funding, grantsThis question corresponds to both the academia and startup/company worlds. I have heard that some researchers from academia (who have experience in getting academic grants), given their low salary, decide to leave university and create a startup, and in some cases, they focus on earning money or get investments or revenue only from different kinds of public and private grants (H2020, NSF, etc) or other type or funding calls. Do you think this can be a sustainable business model?
I think the key point here is already in your question: can a business survive only from grant applications? Maybe it can, but if surviving is their goal, that isn’t a startup but some kind of low income venture.
Anyway, if you’re thinking in pursuing that route, you should have in mind that all those grants have significant delays, so you need some income to survive between the application and the grant of the funds (6 to 12 months is usual).
Finally, if you are thinking of a true startup, one with a business model that can grow the lead time is crucial. And grabbing all the free money available can buy a lot of time so all these grants can be of invaluable help.
Not all startups require huge amount of funding. However, generating revenue from investments/grants is not a business model at all. It can help you to reach a point when you can start implementing your actual business model but you cannot just depend on it.
A business model means that there are people paying you to use your product or a service provided by your company. It doesn’t mean that if I’m running a company and I raise $X from grants (private or public) or through any other kind of investor, I cannot show that $X has been my revenue.
H2020 and most Eu funding schemes require financial (or in kind) contribution from the participating for profit entities. E.g. the for profint entity gets 90% (or 50% in some cases) of the funding needed to carrie out their tasks in the project. National grants for SME’s in many EU countries work similarly, they need to be co-financed from the for profit parties of the project. This is ment to assure to aviod the situations that you mentioned, that companies apply for grants just to “live” from tge grant and not use the grant to develop something new.
State owned reseatch institutions usually recieve 100% funding from grants. In some cases privatly owned non-profit research institutions can also recieve 100% funding from grants, if eligible (criteria for eligiblity depends on funding scheme).
You can get subcontracted work form a grant funding, in that case you are funded 100% but you do not get to share the developed IP.
So if your goal is to survive, you can be a non-profit or a subcontractee. Otherwise you would need (at least 10%) co-financing for the project.
You should think of grants as the option to get funding when the product or service is in a phase where private investments are still to risky.
You will anyway have to sell your idea to those who will be giving you the funding. Will anyone buy into your idea?
“market” our science, or in other words, to be able to earn money from the research we do
Money is important, but your research service is even more important. I would talk to potential customers first before going for funding which is not related to your service/product (purely related to ROI). Having sustainable customers is sustainable. Maybe potential customers will be keen to fund you.
different kinds of public and private grants
Did you consider ownership of intellectual property? If business will go well, what will be the destiny of IP?
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