Grants have gotten a bad rap. They're "too slow" or have "too many strings attached". But here’s why it’s worth reconsidering grants: it’s non-dilutive funding. In an era where it’s taking longer and is harder to close a funding round, it’s now grants’ moment to shine.
Startups want in on the grant action because:
- It’s the cheapest capital (lower cost of capital than venture debt and venture capital).
- It’s non-dilutive. You and your existing investors are happy because you’re in control.
- It’s great for credibility with investors and for bigger government plays.
- It extends your runway in uncertain times or lets you pursue additional work/research to help you to secure that first-mover advantage.
What stops many startups from applying for grants is the time it takes, from writing the application to waiting to hear back from the government. By the time the money comes in, your plans have changed.
Like any challenge, this is entirely navigable with the right strategy. Here’s how to make applying for grants time efficient, increase your chances of success, and secure money–fast!
Start with a strategy
Approach your grant strategy like you would your business strategy. Focus on the best fit (value, activities and objectives alignment, speed of decision, highest probability of success). Get your target list of grants and go hard at them.
Sure. But what’s something tactical I could do right now?
- Create a Gantt chart of your activities for the next 2-3 years. Activities include capital works or major equipment upgrades/purchases, key staff hires, research and development milestones, and general business milestones (commercialisation, marketing, export).
- Get a list of all grants you’re eligible for.
- Work out when the money would come in for each grant and if it aligns with your activities.
- Assess your probabilities of success.
- Stay focused and beware of time sinks.
Create a list of grants
Grant information is easy to find. It’s the filtering for eligibility and success probability assessment that takes time. Start by looking at free existing lists of grants online:
- AirTree’s list (the well-known innovation grants–and therefore more competitive–but not an exhaustive list)
- Grant Connect (A comprehensive list, but not tailored, so it takes time to filter)
- All the state governments list their grants (Google is your friend)
Other themes and activities to look into:
- Innovation and commercialisation: ~$200K-$4m. Eligible activities include equipment, R&D, staff and international expansion costs.
- Female : ~$100K- $1m. Cuts out the large proportion of male founders. Your success probability = high.
- Infrastructure: Anywhere from $2, to $10m, up to $100s of millions if you’re building infrastructure in Australia that allows you to service a global market.
- Jobs: rebates on payroll tax etc. for each employee.
- Research: $1m-$5m. Ideal for longer time horizons (e.g. 2+ years). You generally need an established uni partnership.
- Schemes: For example, R&D tax incentive, Federal Export Market Development Grants, Federal Government’s Landing Pads.
Determine your eligibility
Here comes the unavoidable but necessary work.
You may be eligible for between 30-100 grants and schemes. Some grant guidelines are 50 pages long. 100 x 50 pages= 5,000 pages to read to assess your eligibility.
Startups often come to me saying, “We’re perfect for this grant. Will you write it?”. It’s tempting to jump in immediately, but it pays to slow down, forensically read the guidelines, and compare them to other grants. This upfront time could save you months of hard work.
Recently one grant I was writing stated, “If you’re eligible for Grant X, then you are not eligible for this grant”. This was buried in the document, and not in the logical section about eligibility, making it easy to miss. The company was eligible for Grant X, and therefore not eligible for this grant. This saved them months of work applying for a grant they wouldn't have been eligible for.
Too many people burn their staff, partners and themselves out by being reactionary to grants sent by well-meaning board members and friends and then miss the ones they’ve got a great shot at.
That’s why I’m a big advocate of a “Grant Scan”: a prioritised list of all eligible grants tailored to your company’s strategy with a ranking based on a probability of success. When done properly, they’re a month’s worth of work but set you up for years, which makes it worth it if you get millions of dollars in non-dilutive funding.
Some grants require matched funding. An example of matched funding is when 50% of the budget needs to come from you, and then the government will tip in the remaining 50%. CTRL F “matched” or “co-investment” etc. in the guidelines for a quick check, because if you can’t match the funding, then that will quickly disqualify a grant.
There are a lot more grants for companies doing substantial research and development or commercialisation of IP they own. The key determinants of eligibility here are often that you own the IP, that the IP is novel and the definitions around what constitutes R&D and commercialisation. For example, the definition of core R&D activities in the R&D tax incentive (e.g. 'outcome of experiment cannot be known based on current science....') and the definition of a novel project and eligible activities in the Accelerating Commercialisation grant (e.g. grant won't pay for innovations on your internal systems).
