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Can You Finance Your Company with Grants?

First, here’s a link to my recent TEDx talk, “Smiling at success; laughing at failure.”

I am chairman of a company that, as I write this, is twelve years old and has not yet taken a dollar of outside investment. The company has been funded entirely by grants from the National Institute of Health, amounting to millions of non-dilutive dollars in all. The company has created a product that can be delivered as a service to medical clinicians anywhere in the world, enhancing their ability to understand their patents’ problems and needs in less time, using the expertise built into an expert system created by the best minds in many medical specialties.

The company grows in value to its customers and to prospective buyers of the business, but without any dilution of control or ownership for the founders. How refreshing!

In general, grants are made to individuals, companies, businesses, organizations or institutions that are working toward serving the greater good or a greater cause. These grants include funding to educational institutions, researchers, research centers, colleges and universities, or private companies that are researching or developing leading edge solutions in several categories including agriculture, education, energy, health, medical, space, science and technology to name a few.

Grant writing takes skill and immense amounts of time. Often, grants require that you partner with other organizations to deliver the results, or measure the effectiveness of your special project. And often, grants come with detailed accounting and reporting requirements. If you can finance your enterprise through grants rather than equity or debt, you retain control and when it is time to sell your interest in the business, a lower sales price will create a higher return on your personal investment.

There are some grants available even for one person shops, from cities, corporations and even non-profits for just your type of business, especially if you support a social cause, can employ more people, or help turn around a geographic area in need of upgrade.

This article was originally published by Berkonomics

Published: May 16, 2014
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Dave Berkus

Dave Berkus is a noted speaker, author and early stage private equity investor. He is acknowledged as one of the most active angel investors in the country, having made and actively participated in over 87 technology investments during the past decade. He currently manages two angel VC funds (Berkus Technology Ventures, LLC and Kodiak Ventures, L.P.) Dave is past Chairman of the Tech Coast Angels, one of the largest angel networks in the United States. Dave is author of “Basic Berkonomics,” “Berkonomics,” “Advanced Berkonomics,” “Extending the Runway,” and the Small Business Success Collection. Find out more at Berkus.com or contact Dave at dberkus@berkus.com