Grants as an alternative to investment. How can startups attract grant funding? A guide from Revisior founder Serhiy Shapirenko

 

It is becoming increasingly difficult for startups to attract investment without stable growth. Grants can be an alternative source of financing that does not dilute the business stake and increases investor confidence. How to apply for a grant effectively? Revisior founder Serhiy Shapirenko shares from personal experience.

 

A startup needs money for development the way a plant needs water. If a few years ago attracting investment for an idea or a minimum viable product (MVP) was relatively easy, the situation has now significantly complicated. You must demonstrate to an investor not just unit economics, but also positive momentum. And then, perhaps, the startup will receive the long-awaited check.

We get a vicious circle — startups seek funding to grow, while investors wait for growth to approve funding.

But don't be discouraged, besides investments, there are other sources of financing. For example, in addition to €320,000 in angel and venture investments, Revisior managed to attract for product development:

  • €290,000 in grants in Ukraine and Poland (Google for Startups, USF, Poland Prize, EBRD);
  • €240,000 in bonuses and service credits (AWS, Google Cloud, Microsoft, Miro).

Let me focus on grants in more detail. This is an option to receive funds for development without diluting the company stake, and it can serve as a demonstration of development momentum to potential investors.

Three categories of grants

CASH grants — funds go directly to the startup's account for project implementation. Popular in Ukraine: Ukrainian Startup Fund (€25,000–€50,000), Seeds of Bravery (€10,000–€50,000), Google for Startups (€100,000).

CONSULTING grants — financing for consulting services (market research, CRM, legal consultations). For example, EBRD programs. Funds are provided under a project or expenses are reimbursed.

RESOURCES grants — credits for services (AWS, Google, Microsoft, Monday) or free use of products.

Getting a grant: a road map

Define your goal. Grants are provided for specific projects: technology development, entering new markets, cooperation with corporations.

Assign a responsible person. Grant management is similar to fundraising: you need a pipeline with deadlines, application analysis and reporting. Delegate control of the process to a business assistant or project manager.

Search for grant programs:

Filling in the application. 80% of questions are standard: problem description, solution, market, team. Save your answers in a separate file. Pay attention to the pitch deck and additional materials (video, case studies). 

When reviewing a pitch deck, the most attention is paid to the following questions:

  • How relevant is the problem and why is your approach capable of solving it.
  • What is the market size and its growth potential.
  • Who are the competitors and what are your competitive advantages (the focus should be on innovation, not price, design, or convenience).
  • What has been achieved so far and what are the plans for the next two years.
  • What team do you have and what competencies do its members possess.
  • What you plan to spend the grant on and what goals you plan to achieve with it.

Pitching. Only 5–15% of applications reach this stage. The pitch should last three minutes and be as persuasive as possible. 

Five pitching tips:

1. The pitch should be as simple as possible. Your grandmother should understand it. The jury may not always be competent in your field. The more complex your story, the more likely you will not be understood and will not receive a high score.

2. Pitch confidently, don't rush and under no circumstances read from a script.

3. Watch pitches from other startups, including international ones (YouTube is your friend) and write down ten questions that are asked after pitching.

4. Prepare additional slides for possible questions from the jury. For example, for the question "how did your solution help the client?" show a slide with metrics showing what the clients managed to improve (revenue, number of returning customers).

5. Most pitchings take place in English. So polish your command of it.

Due diligence. Includes analysis of financial and reputational indicators. Usually 50% of participants who reach the pitching stage receive funding.

Grant disbursement and reporting. Spend funds transparently, in accordance with the budget. Notify the grantor of changes in advance.

How to refine the process

Establish a process. Involve an assistant, a financial officer, a lawyer, a sales director. Maintain an application pipeline, monitor deadlines. 

If you are just starting out, the responsibility falls entirely on your shoulders. However, I still recommend allocating some funds at minimum for developing a pitch deck design.

Work with numbers. Formulate the goals you plan to achieve with the grant. Keep the following in mind: the goal must be clearly stated without vague expressions, must contain criteria for measuring progress, must be realistic given the available resources, must correspond to real needs and must have a clear deadline for completion.

Build your social responsibility. Look at the Sustainable Development Goals and identify those that correspond to your project. This will be a major plus when your application is reviewed. Some grants are even targeted at startups that align with specific sustainable development goals. For example, environmental protection, support for inclusivity, responsible energy consumption, clean water and proper sanitation conditions.

Present your uniqueness. Simple words and clear advantages.

Make your pitching perfect, then make it even better. Pitchings are usually in English. Limited to three minutes and five minutes for questions and answers.

Grants are not only a source of funding, but also an opportunity to scale, gain momentum and earn investor trust. Use grants as a tool for growing your startup.