Subsidies: no easy money but often worth your while
On 20 March startups and scaleups joined at Dotslash to find out more about the pros and cons of subsidies for startups. And if startups in the Utrecht Region are looking for subsidies or financial programmes, which ones are best applying for? PNO's Harmen Klaassen presents plenty of options and tips & tricks.
Klaassen starts off with some perspective: “Don’t try and get subsidies just because you want to have more money. Only apply for things you were about to do anyway. If you keep that in mind, subsidies are a good and realistic way to create opportunities for your startup or scaleup”.
Examples of subsidies
So, the first step is to analyse future plans and then connect to funding options. But since the meetup is too short to discuss all future plans of the attending startups, Klaassen presented the options on national and European level. Roughly the options range from sheer impossible to get money to having a big chance to get the funding you need.
On a national level there is the WBSO, a fiscal incentive. With this arrangement companies get a reduction of the wage tax for hours spent on R&D. This means: the more employees on the payroll, the more advantage for the company.
With PoC Financing companies can get 350.000 euros credit. Especially interesting for startups that already have an investor’s attention but need to develop the technology a bit further. With the Innovation Box companies can get a tax reduction for innovation profits. This can amount to 10 million euros credit. For this arrangement the Technical Readiness Level must be a bit higher, Klaassen indicates.
The MIT arrangement provides grants for feasibility studies up to 20.000 euros and 350.000 euros for R&D projects in which at least two parties work together. All applications should have a technological aspect and should fall within one of the nine Topsectors of the Dutch government.
As far as European subsidies are concerned, there are two good options, according to Klaassen. Eurostars, and you also may consider SME Instruments phase 1 or 2 but the success rate is very low, as in: 2%. The rewards can get rather high though: 2,5 million euros. But money isn’t everything, says Klaassen: developing the network relations within your coalition may actually be the real upside. An explicit don’t in Klaassens book: trying to get subsidies from EFRO, Horinzon 2020 as a startup or scaleup on your own.
All of the mentioned options have different goals and rules. So be sure to get acquainted with those!
Utrecht region: Groen Gezond Slim Fonds
A special fund for the Utrecht region is the Groen Gezond Slim Fonds (Green, Healthy, Smart Fund). Klaassen indicates this as a very interesting option. A crowdfunding campaign set up by the startup or scaleup is the start for this loan. The Fund provides a credit of 25% of the amount that was collected by the crowdfunding campaign with a maximum of 100.000 euros. The loan has a very interesting interact rate.
For the Groen Gezond Slim Fonds and the MIT arrangement startups and scaleups can apply via the Economic Board Utrecht (EBU). Heerd Jan Hoogeveen from StartupUtrecht points out that also for finding partners and to form consortia EBU is the right organization to go to in the Utrecht region, as well as StartupUtrecht or subsidy consultants firms such as Harm Klaassen’s PNO.
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Tips and tricks
Klaassens helps the attending startups and scaleups by giving some tips and tricks. Here are some of them:
- Preparation takes time, so start early.
- Learn about the goals of the specific programme before you apply; is there a good fit with your goals?
- Inform yourself about the formal documentation and appendices that are required; missing one can make sure you lose the chance of getting money
- Study official publications, do not trust leaflets or extracts
- Check the exact time of the deadline
- Check: is it a tender or a first come first serve kind of arrangement?
- Get an external reader for a critical review to make sure you dotted all the eyes
- Check the ineligibility criteria carefully
GoBoony and VROwl as experience experts
Two companies that came a long way after receiving various subsidies presented themselves and discussed what the subsidies meant for them. GoBoony, a platform for renting privately owned motorhomes started four years ago. Since then the company grew to an international team of 22 people facilitating 11.000 bookings a year and 2.500.000 searches. This company gained subsidies from: WBSO, LEF and the Groen Gezond Slim Fonds.
VR Owl is a VR/AR company from Utrecht that started in 2015. The tech company now has 25 FTE, and is still growing every year. As a startup VR Owl benefited a lot from subsidies in the form of WBSO, LEF and subsidy for three feasibility studies.
Get a partner on board
Turns out that seeking a partner that knows the ins and outs of the subsidy universe helps a lot to take away the hassle. August Janmaat form VR Owl:
“I know what the goals for my company are and I like to not bother about side issues. It gives me peace of mind to have a partner that knows how it works. Startups can focus on growing the business while the partner knows all about the rules and regulations concerning subsidies”.
Get administrative processes in order
The regulatory hassle of subsidies is one thing to keep in mind. Administrative processes are a second, says Foppe Mijnlieff from GoBoony:
“You have to show what you have done with your money and that can be an administrative burden, especially for small companies who are for example not used to registering hours”. Janmaat from VR Owl says in return: “Once you make use of subsidies more than once you should get your administrative processes and administrative infrastructure in order. In that way it will cost you less time”. And sometimes the administration has a tendency to work against you. Mijnlieff: ”Be prepared to refund some money. We had to do that for the WBSO. That’s all part of it, because you get subsidies based on a planning and there can be a discrepancy with reality”.
Not easy but worth it
Subsidies are no easy money. It takes time and (gaining) expertise. Making an informed choice with regard to the kind of subsidy helps making the money come to you more easily. And even when the fund is allocated the administration is a thing to be prepared for. Paying attention to all this will make startups maximize the effect of subsidies to grow and innovate.
Looking forward to 18/4 meetup: growing pains
The next startup scale-up meetup is all about growth. More precisely: the growth of your organisation. Having an idea and being a founder and an entrepeneur is one thing, but at some point you realise you have to be a manager as well. How do you do that? At the next startup scale-up meetup we discuss the beauty, the pitfalls and the tips & tricks that help your startup grow as an organisation. Be sure to attend this meeting on 18 april (17-18, followed by networking drinks) and register here.