Benefits of grant funding for startups
Grants provide early-stage startups with non-dilutive capital—meaning there’s no repayment required or equity lost. Beyond funding, startup business grants can offer several advantages:
- Additional capital access: Financing can beget financing. Grants may help businesses attract more investment from other sources, such as angel investors or venture capitalists.
- Recognition and improved business reputation: “There are some prestigious grants, and that definitely helps with companies’ branding,” said Thuy Cusato, Vice President, Startup Banking at J.P. Morgan. Receiving a grant from a large government agency or a major tech company lends credibility to an early-stage startup, boosting its reputation with investors and customers.
- Networking and mentorship opportunities: Grants can connect business owners with other entrepreneurs and more experienced mentors who can offer guidance.
Grant sources for startups
The startup grant landscape includes various funders, each with distinct priorities and requirements. Common sources include:
- Governments: Federal grants often focus on specific research areas or industries. Some target scientific disciplines, including astronomy, biology and physics. State and local government grants frequently emphasize economic development and community impact.
- Foundations: Foundations may provide grants to startups, particularly those aligned with their mission.
- Corporations: Large companies frequently offer accelerator and incubator programs for startups, along with training and support. Large companies may also offer grants to startups.
Keys for getting startup business grants
There are a few keys to success when applying for startup business grants: eligibility, documentation and alignment with funders’ goals.
Grantor and grantee alignment
Match your startup’s profile with grant requirements:
- Community ties, demonstrating links to areas like women’s or veterans’ affairs
- Industry, such as healthcare or agriculture
- Objectives, such as community development or education
Beyond eligibility, it’s important to evaluate how your startup aligns with the funding source and grant’s criteria. “It’s about matching the grantor’s values with your startup’s objectives,” Cusato said.
For example, a women’s health startup might target research grants from healthcare-focused government agencies and foundations. “There are enough funding opportunities that you don’t need to force your startup to fit the mold of any one grant,” Cusato said.
Information and documentation
Grant applications typically require:
- A business model and goals, with specific plans for grant funds
- Documentation such as business plans and tax returns
- A pitch presentation or written pitch
Networking opportunities
Many organizations, including J.P. Morgan Startup Banking, assemble network events that connect grant seekers with successful recipients. “Our team hosts smaller, intimate networking happy hours and other events to connect serial entrepreneurs, VC firms and experts in the local startup ecosystem,” Cusato said.
Founders can use these events to learn from others who’ve received grants—which can be particularly valuable for local opportunities. These connections could lead to new funding paths.
