A new business requires cash to grow effectively. The traditional routes of investors or loans can sometimes place undue pressure on founders.
Investors may require a share in the business, and loans will need to be paid back monthly.
One source of funds that is often forgotten about is grants.
Grant funding gives businesses the opportunity to raise funding without giving away equity or having to pay the money back!
So what’s to lose?
In this article, we look at just that and give some interesting grant sources for entrepreneurs worldwide.
Here goes…
Why Grants?
The main benefit of grant funding is that they do not have to be paid back, and founders do not need to give up a share in their business.
Grants are often provided by private corporations and even governments to stimulate growth in certain sectors of the market.
Grant availability will vary depending on where your business is set up and your sector in the market.
While grant funding often does not have to be paid back, that does not mean it’s ‘free money’.
Grant funders will often have strict criteria as to who is eligible for funding, and the funding process may be very competitive.
Grant Funders – USA, Europe and UK
The USA, Europe and the UK provide many grant opportunities for new businesses.
If your business operates elsewhere, you may have to research grant funders in your particular region.
Some grant providers allow you to relocate your business to be eligible for funding.
USA Grant Providers:
National Science Foundation (NSF)
National Science Foundation (NSF) | Grants.gov
National Science Foundation (NSF) – USA- Up to $2m funding – Science and Deep Tech
Small Business Innovation Research (SBIR)
Small Business Innovation Research (SBIR) – USA – $50k – $2m+ – Technology Commercialisation
National Institutes of Health (NIH)
National Institutes of Health (NIH) – USA – $300K-$3m+ – MedTech, HealthTech, BioTech
National Institute of Standards and Technology (NIST)
National Institute of Standards and Technology – USA – $ Variable funding amounts – Manufacturing and advanced technology.
Advanced Research Projects Agency-Energy (ARPA-E)
DOE: ARPA-E eXCHANGE: Funding Opportunities
Advanced Research Projects Agency- Energy (ARPA-E) – USA – $500k – $10m – Clean energy and climate innovation.
European Grant Providers:
Horizon Europe
Horizon Europe, the EU’s funding programme for research and innovation
Horizon Europe – Europe – €100k–€15m+ – Innovation projects
European Institute of Innovation and Technology (EIT)
European Institute of Innovation & Technology (EIT) | EIT
European Institute of Innovation and Technology – Europe – €25k–€500k+ – Climate, Digital, Food, Health
Digital Europe Program
Digital Europe Program – Europe – €500k–multi-million – AI, Cybersecurity, Digital infrastructure
Digital Europe Programme – European Commission
LIFE – European Climate, Infrastructure and Environment Executive Agency
Life Program – Europe – €250k–multi-million – Environment & Climate
EIC Funding opportunities – European Innovation Council
European Innovation Council (EIC) – Europe – Up to €2.5m grant (+ equity option) – High-Growth deep Tech startups.
UK Grant Providers:
Innovate UK
Innovate UK Grants: How to apply – Innovate UK Business Connect
Innovate UK – UK – £25k–£2m+ – Innovation, R&D, DeepTech, AI
UK Research and Innovation (UKRI)
UK Research and Innovation (UKRI) – UK – £50k–multi-million – University spinouts, collaborative R&D
Small Business Research Initiative (SBRI)
Small Business Research Initiative (SBRI) – UK – £50k–£1m – Public sector innovation challenges
Connected Places Catapult
Connected Places Catapult – UK – £20k–£500k – Mobility, transport, cities
Grants Disadvantages
As discussed previously, grants are not ‘free money and often come with post-funding obligations.
So, even if you are successful, you may have to keep up to date with reporting and compliance.
Here are some disadvantages of grants, so you can weigh up if they are right for you:
Highly competitive – Grant programmes receive a lot of applications, so success rates can be low.
Time-consuming applications – Applications can be very time-consuming and may take many weeks to complete.
Restricted use of funds – Grant funding is usually for very specific projects or cases. Businesses may not be able to use the funds for operating expenses unless allowed.
Match funding – Some grant funding programmes may require the business to contribute or raise funding from another third-party to contribute to the grant.
Reporting and compliance – If successful, you will have to submit progress reports, financial records and other project outcomes. Failure to comply can result in funding being withheld or, in some cases, a demand for repayment.
Payment timing – Many grants reimburse expenditure after costs have been incurred rather than paying the full amount upfront. Businesses may need sufficient cash flow to fund the project initially.
Project limitations – Grant-funded projects often have defined objectives, timelines and deliverables. Significant changes to the project may require approval from the funder.
Final Thoughts
Grant funding could be a good way forward for some businesses looking to raise capital.
However, entrepreneurs should be aware that their business will need to be heavily aligned with the grant program.
While the advantages of retaining equity or the lack of debt to be paid back are significant, savvy entrepreneurs should be aware that grant funders are usually oversubscribed.
Grant applications can be very time-consuming.
Founders should ensure that the grant terms and conditions allow for spending on the aspects of their business that are necessary.
If grants are available in your jurisdiction and your business operates within the correct business sector, grant funding is certainly something to consider.
Relocation of your business may also be an option in some circumstances.
Grant funding allows small businesses to innovate without sacrificing ownership or taking on debt.
If your business meets the criteria, the effort and enhanced credibility is definitely worth it.
Good luck!
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