True Tech Startups- Show Us the Money

Ideally every entrepreneur would like to just have total control over his or her company and take it to the heights of greatness.  But the fact is it’s really hard to continually do this part time, and then it’s even harder to quit your job and not have an income.  So Entrepreneurs in the DC area start to think, “What are some possibilities for money?”

State Money – In Maryland, Entrepreneurs have access to TEDCO (Maryland Technology Development Corporation).  Tedco has a program called MTTF, where you can get access to $75K in money for the development out of technology.  That sounds great, right?  But first you need to have a collaborative partner, which usually means transferring a technology from a local Maryland university, OR the easier scenario of just getting accepted into a Maryland Incubator and forking over a little bit of cash monthly (e.g. $300 for a virtual space and conference room access, or $400+ for actual office space).  So now you got the office and you’re official, that money is yours… Not exactly, the challenge with TEDCO is that they are big on Patents? HUH? Software companies are not big on patents. In fact it’s easy to get the money if you are a biotech company, but how much does $75K go in building one of those companies?  Not very far. You might get access to the capital, once you have true competitive barriers to your technology startup, like a lot of sticky users.  But by that time, you might not need the money, or it might be hard to argue to the board you need the money for the commercialization of your start-up since you have real users.  The fact is that TEDCO is very risk adverse because they don’t really capitalize on your startups upside.  They at most will see a ROI of 2x, thus there incentives to follow a VC model of 1 homerun in 10 is not the case. (Grade: B-/C+)

Government Grants. That’s the solution. Let’s go after a SBIR (Small Business Innovation Research Grants).  Well I got the skinny here too.  The application process is long and arduous and you most likely could have your MVP (minimal viable product) done by the time you finish the application process. For the NIH that has one of the highest budgets, you need a Super PhD PI (Primary Investigator) to have a shot.  The focus of an SBIR is to help test a business hypothesis and help you commercialize it, yet the system is broken where its often awarded to projects that are really quite academic, and may never have a shot at the true light of day.  You still have some decent shots at the Dept of Ed, but the money is low or the NSF, but still it’s a shot of 7.5%.  It takes a minimum of 200 hours to do an effective submission.  The expected return of your time is about $37.50 per hour for the effort.  (Grade: D)

Business Plan Competitions? LMAO. Utter waste of time.  You may have a shot, but if you are doing it for the money you have better uses of your time.  The truth of the matter is your business will change and pivot so much all that you need is a solid and ever changing pitch deck, not an antiquated business plan.  Moreover, the money is so minimal.  If you’re going to do a competition, do it for exposure. (Grade: F)

It’s tough out here.  Hopefully we will see more communities of Angels foster here and start doing more deals.  There are a few notables starting to pop up and slowly flourish, but time will only tell.

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