As a new entrepreneur, or even a seasoned entrepreneur, finding the path to success can be tricky business. Throw in the added pressures of having no money, short deadlines and limited knowledge (let’s face it, you don’t know everything) and you’ve got the perfect cocktail for pure business chaos.
Let’s talk a little more about the first pressure, having no money. It’s one of the biggest challenges startups face and can put you in the tough situation of choosing to hire a new developer or paying your rent for the month. So how can you avoid that pickle of a problem?
There are a few major funding options for startups: 1) Customers 2) Friends and family, 3) Angels, 4) Venture Capitalists, 5) Grants, 6) Suppliers and 7) Crowdfunding. We’ll be exploring each of these funding options in later blog posts, but today we’re focusing on government and government-supported grants. Often considered “free money” because all you have to do is apply (there’s no exchange of equity), there are lots of grants in Canada for various industries. But don’t be fooled by the concept of “free money.” There are a few hazards you may be able to navigate when chasing grants – if you know what to look for. In our line of work, we spend a lot of time learning the ins and outs of government funding, and we’ve got three key things for you to consider:
1. They can pivot your business
Often, government and government supported programs evaluate eligibility based on a benefit to the government jurisdiction they are supported by (Province and/or Country) and create strict requirements around innovation, hiring, export potential, etc. In the excitement to access this alluring pile of cash, entrepreneurs sometimes shift, pivot or tweak their business model/product to fit the grant requirements. This takes them in a long-term direction that they didn’t originally perceive as being optimal. Now, don’t get us wrong, we’re all for pivoting… for the right reasons. However, if you’re adapting your core strategy for a quick $10,000, slow down and rethink how you’re changing your business. That grant amount could be the smallest fish in the sea of capital you’ll be raising.
2. Sometimes it’s just “dumb money”
What’s dumb money, you’re asking? Think of it as fluff, or filler. It’s free and there are no obvious strings attached, but its contribution ends at face value. In comparison, smart money usually has a person (or people) behind it that can help solve your business problems and overcome challenges. As an entrepreneur, you have limited amounts of time and if you’re dedicating a good chunk of that to financing your business, you want to make sure it provides maximum benefit. Note: not ALL grant funding provides dumb money – some can provide some form of ongoing advocacy and resources, it’s just a matter of understanding the ecosystem and knowing the best organization to go to.
Something else to consider: dumb money can’t help with product-market fit. As an entrepreneur, your primary job is to get people to buy your product or service. This helps with market validation and product iterations. Spending time applying for grants takes away from other funding sources and activities that contribute more to understanding your product-market fit.
3. Not the only tool in your toolbox
Grants should never be your primary source of funding. Diversify your funding options to spread your eggs throughout multiple baskets. Yes, government grants have criteria and restrictions that can pivot your business if you’re not careful, but if used strategically, they can be quite effective. A good mix of angel investors (who provide the knowledge, experience and support a new startup needs) and government grants could be a dynamite combination for your business.
Grant funding is an option available to entrepreneurs and startup founders, to help ease the burden of bootstrapping. But watch out for free money and dumb money because that’s not the sort of tool that helps you in the long run. Develop a financing strategy for your business – think about it carefully to evaluate how multiple funding options can work together. The path of an entrepreneur is not an easy one – it can be perilous, full of ups, downs and difficult challenges– but it can also be highly rewarding.
If you have questions about navigating the government grant landscape in Alberta, contact us – we’ve got a pretty good map.
Uncommon Clients Recognized at Calgary Startup Launch Party 2011
Uncommon clients Hubblr, Kudos, Minigroup, CoreConnect and eThor Media all win recognition at Calgary Launch Party 2011. Congratulations on your great work!
eThor.com Wins Investor’s Choice at Banff Venture Forum 2011
BANFF – October 7, 2011 - eThor.com took the top prize for the IT stream at the Banff Venture Forum this year. eThor solves the problem of the fragmented and non-standardized POS (point of sale) system industry. eThor’s POS integration technology puts the power of new commerce into the hands of restaurants and retailers to attract and keep new, hungry, hurried online consumers.
see more about eThor at www.ethor.com
At Uncommon we have now helped build and launch over 40 new technology products for 25 different companies in the past 3 years. Some of these products have gone on to be passionately used by millions of users and others have been wholly abandoned for more promising ventures. These experiences, along with our research and team member’s past product efforts, has helped to establish a set of core elements to consider in order to enable entrepreneurs and investors to better decide which ideas to aggressively pursue and which to shelve.
