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The question of startup’s financing is always acute, especially for the entrepreneur. It is cool when you have a successful “exit” in your background experience and the second business can be built on the money received from the sale of the first one. But what should one do if it is their first project? There are two main ways: bootstrapping (the development of the project on your own money) or attracting the investors, starting with a magic FFF (Friends-Family-Fools) formula and ending with solid investment funds. But what if we tell you that there is a third way — grant programs?
Startup Jedi
We talk to startups and investors, you get the value.
When we hear the word “grant”, our mind pictures are either “grant-eater” or “foreign agent” depending on the country you are located in. Indeed, the vast majority of the grants are given to public organisations to support their projects. However, with all that, there are at least a few programs in Ukraine for commercial projects that provide grants for business development.
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Let’s begin with the governmental fund founded in 2018 by the Cabinet of Ministers of Ukraine with the participation of the Ministry of Finances of Ukraine that started to function actively in the second half of 2019 when the members of Supervisory Board and requirements of grant offers were announced. The Fund operates with the earliest investment stages (Pre-seed/Seed), allocating $25 000 to the winners of the contes on the Pre-seed stage and up to $50 000 for those who are on the Seed stage. However, it is crucial to understand that grants can be received only by pitch-day winners where those teams are invited that got the highest rating from the experts.
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It is the second fund that allocates grants for business. This is a European support program of technological and innovative projects. With the help of this program, it is possible to go through three financing stages: from €50 000 to €2.5 million. To receive a grant, a project needs to have partners in EU countries or countries of Eastern Partnership (Georgia, Moldova, Belarus, Armenia, Azerbaijan). It is also important to keep in mind that 50% of the grant is issued only when the final report is submitted.
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Another European program that does not provide “live” money, but organises business-internships abroad (Erasmus for entrepreneurs). What is more, another aspect of the program is the support of public organisations in implementations of their programs to simplify SME management.
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Finally, one more program for SME is the program of European Bank for Reconstruction and Development that allows an entrepreneur to receive a grant up to €10 000 to cover 25–75% of the consulting costs for your business. In the frame of this program, it is also possible to get a consultation on business-plan development, implementation of international standards, technical-engineering solutions developments, energy sufficiency improvement, etc.
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It would be unfair not to mention USA sponsored programs: USAID conducts its own grant programs for Ukrainian startups. For example, you can apply with your startup on the scaling stage. The deadline is July 15. In general, you can monitor the CEPgrants on https://www.prostir.ua.
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Despite the fact that even under the pandemic conditions more and more new projects are opening, the question of financing remains burning. Except for those funds that we have already mentioned in our article, keep an eye on serial entrepreneurs and large businesses that might have an interest in finding innovations for their corporate needs. For instance, in the beginning of May, Ragnar Sass announced the opportunity for new teams to receive two months in Lift99 co-working in Kyiv and Tallinn free of charge. There, a great community of entrepreneurs is gathered. Moreover, after two months the project prototype is announced, it is possible to get the first investments from Ragnar.
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