare providers struggle to organise patient activity efficiently and allocate scarce resources like operating rooms.
Solution: A quantum computing application to optimise healthcare operational challenges that are too complex for classical computing alone.
Project: Seaweed-derived plastic replacement (£49,034) (See full abstract).
Problem: Mixed materials, especially those containing concealed plastics, challenge recycling processes, leading to substantial landfill waste from products like windowed envelopes.
Solution: A compostable biopolymer material derived from seaweed, which is a fully biodegradable alternative to single-use plastics.

Each solution above feels like a precisely cut key engineered to unlock a stubborn, seemingly impossible problem. 

Whether streamlining video processing, tackling the e-waste crisis, revolutionising healthcare efficiency, or replacing harmful plastics, each innovation targets a single, undeniable problem with a tailor-made solution.

This sense of inevitability, this undeniable problem-solution harmony, is a hallmark of great PSF, and it's the feeling grant assessors are searching for. 

The ultimate results of the funded R&D – the market transformation or societal impact – might be years away. But with a compelling PSF, the assessors feel confident that these solutions are the right keys, crafted by the right minds, to unlock breakthroughs that will shape the future.

Going Beyond Basic Problem-Solution Fit (Creating Value)

Not all problem-solution fits are created equal. While every startup aims to solve an issue, the true litmus test for both grant funders and investors is the potential value your solution creates. 

Let's consider three levels of PSF effectiveness:

Tier 1: The "Huh?"
Addresses a problem that barely exists or a need that no one actually has.
E.g. solar-powered clothes dryer.
Tier 2: The "Nice to Have"
Tackles a genuine problem but offers a minor improvement or a workaround rather than a fundamental shift.
E.g. a more ergonomic smartphone case.
Tier 3: The "Game-Changer"
Effectively addresses a major pain point with the potential for societal and economic impact.
E.g. an AI-powered diagnostic tool that dramatically improves early disease detection.

The ‘Game-Changer’ Solution is where innovation shines and where grant funders like Innovate UK take notice. 

They want to fund ideas with the potential to:

  • Improve lives on a broad scale (healthcare, accessibility, education, manufacturing, etc.).
  • Boost the economy by creating jobs and new markets.
  • Drive innovation leadership for the UK on the global stage.

By framing your solution's value in these terms, you align your project with the core goals of grant funding bodies and significantly bolster your application.

A Simple Framework for Finding Your Focus

1. The ‘5 Whys’ Exercise

2. Competitive Analysis

3. Target a Niche or Submarket

4. Become a Storyteller

The '5 Whys' Exercise
This technique forces you to dig deeper into the root cause of a problem. Start with the problem statement and ask 'Why?' at least five times, delving into successive layers of cause and effect.
For example:
Problem: Farmers lose crops due to unpredictable weather.
  1. Why? Because they lack reliable weather forecasting.
  2. Why? Because existing weather models are too general.
  3. Why? Because they don't incorporate localised data.
  4. Why? Because collecting local data is expensive and labour-intensive.
  5. Why? Because traditional sensors are costly.
This may reveal a deeper problem to solve: the need for low-cost, localised weather data collection.
Competitive Analysis
Research existing solutions in your space.
  • What do they do well?
  • What are their shortcomings?
  • Where are the gaps your innovation could fill?
This highlights areas where your solution can truly differentiate itself.
Target a Niche or Submarket
Avoid the temptation to be a one-size-fits-all solution. Instead, identify a specific niche or submarket within your target audience. This laser focus allows you to tailor your solution and messaging with precision, making your PSF more compelling.
Imagine you've developed a groundbreaking AI-powered drug discovery platform. Targeting the entire pharmaceutical industry might seem logical, but a more effective approach could be focusing on biotech startups working on treatments for rare diseases. These companies often struggle with limited resources and could greatly benefit from an AI tool that accelerates their research.
Become a Storyteller
Don't just list features; tell a story.
How does your solution change lives or disrupt industries?
Use vivid language and real-world examples backed by solid data to paint a picture of the impact your idea could have.

Finding the perfect PSF is an iterative process. Start with this framework, and don't be afraid to experiment, pivot, and seek expert feedback.

Nailed Your Problem-Solution Fit, Now What?
Problem: You know your solution is a game-changer, but translating that into a winning grant proposal still feels overwhelming.
Solution: Grantify's experts understand the complexities of grant funding and can guide you every step of the way.
Start the conversation with our 90-second eligibility quiz and discover the potential for your groundbreaking idea.
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Learn from real-world examples how to define your problem-solution fit (PSF) and secure grant funding to fuel your innovative startup's growth.

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