Source: entrepreneur.com ~ Author: Michelle Goodman
Nonprofits aren’t the only businesses eligible for government grants. Since 2010, for-profit company Canopy Apps has received $2 million in National Institutes of Health (NIH) grants to develop translation technology for medical professionals working with patients who don’t speak English.
Jerrit Tan, CEO of New York City-based Canopy, believes more entrepreneurs should take advantage of the billions of dollars in business grants offered by government agencies, which can buy a startup valuable R&D time and boost credibility.
“You’re literally turning stacks of paper into money for your business,” Tan says, referring to grant applications. “And the government usually does not take equity.”
Of course, nabbing local, state and federal grants involves more than cutting and pasting your business plan into an application. Here’s what you should consider.
Aim high. A revolutionary idea is essential, says Tan, whose translation app targets the language barriers that plague 15 percent of U.S. patients. “Incremental ideas usually don’t win,” he says. “It’s almost like the crazier, the better–within reason. This is the government, after all.”
It’s essential to be able to quantify the effect your product will have on the market, says Amy Baxter, an Atlanta pediatric emergency doctor who in 2009 scored $1.1 million in NIH funding for Buzzy, a pain-blocking device used for administering injections to children. “Make it clear how big the impact of the problem you want to solve is,” she says, “and how inadequate the previous solutions are. Even better is to have a way to measure how well your solution is working.”
Put in the time. For large federal grants, expect to spend several months preparing an application.
“It’s not a fast process,” says Michael Patterson, CEO of Graphene Frontiers in Philadelphia, an advanced materials and nanotechnology company that has won 10 grants from local, state and federal agencies totaling nearly $1.3 million. Payments can be slow to arrive, too. To tide you over, he says, “you have to have funding from other sources or be able to get other funding quickly, whether that’s revenue or equity investments or something else.”
Find the right opportunities. “There are grants out there that can be more trouble than they’re worth,” Patterson warns. Some have big payouts but overly restrictive stipulations on how the money can be used. Others, meanwhile, seem almost too good to be true, such as the $930,000 Graphene has received from the National Science Foundation, including a match on outside investments of 50 cents on the dollar.
But don’t discount smaller grants. Many have less stringent application requirements and spending restrictions. A $2,000 grant Graphene received from a Pennsylvania economic-development program was designed to support larger grant-writing opportunities. Graphene used the money to bankroll proposal efforts for a hefty Department of Defense grant.
Get external feedback. When pursuing a grant, Canopy runs its application by “as many smart people as we can find,” Tan says. The more removed from the business reviewers are, the more likely they’ll be to find the hidden flaws in the proposal.
Outsiders may also come up with new commercialization ideas. In Canopy’s case, that meant selling the translation app to the legal, construction, travel and education sectors, industries the NIH has no vested interest in. As Tan points out, even with a grant, “it’s still up to you to find other ways to commercialize your product.”
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