Non-diluting capital can be an essential source of funding when trying to get your innovation off the ground. Investor money comes with the loss of equity and/or control. Family and friends’ money may come with the risk of strained relationships. In comparison, essentially free money by way of government grants can seem like an obvious choice, right? And it is for many. The Small Business Technology Transfer (or STTR) and Small Business Innovation Research (or SBIR) grants are the largest source of early-stage capital for life science startups in the United States, combining to provide over $2 billion annually in support from federal agencies like the National Institutes of Health (NIH). But like money from investors, friends, and family, these grants do still come with some serious strings attached and potential ramifications you need to be aware of.
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