You have a great idea. You have a great team. But how do you get that initial funding to help your startup come to life? Funding is crucial to a startup’s success, but not the easiest to come by. Knowing where to look, who to talk to, and what to expect is important.
Dan Hoffman took some time to share his knowledge. Hoffman holds a master’s degree in economics and is the CEO of Invest Nebraska, so it’s safe to say he knows a thing or two about money. Invest Nebraska is a nonprofit venture development organization designed to assist entrepreneurs and startups with investing.
When it comes to funding, what your startup focuses in should be considered. “All startups are a little bit different,” Hoffman said. For SAaS (Software As a Service) businesses, his advice is to focus on sales, look to friends and family, and make sure there’s a market for the product or solution. Some well-known SaaS companies are Google, Adobe, and Microsoft.
Biotech companies are a different story, he said. Investopedia defines them as, “a company that uses live organisms or their products, such as bacteria or enzymes, to manufacture drugs.” They combine biology and technology to create products. Hoffman said that it’s unlikely biotech companies will ever see revenue. Their focus is innovation.
The main sources of funding for those start-ups come from a SBIR (Small Business Innovation Research) or STTR (Small Business Technology Transfer) grant. As Hoffman explained, federal agencies set aside some of their budget for these grants in hopes that small businesses will research some problems the agencies have encountered. The grants range from $100,000-$250,000.
Nebraska offers assistance programs to small businesses as well. At one point, Nebraska ranked last in the nation for venture capital and provided no financial assistance to early-stage companies until 2011. “We believe the growth of Nebraska is going to come from startups and early-stage businesses . . . We have all the smart people here in the state,” Hoffman said. “We just need to take more risks once and awhile.”
In the state of Nebraska, small businesses that receive an SBIR or STTR grant can apply for the Nebraska SBIR/STTR grant program. This program will match the grant received if the startup meets their criteria.
Once the company gets past the research stage, it can move into the “seed round.” This step is important for all startups, not just biotech. In this step, Hoffman said they’ll look to investors that understand their market in hope of receiving funds. Nebraska also has a seed matching program that will match up to $500,000 per project. “The great thing about Nebraskans is they’re always willing to give back,” Hoffman said.
Starting a company takes time, dedication, and resources. If you have the time and dedication, the resources will come, especially now that you know where to look.