On government funding…Part 1

It’s great to be a startup in Canada: Not only do you have access to a wealth of incredible services and resources, there are also plenty of funding to go around in the form of government grants and programs. With April being the start of the government fiscal year, when funding for existing programs are renewed and new programs rolled out, this seems to be an appropriate time to talk about this sometimes nebulous source of money.

The governments, both provincial and federal, usually set aside a portion of money from their budget each year to help businesses to grow in (usually) non-dilutive and non-debt form of financing. But because funding is limited, they are almost always application-based, wherein the best proposals out of the total pool of applications are awarded. These proposals generally come in one of three forms:

1. General — A general overview of your business, e.g. “What does your business do?”, “What problem is your business solving?”, “ Who are your competitors?”, “How are you different from them?”, “How do you plan on using the money if successful?”, etc.
2. Project-based — The same general questions above, but more emphasis on how you plan on using the money in terms of a project, e.g. “I need the money for R&D towards a new water-purification system. Specifically, I plan on using the money for…”, “I need the money to hire someone with quantum computing expertise. Specifically, I need someone who can…, so that I can…”, etc.
3. Challenge-based — A branch of government pose a challenge they need solving, and you must submit a proposal on how your plan on solving it for them, e.g. “For the problem of identifying distracted drivers on the road, I propose the following technology-based solution…”

Whereas there were more of the General, Type 1 funding in the past, Type 2 are the most prevalent now with an increasing number of Type 3’s being rolled out. This has coincided with an increase in requirements and difficulty with these government funding applications.

This is unsurprising. Whereas 10 years ago the focus was on promoting entrepreneurship and fostering a startup culture, the emphasis now is on assisting companies to scale. With the explosion in the number of startups in the last decade, both in Canada and around the world, the majority of which go nowhere and do not help to contribute towards the economy, the governments are now hedging their bet by putting more of their energy and funds towards helping the scaleups and SMEs. They see this as having a higher potential for greater ROI in terms of creating employment and contributing towards the economy — their ultimate goal.

So in this increasingly competitive government funding landscape, how do you and your startup standout and succeed on your next funding application? Stay tuned for Part 2…