Uncommon’s primary considerations for new product success are:
Team and Organizational Fit – The product team is passionate about the opportunity and has the ability to obtain resources, execute and effectively react to new conditions as they emerge
Market Potential – The opportunity has identifiable customers and associated market segment(s) with sufficient spending potential to achieve the team’s targets
Relative Value of Product – The product is very valuable to its users and purchasing entities, addresses an issue that is a top priority to address and is much more valuable than the status quo, competition and other alternatives
Relative Simplicity of Product – The team has a clear ability to build, deliver, integrate, and support the product and can do so faster and much more easily than their potential competitors
Clarity and Accessibility of Decision Makers and the Decision Process – The decision makers along with promising marketing and sales channels are identifiable and accessible and purchase/influence drivers for key stakeholders are understandable and addressable.
Sustainability – The above criteria needs to be examined, not just at an instant of time, but dynamically. How are these factors expected to evolve over the time it may take to yield sufficient return. Probably the most important element here is speed – concepts, prototypes, and early product versions need to be rapidly developed and validated by customers.
On the weekend I was watching the greatest show on television right now – Mad Men. The agency had just lost their anchor client and they were horribly desperate to get some new business. The partners were considering their options when they were informed that an ideal prospect was willing to meet with them and hear their ideas. It was music to my ears when the most senior partner of the firm said of the potential meeting “we will listen more than we talk”. Too often in the early stages of bringing a new concept to a potential customer people get caught up in trying to sell whatever they have rather than trying to learn what might be desired. This is usually because the new product representative is so excited/desperate to gain acceptance from a potential customer that they miss the fact that the customer is often very willing to let them know a great deal about how best to proceed – if only they would shut up and listen. Asking the right questions and paying as much attention as possible to every detail of the answers is most often not only the best way to get your overall product, marketing and sales plans on the right track, but is usually the best way build a relationship and close that specific sale opportunity as well. In helping companies and their teams to effectively engage and listen to their initial prospects we have not had one case where the learning that resulted did not adjust either their product or their target market or both.
Uncommon’s blog – Ragged Ideas to Product Riches – is focussed on providing useful insight to technology inspired entrepreneurs and entrepreneurial organizations that are working to successfully bring new products to market.
Major topics will include:
- How to evaluate the potential risks and rewards of new product opportunities
- How to reduce missteps and maximize market traction through real time information gathering, continuous customer engagement, and rapid risk reduction techniques
- How to most effectively invest scarce resources in developing and rolling out your new product
- How to successfully raise capital and attract people and partners in order to advance your opportunity
Last night I was reading to my son and came upon this fable by Aesop. It is a classic product management issue and applies to many entrepreneurs as well who often bounce from one advisor or investor or mentor or industry veteran to the next and change their story every time an “expert” voices an opinion. Much better to gather to a bunch of input, seek inspiration and weigh comments against the views of your team and make fewer more well thought out decisions.
The Man the Boy and the Donkey
Each Hype Cycle drills down into the five key phases of a technology’s life cycle.
5. Plateau of Productivity: Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology’s broad market applicability and relevance are clearly paying off.
“Uncommon Innovation helped me take my idea and turn it into a reality. If it wasn’t for Uncommon Innovation, I certainly wouldn’t be where I am today. They are worth every penny!”
“Uncommon’s research and strategic insight has made a valuable impact on our ability to create more market driven products and more easily communicate our benefits to our customers. am very impressed with Uncommon’s abilities in market research and requirement analysis. The data gathered through their customer interviews is invaluable to our go-forward strategic investments.”
“Uncommon helped us to raise over $3.5 million by fine tuning our pitch and connecting us to several finance sources. Uncommon’s insight, effort, professionalism, and dedication was essential to providing CoolIT with the financial capacity it needed to continue to support its rapid growth.”
- Grants and the Myth of Free Money
- Uncommon Clients Win Awards
- What Makes A Great Product Idea Great?
- Shut Up and Listen – to Your Prospects
- Ragged Ideas to Product Riches Blog