A quick Google search can come up with a plethora of grant opportunities for your startup or organisation. John Ng, Senior Advisor from Write My Grant spoke on what he’s found to be the top 5 hurdles encountered when applying for a startup grant and what to do to improve your chances.
- Lack of track record
- Lack of co-funding or partners
- A competitive market & lack of innovation in the product/service
- Not communicating with the funding organisation
- Focusing too much on commercial profitability for government grants
An important reason why many applicants fail to gain grants is due to a lack of marketable milestones or past successes. I’ve spoken to many people who have presented the latest and most innovative ideas. However, the reviewing committees will frequently fund an applicant based on tangible or quantitative metrics, such as an existing prototype, past funding, awards, or demonstrated pilot customers, rather than the concept itself.
We found some applicants fall into the trap of simply presenting a great idea, without demonstrating a track record of success. Thus, it’s important to have tangible results before applying for a grant application.
On the flip side this might sound like a chicken and the egg conundrum, why apply for grant funding when you already have previous successes? This is where a fine balance lies in judging the value of a potential award/grant, and focusing on the core business.
Check: You have demonstrable milestones in the short and long term.
Do: Present quantifiable competitive milestones in your grant application.
Many government incentives want to see co-investment either in-kind or better yet in hard dollars. This may include stakes from an investor, corporate collaboration, pilot customer or the founder. It is easy to fall into the trap of spending a long period of time building a minimum viable product and investing in your technology for 1-2 years without generating any customer interest or relationships in the industry.
Although it does not prevent the applicant from gaining future success, it does exclude a lot of applicants from government incentives that have co-investment as an eligibility requirement.
However, if your startup needs co-investment, it can be daunting to ask a corporate pilot customer to be an official partner for a project. If the project encounters hurdles, or the project falls behind, requesting the corporate collaborator to be a part of the grant can feel like an unwelcome distraction from the core work.
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A potential solution to this issue is to contract the application to a technical writer or a grant writing service. Many government programs have a commercialisation business advisor, and there are also commercial advisors such as Write My Grant’s partner organisation Chrysalis Advisory, to help generate strategic partnerships. An advisor can champion the grant program and drive the coordination of the parties necessary, leaving the core development team to carry on with engineering or technical development.
Check: You are cultivating a good relationship with a potential or existing collaborator regardless of the stage of your business.
Do: Find a third person (internal or external) to champion and drive the application process.
Innovation can take many shapes and forms. Your innovation doesn’t have to be a cure for childhood cancer or a breakthrough that stops climate change. It can be a small improvement in a niche area. However, if it is only a minor innovation in a heavily marketed area, it can be perceived as lacking innovative qualities.
One area we’ve seen this issue has been in mobile apps. The impact of a new iOS or Android app can be difficult to demonstrate to reviewers, especially if the product has a social function at its core. Many apps that aim to connect local communities for instance, can find it difficult to share tangible results or demonstrate that their innovation has been more effective than existing projects.
A good rule of thumb is to imagine a journalist writing a news article about your work. Is it likely that a government or council newsletter will promote your product or service to the community? If you are able to articulate your innovation and the value you provide to the community, it is far more likely that grant committees will consider your application.
Check: The grant program you are applying for is not flooded with applicants very similar to your application.
Do: Consider the innovative angle or community benefit of your proposal in the grant application.
Especially for some smaller schemes, having regular communication with the funding organisation can be beneficial for your business. A key frustration that many applicants face when applying for grants is preparing the documents for submission only to find out that their project is ineligible.
Some NSW startup grants are highly specific on funding in certain expense categories such as infrastructure, consumables, salaries or career development, and it can take volumes of information to know whether your startup is eligible. In my work, it’s possible to have a project that matches a scheme word-for-word, but later find out the project was in fact ineligible. Sometimes this can be due to strict rules on IP ownership, overseas expenditure, overseas contractors, or business/organisational structures.
These nuances however, are best resolved with the help of a project officer from the funding body. We’ve found that many of these organisations have moved to a model with a greater focus on customer service, thus we recommend you talk to the body directly to save time and possible headaches.
Check: Processes or contact details that allow for prequalification or expressions of interest.
Do: Have an initial conversation to communicate what project and what sort of expenditure they like to fund.
Many projects overemphasise the profitability and commercial return for the project. While this may be a big plus in pitch decks and presentations to venture capital, applications made to government and philanthropic organisation will favour different outcome metrics. Remember, the government is not just focused on revenue but also on politically and socially favourable outcomes, and this will have an impact on the types of grants available.
We’ve found government bodies also look at criteria such as job creation, industry advancement, national ownership of IP, ownership of major infrastructure, improvements in the community or greenhouse reduction—not just profitability. Depending on what scheme you are applying for, generating new jobs or making improvements to the general or disadvantaged community can be viewed favourably towards grant committees.
Check: Your grant proposal isn’t a carbon copy of your business plan or pitch to VCs.
Do: Quantify and match your project outcomes to that of the scheme’s (i.e. New jobs, health benefits, technology, exports).
This final major reason is a serious hurdle to most potential applicants. The preparation of a grant application can be tedious and is frequently neglected and pushed to the bottom of a person’s to-do list. Fortunately, there are a number of specialist writing services, such as Write My Grant, that can support an applicant on a fee or commission basis. On this final note, good luck and remember to apply!