Grants bad, revenue good
Written for Michael, and many many others.
This post is the absolute height of hypocrisy and I know it. My last startup, STAND, was grown entirely on grants and competition money, but looking back now I have a very bitter opinion of both of these sources of $$.
On paper, grants look great. Someone gives you some money to go build something, and what? You don't have to pay them back? Awesome!
But just hold your horses there for a second. Grants have some fundamental flaws. For starters, they are created by people with good intentions, but no real world experience of growing a business.
The result is that most grants have a structured application process and limit the way you can spend the money. This forces you to spend time labouring over questions and pulling together useless information about your business when you could be talking to customers, building landing pages, or trying to figure out how Bubble works.
I didn't get this for a long time, it's almost a bit unnatural.
This is the lens I used to see things through;
"We have an idea so we need to build a product and try to sell it to people" - we need a chunk of money
This then evolved into;
"We have an idea so we need to build a product and test it with people" - we need a chunk of money
Which then evolved into;
"We have an idea so lets make a simple version of a product and test it with people" - we need a smaller chunk of money
And now I think;
"We have an idea so lets make the simplest feature in the smallest amount of time and try to sell it to people" - we don't need very much money at all
I think this is the quickest route to finding out if your business idea/model has potential. I suppose the obvious caveat here is that my opinions on this are still changing, as should yours.
It's important to understand that whatever you sell doesn't need to look perfect. In fact, it's better if it's really ugly. People don't buy products because they're pretty, they hire products to complete jobs. If the problem is painful enough they'll buy no matter what it looks like.
This is what I failed to realise for a long time. So much changes when you start to charge for your product. Everything is more grounded in reality. Customers become more defined, you learn more, because you're forced to look at things through the real lens of why the business exists; to make money
Competitions carry the same problems, only they are worse because the chances of getting any money are much smaller. Avoid at all costs. The only thing these are good for is honing pitching skills/getting comfortable in front of an audience.
This is such an easy trap to fall into, in NI at least. There is a little path set up for early stage companies. From grant to grant or competition to competition, that you're encouraged to go down. A lot of people will tell you that 'It's free money' or that 'The support here is great, you can get this grant and then this grant...' etc etc
It's free money, but not really. It costs you time and it's not worth it.
This lesson was a really painful one for me to learn. One that some very smart people tried to warn me about, whom I ignored for a long time.
We spent a year of our time at STAND dicking around with grants and competitions.
Looking back, all of this time should have been focused on figuring out who our customers were and what they needed. You don't need a lot of money to do that, and you can access a lot more, a lot easier when you know that information.
DON'T MAKE THE SAME MISTAKE I DID. PLEASE!
If you don't trust me, listen to Paul. Paul is much smarter than me.
Note: Not all grants are bad. I've also had some great ones, that gave me some money and didn't ask me what I was going to use it for. Even gave me access to some fantastic mentors.
The key here is time and space to build and test. You don't need a grant for this though. Start a business while you're in university (maybe...). Start a side hussle while you have a full/part time job, then go all in when you know it has legs.
Whatever you do. Focus on revenue from the start, otherwise you're wasting your own time.