The NC IDEA grant is one of the best resources available for local entrepreneurs and startups. Applying is quick and easy, and the worst case scenario is you get feedback to help improve your idea/company. The best case scenario is you win up to $50,000, as well as guidance from a Venture Advisor and in some cases, the assistance of an intern subsidized by NC IDEA. This is not equity investment but rather non-dilutive capital, or put simply, free money.
NC IDEA has two cycles each year, and is currently in the midst of the spring cycle. Each cycle has three stages: Pre-Proposal, Full Proposal and finalist Presentations. As an application reviewer, I help grade the entries of some companies based on criteria set forth by NC IDEA. Having just reviewed a batch of pre-proposal applications over the past few days, some trends became fairly evident and I figured it could be helpful to provide some tips for founders trying to win the grant. In no particular order, here is some advice to avoid common mistakes:
Clearly Explain What You’re Doing & Why You’re Doing It
*Avoid Jargon—Many applicants describe their idea or product in very high level terms and get carried away with industry jargon and buzzwords. If a reviewer doesn’t understand exactly what your company is doing or plans to do, you are going to have a hard time moving forward in the process. Fellow judge John Austin of Groundwork Labs says, “There isn’t much space to convey your idea, but the winning applicants can do that. The reviewers are smart people but they don’t have expertise in your field, so convey your idea in a way that’s not dumbed down but compelling.”
Having a deeply technical or complex solution is a great thing, but you need to figure out a way to communicate your ideas clearly. That leads directly into the next point:
*Be Specific—Saying (for example) that you’re building tools to help companies sell products online is not specific enough for me to evaluate your company effectively. If you’re going after a large market and/or competitive space, that’s fine, but you need to explain how your product is different from competitors and why you will stand out. Similarly, be specific when discussing market size. For example, if you sell a tool that helps homeowners with lawn maintenance, give me that segment’s market size, not the data for all home maintenance projects.
*Show Passion—The application limits the amount of words you can write, but somewhere in your write-up, find space to explain why you care about the problem your company solves. That enthusiasm and drive goes a long way in helping reviewers understand why you are starting this business, and why you will be resilient enough to handle the adversity that pretty much all startups face. You might be surprised at how few applications touch on this point.
Explain What You Have Accomplished & Who Is Really Involved
*Do vs. Will Do—In reading some applications it can be very difficult to ascertain what the company has actually done vs. what it plans to do. If you have built a product and it is live, brag about that accomplishment in your write-up. If your product is still in development or purely at the concept stage, that doesn’t eliminate you from contention, but be careful not to misrepresent your company stage. I’ve read several applications that imply that the product is live, but I go to check out the website and see a ‘Coming Soon’ page.
A more complicated case occurs when a company has multiple products in various stages of development. I’d recommend focusing on the near term products if you’re in this boat, with minimal reference to products or add-ons that may be built down the road— that is, unless they are absolutely critical to the company’s solution.
*Commitment Levels—The team section of the form asks for full-time and part-time employees as well as advisors. This helps us understand who is involved. More is not always better—as a reviewer, I want to know who is truly involved and plans to eventually join the team. Therefore, listing a bunch of impressive resumes of part-time employees without a clear explanation of who is in it for the long haul doesn’t make assessment easy. In the team section, make sure to explain what each member is doing for the company and what his or her commitment will be to the business going forward.
Explain How You Will Make Money
*Who is the Customer?—Trying to build two (or more) sided marketplaces is painful and can confuse the issue of who the customer is. I know from firsthand experience. Still, even in these cases there is usually one party that is paying the company while the other side gets a free tool or account with other benefits. Don’t make reviewers guess who your customer is, because we might get it wrong and misunderstand your concept. Explain who your target customer is with as much specificity as possible to avoid confusion.
*Business Model—This section seems to be treated as an afterthought by many applicants. They explain the idea, market and technology in great detail, but when they reach the business model section, they simply write “We will use online marketing” or “We will sell our product to consumers.” These answers leave me with limitless questions. What online marketing tactics? SEO? Content marketing? Advertising? Social? And for sales, will you sell directly? Through your website? Using channel partners? Again, the more detail you provide, the better you will fare.
Explain What You Will Achieve With Grant Funding
*Use of Funds and Impact—Almost every applicant says they need the full $50,000 in their request. Then they answer the question about how they will use it with a general statement like “to increase sales” or “to complete the product.” Not exactly a detailed breakdown. Companies are also asked to provide milestones that the grant funding will enable them to achieve. I’m going to sound like a broken record here, but this section is arguably the most important on the whole application, so the more specific you can be about timelines and accomplishments, the better. Dave Rizzo of NC IDEA says, “Make sure your milestones address your weaknesses. Be honest about your weaknesses and allocate grant money wisely to solve these issues. Don’t spend money on things you already do well.”
The grant money is intended to help companies achieve specific goals that will help push the business forward in a demonstrable way. Examples could be reaching 10 paying customers or 1000 users, or completing API integration for a product, or going live with a Beta product. Any of those sound a lot better than general statements about accelerating progress.
Finally, if you don’t win the grant keep your chin up. I won, but only after getting rejected in the first phase during the prior cycle. Take the feedback in stride and try to use it to help refine your story and strategy. You can reapply if the timing makes sense, or you can take the lessons learned and apply them to growing your business organically or through a capital raise.
Getting rejected isn’t an indictment of you or your team, it just means other companies did a better job of explaining why they should receive grant funding. And that’s the purpose of this article—to help founders write better applications.