What do robot vacuum cleaners and personal DNA tests have in common?
Both Roomba and 23andMe received government funding to help build their businesses.
23andMe has received $4.1 million in investment from the Department of Health and Human Services over five years through the Small Business Innovation Research (SBIR) program, which encourages US-based startups to explore their technological potential and provides incentives to profit from its commercialization.
iRobot has received $10.2 million in investment from the Department of Defense through SBIR, and recently sold its entire defense division for $45 million in order to focus on its Roomba line of robot vacuum cleaners.
So, it begs the question. If you’re raising money for your startup…have you thought about tapping the government?
Most entrepreneurs face one common problem during their entrepreneurial journey: how to raise funds. Although some know exactly where to turn—from angel investors to VCs—many ignore a great source of capital which may very well catapult their growth: the government.
To start getting entrepreneurs thinking about government funding, we created Pitch the Gov, designed to educate businesses on federal, state and local procurement initiatives, and provide them with ways to navigate this process and access these funds.
We recently visited 10xU, where we had the opportunity to share the 10 things every entrepreneur should know when it comes to pitching the government.
Here is what we discussed:
Network, network, and network again: Research and identify the decision makers in your market, and reach out to them for “informational interviews” to build rapport.
Build a clear understanding of what you do: Clearly define the problem and solution your company, product, or service tackles so you may better explain it to others. This will help you navigate the federal procurement landscape more smoothly.
Have a vision: Government grants are designed to help your company get from where you are to where you want to be, so it’s very important to have a clear view of where you are headed and what you need to get there.
Read up on how others have succeeded: Read success stories to learn how other companies have used government resources to grow and scale. These are also a great way to boost your spirits when you’re having a bad day.
Gain an understanding of what the government wants: What is the government looking for? What is the issue or problem they want to address? Figure out how your company can offer a solution so you can better explain it to them.
Figure out what the government may need: Startups are all about thinking outside the box. If you have a better solution to a problem or issue the government is tackling beyond what they are asking for, share it with them. You might be surprised at the results.
Follow directions: The government is very strict when it comes to the format and procedure for grant submissions, so make sure you follow directions to the tee. This is not the time to get creative.
Build your own support network: Government procurement is a tough process. At times it may become tedious and irrational, and it involves a lot of red tape. It’s important to build a support network that will help you navigate this process. Plus, it will also do wonders for your mental sanity.
Get to know your audience: You’ve come up with the next best thing. It’s only natural you want to showcase your technical expertise by using industry jargon, but grant managers are not necessarily experts in your field. So explain your idea in a way that anyone can understand, and take it from there.
We’ve also developed this graphic you can always keep handy, summarizing these 10 tips.
Entrepreneurs don’t always think to ask, but federal, state, and local governments all have programs to help.
Total federal spending for 2016 exceeded $3 trillion; contracts accounted for $474 billion and grants accounted for $667 billion. Federal grants can provide start-up capital, while federal contracts can provide steady cash flow with low default risk.
Which means there’s a lot of opportunity for budding startups.
Our goal is to guide entrepreneurs through this process and helping them think beyond traditional sources of capital when it comes to raising funds. This goes hand-in-hand with 10xU’s overall mission – connecting the entrepreneurial community with those that may help make their ideas into successful companies.
If you’re interested in learning more: visit pitchthegov.com or you can always reach out to 10xU.com.