Perhaps the most common need reported by early stage startups is funding. While nothing beats revenue, it sure helps to have cash in the bank and a healthy runway, especially in 2020.
To fund their ventures, entrepreneurs have several options. Many startups go the fundraising route – when they hit milestones related to product-market fit or revenue (and often before), it's time to raise capital – friends and family, angels, seed, institutional VC and so forth. Joining an accelerator is another option for cash plus value add. Yet these options often involve giving up precious equity, board seats, or both.
And of course there's the alternative option of crowdfunding, but results may vary. According to this data analysis on Kickstarter, campaigns for tech comprise less than 10% of total projects – and 80% of them are unsuccessful.
Many entrepreneurs aren't aware of the non-dilutive funding options available through the U.S. Federal government.
The Federal government has long operated many programs to support entrepreneurs – well before the launch of the widely reported Paycheck Protection Program (PPP). These programs present incredible opportunities for entrepreneurs to receive non-dilutive funding, de-risk their businesses and commercialize their innovations.
The Small Business Administration (SBA) manages these programs and bolsters service providers that work with entrepreneurs. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs offer a range of programs across various agencies. Read more about the differences here.
Since the SBIR program was established in 1982, over 179,000 awards have been made to small businesses – totaling more than $54.3 billion. That's no small sum.
Here's a quick comparison of SBIR / STTR against a few of the more traditional funding options:
The SBIR / STTR option has some attractive upsides. There are some rules, of course – companies that apply for SBIR or STTR need to be eligible.
Current opportunities include:
The SBA is also doing incredible work to empower entrepreneur support organizations (ESOs). The SBA Office of Innovation & Technology oversees the SBIR/STTR programs, policies and databases as part of their mandate from Congress.
This mighty 6-person team also builds capacity among service providers through funding programs such as FAST and GAFC, and a recently closed Lab-to-Market prize competition. The OI&T team also educates ecosystem builders through monthly calls and train-the-trainer courses.
In fact, registration is open for a train-the-trainer course kicking off Oct 21. If you operate an incubator, accelerator or other entrepreneur support organization, this course will help you better serve entrepreneurs.
Please share these links far and wide! The Federal government is an underutilized resource and customer, and too few ESOs and entrepreneurs know about these opportunities.