Assess your probability of success
Once you have your list of grants you're eligible for, you can start to prioritise based on your probability of success. As a starting point, here’s how you can assess your chances of success:
- When you read the criteria, does it shout, “This is us! I could nail this response!”?
- Do the activities you want money for directly align with what they want to pay for?
- When they say, “We encourage co-investment or partnerships”, is that something you can do? “Encourage” means “you’ll need this to be competitive”.
- Have you gathered the industry partners that give you a competitive edge? (e.g. all the best partners are aligned under your grant and not someone else's?)
- Are you aligned with the referenced government strategy documents (e.g. regionally based, female-founded etc.?)
- Are your competitors excluded for some reason? They may not be eligible or too busy to apply.
- Is the grant opening window short? Last-minute grants can sometimes give you a competitive edge. If you’ve done your Grant Scan and forecasted opportunities, you can line your ducks up early (partners, support letters, program of work etc.). If there’s a short grant opening window of 3 weeks, you’ll be organised and have a great application when all the other applicants are rushed and sub-standard.
Check the timings
A quick way to disqualify a grant is to put together a high-level Gantt chart of activities and costs. If you’re clear about your activities and budget needs for the next 6-36 months, you can check when the money from the grant would arrive and strike it off the list if it isn’t a good fit.
Grant decision-making can happen in as little as 40 days. Typically, you can expect a 6-9 month process from submission to assessment, awarding and contracting. Check the guidelines for an indication and to ensure that the activities you want to use the grant money for match their timings.
Larger grants with multiple qualification rounds (e.g. an Expression of Interest, then invitations to submit a Detailed Application) take longer, so factor that into your timeline.
It’s also worth knowing with government grants, nothing is binding until you sign a contract. Usually, governments in the innovation grant space know you’re moving faster than them and they’ll try to accommodate changes to plans.
Work out your core sales pitch and repeat, repeat, repeat.
The people assessing applications are reading hundreds of them across industries. They may not be familiar with your business model or technology, so make sure a layperson can understand it, and you have a compelling economic argument you can hammer home.
Government KPI’s are different to business KPI’s: you need to make an argument around economic development, such as jobs, economic value, skills development etc. If they award you this grant:
- How would it grow your business?
- How many more people would that enable you to employ? Are those jobs regionally-based (bonus points)?
- How does it benefit the whole supply chain and the wider industry?
- How does it help the industry to employ more people and create more economic benefits?
- What new skills would it bring to the industry? How would that give the state or Australia a competitive advantage when trying to attract economic investment and talent to their region
- What do they stand to lose (jobs, economic value, a new industry) if you don't get the grant?
How to avoid time sinks
- Forensically read the guidelines to find out if you’re eligible before you start writing the application.
- Do a Grant Scan before applying to grants to ensure you’re only focusing on grants that are a good fit and are likely to win.
- Stay focused on your target grants and line your ducks up for those. If you go after everything, you’ll likely burn out and become disillusioned with grants, so focus on the probable wins.
- Write to the criteria. Treat it like a uni assignment: where are the points awarded, and write to hit the points. It will look and feel different to how you usually pitch.
- Smaller grants aren’t necessarily easier or less work. Generally, grants between $100k to $3m are about the same amount of work. Over $3m typically requires a different standard and involves multiple rounds, such as an EOI then an invitation to submit a detailed application.
- Get a grant specialist to put together a Grant Scan (grant strategy)–they’ll be much faster.
Stay focused but agile
Grants frequently change, particularly with elections and changes of government. They also have different timelines and rules, so keeping up is hard. Do the work upfront by investing in a grant scan; it doesn’t take much to maintain. By having a small targeted list, you’ll have the capacity to go for last-minute grants, which will be less competitive.
Get a comparative advantage
You can do the Grant Scan on your own, but it’s often worth investing in a specialist to do it for you as they have a comparative advantage and can filter and assess much faster because they know how to navigate the language and structure quickly. If you get a pro to set you up with a strategy, your team can maintain it and gradually build in-house expertise.
Grant specialists also know when fantastic last-minute grants open and close quickly, giving you a competitive edge.
Have I changed your mind about grants? Contact me on LinkedIn and let me know if you’d like any more intel on this topic or if you’d like help with a Grant Scan.