Willem Maas: “Subsidies are definitely not sexy, but…”
The MK Subsidy Community is introducing a new edition of blogs; every month, a different consultant from our community will present their expertise and tips to get funded. The first edition is about the expertise of Willem Maas, the Co-Founder and CCO of MK Subsidy. He has more than 10 years of experience in supporting entrepreneurs to get funded. In the past few years, he’s seen how startups, scale-ups, and corporates manage their funding strategy. Yet for the first time, he’s been asked to write an article about his rich experience as a consultant and his tips for entrepreneurs.
First rule: have a persistent cash flow
To start running a successful company, of course you need to develop a great product or service. Selecting and inspiring a great team is a part of the process. Having a clear mission and vision for your business is also a key need, just as listening to your customers is. Not to forget, being persistent in the execution of your business plans is important, as many startups fail because of diverging their plans unsuccessfully. But what about cash? Running out of cash is a common problem. Yes, you should talk to your stakeholders, talk with people who have a great network and arrange funding possibilities. But make logical choices and do it on time. You need a cash runway for at least a year. Don’t forget that talking to investors, banks and other parties may take a significant amount of time and if you don’t have the time, these parties will put you on pressure and you will have to pay a high amount of interest or you’ll have to give away a lot of shares.
2. Good timing is everything
You might be thinking: ‘Is it also possible to avoid the high interest rates from banks or having to sell some of your shares to investors?’ How about considering government money such as subsidies or grants? Even though the application process for this type of financing type sometimes takes a lot of time and energy, overall it is definitely worth it. Of course, you and other entrepreneurs will make some mistakes in applying for subsidies for the first time. This is mostly because of selecting the wrong subsidy at a particular development phase of your company. Each subsidy has its own terms and you need to start the application before you start a specific project. If you are an innovator (and let’s face it; who isn’t?) you can use the Technology Readiness Level scheme, which shows the various phases of development per product or service. Almost every subsidy provider (e.g. RVO, European Commission) is using it to check if a given application is eligible for a subsidy or a grant. Of course you need a great project proposal, but it is equally essential that you apply for the right subsidy at the right time. For instance, you can only apply for the “Early Stage Funding” from the RVO if you haven’t started developing your product yet. What I often see in my work are many companies wasting time filling in the wrong applications. And that means that they haven’t only lost a lot of time – they’ve also wasted a lot of money!
3. Subsidies bring along a lot of advantages
Maybe your product or service is great and your clients will pay for it from the very beginning. Maybe you’ve got enough investors and/or the bank will lend you credit to scale-up fast. But why shouldn’t you bother picking up free money while it’s available? Take famous Dutch scale-ups such as Ampelmann and The New Motion as an example. They all have earned a subsidy to develop their enterprise, to invest in sustainable warehouses or to start new innovative projects. What about big corporations such as NXP, Phillips and Shell? They’ve put a lot of effort in setting up a network with startups, universities and other companies to form subsidy projects. They have done so for the wide range of contacts they can get from the projects.
Why does it seem ‘better’ or ‘more cool’ if you get a huge investment with the publicity that comes along instead of earning government money because you innovate or work towards a more sustainable world? With subsidies, you don’t have to worry about giving away the shares of your company – you get to go on without hesitating about what your shareholders would think if you’d execute plan A instead of plan B.
So, what is Willem’s conclusion after all these years of working as a consultant? First, you need a steady cash flow. Secondly, you don’t necessarily need subsidies but getting them brings along a lot of advantages. And don’t forget that almost every successful company is applying or has applied for subsidies in the past.
4. Start your subsidy research now!
Now that you’ve read about the tips to take into consideration when applying for subsidies, it is time to actually apply for them. Start doing some research around this topic, but don’t spend more than two hours on it. There is too much information out there, so don’t get overwhelmed. Ask your friends, business partners, and network how they got their government money. Or you can ask a subsidy consultant to help you apply for a subsidy. In the MK Subsidy Community, you can pitch your project for free. More than 30 subsidy consultants can give you feedback. And this is all done without the need to sign any binding contract. After our careful investigation of your company’s profile and project pitch, you can decide whether you’d choose us to be your partner in this subsidy journey. If you do choose us, we will offer you a fair price for getting the subsidy you want or need. So, bring it on, innovators! Post your projects to our new platform, we’ll be looking forward to leading you through your scale-up journey!