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Every startup is looking for funding at one point or another. Whether you're a bootstrapping company that's in need of some capital or a unicorn that's looking to expand its reach, there's no such thing as too much funding. And while many founders look to angel groups and venture capital firms to fill their monetary needs, federal funding options are plentiful in the land of the free.
We reached out to a number of budding founders and successful CEOs that have knowledge and took advantage of the many federal startup funding options available in the country. Check out what they had to say about getting money for your startup from Uncle Sam.
Robert Mander, founder of Govlish:
“There are two primary Federal funding grant programs that startups can turn to for funding: Small Business Innovation Research (SBIR) and Small Business Technology Transfer program (STTR). Both are run by the Small Business Administration (SBA). In addition SBA offers several loan programs that startups may apply for.”
“Minus a background similar to mine, my first suggestion for any startup is to contact the SBA and find a good mentor in the Service Corps of Retired Executives (SCORE) program. SCORE has offices nationwide, and they can be found at the SBA and SCORE web sites. There is no charge for SCORE services, so it’s a good place to start.”
Nick Braun, founder of PetInsuranceQuotes.com:
“Good luck getting federal funding for a startup. It's impossible. I've applied to over 30 SBA lenders and unless you have fixed assets (which are the worst kind of businesses) or you will sign a personal guarantee, you have no chance.”
“The reason angels and VCs are so successful is that they are the new bankers. They actually underwrite deals and provide risk capital for a fair return. Banks are still living in the 80's and 90's and entrepreneurs are still thriving. Money is fluid and smart individuals will lend to small businesses directly for high interest rates instead of sitting their money in a savings account or CD that yields 0.3 percent to 1.5 pecent. The world is changing and unfortunately federally backed SBA lenders haven't.”
Sonny Kirkley, CEO of Wisdom Tools:
“I can provide information on a federal program called SBIR (Small Business Innovation Research). There is a variation of this called a STTR which requires a university partner. This is over a $2 billion annual program that is administered through each federal agency that supports R&D. A large percentage of the companies in the program use the funds to startup or move to the next level.”
“Awards range from $150,000 for an initial Phase I to over $1 million for the Phase II follow-on. Some biotech awards have been over $6 million. In addition to the federal funds, several states will also provide funds to supplement the grantee to help move the product to commercialization.”
David Zaretsky, founder and CEO of Snips Media:
“One of the best kept secrets in the startup world is the Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) government grant programs. Through these programs, small business and startups can win government contracts ranging from $100K to $1M that can help build your team, develop products, and take it to market.”
“To be successful in obtaining SBIR or STTR grants, some skills are necessary in research, grant writing, business development, and having a successful team that can execute well. Teaming up with research teams at local universities can also be a great advantage. But be mindful about some of the restrictions that are tied to SBIR and STTR — for example, ITAR restrictions may prevent you from exporting to certain countries, or certain work products developed under the contract may not be patented.”
Paul Dillon, CFO of HyGen, who received $5.3 million from the California Energy Commission to build clean renewable hydrogen fueling stations:
“The Energy Commission develops and deploys alternative and renewable fuels and advanced transportation technologies to help attain the state's climate change policies. The Energy Commission has an annual program budget of approximately $100 million to support projects including expansion of fuel infrastructure, fueling stations, and equipment. HyGen applied for a grant under a 2104 solicitation of the Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP).”
“CEC funding has allowed HyGen to established its clean renewable hydrogen brand. This solid base enables the company to reach out to impact investors looking to place capital in businesses that will make a positive difference to our world.”
Photo: Flickr / frankieleon