Benefits of grant funding for startups

Grants provide early-stage startups with non-dilutive capital—meaning there’s no repayment required or equity lost. Beyond funding, startup business grants can offer several advantages:

• Additional capital access: Financing can beget financing. Grants may help businesses attract more investment from other sources, such as angel investors or venture capitalists.
• Recognition and improved business reputation: “There are some prestigious grants, and that definitely helps with companies’ branding,” said Thuy Cusato, Vice President, Startup Banking at J.P. Morgan. Receiving a grant from a big name such as the National Institutes of Health, Google or Microsoft lends credibility to an early-stage startup, boosting its reputation with investors and customers.
• Networking and mentorship opportunities: Grants can connect business owners with other entrepreneurs and more experienced mentors who can offer guidance. 

Grant sources for startups

The startup grant landscape includes various funders, each with distinct priorities and requirements. Common sources include:

• Governments: Federal grants often focus on specific research areas or industries. For example, the National Science Foundation offer grants across scientific disciplines, including astronomy, biology and physics. State and local government grants frequently emphasize economic development and community impact. For example, grants from Texas Enterprise Fund go to businesses making investments and creating jobs, and the North Carolina IDEA Fund provides grants to startups and early-stage businesses with high growth potential.
• Foundations: Foundations may provide grants to startups, particularly those aligned with their mission. One significant player, the Gates Foundation, supports initiatives in global health, development and education.
• Corporations: Large companies frequently offer accelerator and incubator programs for startups, along with training and support. Large companies may also offer grants to startups. For example, Google for Startups Founders Funds provides cash awards and support to help founders from underrepresented groups build and grow their businesses.

Keys for getting startup business grants

There are a few keys to success when applying for startup business grants: eligibility, documentation and alignment with funders’ goals.  

Grantor and grantee alignment

Match your startup’s profile with grant requirements:

• Ownership, such as woman- or veteran-owned
• Industry, such as healthcare or agriculture
• Objectives, such as community development or education 

Beyond eligibility, it’s important to evaluate how your startup aligns with the funding source and grant’s criteria. “It’s about matching the grantor’s values with your startup’s objectives,” Cusato said.

For example, a women’s health startup might target research grants from healthcare-focused government agencies and foundations. “There are enough funding opportunities that you don’t need to force your startup to fit the mold of any one grant,” Cusato said.

Information and documentation

Grant applications typically require: 

• A business model and goals, with specific plans for grant funds
• Documentation such as business plans and tax returns
• A pitch presentation or written pitch

Networking opportunities

Many organizations, including J.P. Morgan Startup Banking, assemble network events that connect grant seekers with successful recipients. “Our team hosts smaller, intimate networking happy hours and other events to connect serial entrepreneurs, VC firms and experts in the local startup ecosystem,” Cusato said. 

Founders can use these events to learn from others who’ve received grants—which can be particularly valuable for local opportunities. These connections could lead to new funding paths.