Funding Opportunities after High-Tech SeedLab
Joining an accelerator program, you can refine the product you are developing, get exposure, and build important relationships that might help you forge the future of your business. But what happens concretely after the program is over?
If you’re wondering how to get further support after High-Tech SeedLab’s acceleration cycle comes to an end, we recently put together a carefully curated investor’s map to help our 2020 cohort navigate the overwhelming burden of sifting through heaps of public and private funding opportunities.
To simplify the line of thinking, you either have enough traction to put you on a private financing track, or you don’t have enough traction and need to either fall back on bootstrapping or resort to other public sources. Of course, you can also use a combination from both worlds: receive private funding while having a significant part of costs subsidized by public institutions.
1. Private Sources
Angel Investors & early-stage VCs
If you’ve achieved product-market fit and have enough traction, you could make the cut for a seed round afterward – anywhere from a few hundred thousand to more than a million, from either an angel investor or an early stage VC fund, depending on the ticket size. Knowing how much to raise, if at all, is discussed more thoroughly in a separate article.
In some very rare cases, Angel Investors and early-stage VCs finance your startup before product-market fit, but both the idea and team need to have been exceptionally strong, and a good relationship with the investor needs to have been established.
Sometimes you’re sandwiched in between, with some product-market fit, but not enough traction to justify the first round of equity financing. In that case, joining a private accelerator could be a good decision, but you’d be giving up some of your valuable early stage equity: 5% for 36K, 7% for 30K, 5% for 50K, that’s just a small sample of deals we’ve seen out there. On average, you’d be giving up roughly 1% for every 6-10K of funding.
2. Public Sources
One important aspect to keep in mind when applying for public support is the de minimis regulation: No matter which public institution it came from, total public funding may not exceed 200K EUR within a 3 year span. Most, if not all public sources, fall under that umbrella.
Just like private accelerators, you can also benefit a great deal from public accelerator programs like the High-Tech SeedLab. The advantage here is that you don’t give up any of your equity. If you’ve taken part in a BSS (Berliner Startup Stipendium) backed program however, you’re not allowed to join any other BSS-backed programs. But you won’t be hard pressed to find other public accelerators outside of the BSS sphere.
EXIST support is also a great way to bridge your startup from testing phase to becoming investment ready. You can receive follow on public funding as long the BSS program you’re in hasn’t lasted longer than 8 months. Since our acceleration cycle is 10 months, this regulation prohibits you from receiving EXIST funding.
Partial Cost Subsidies
There are plenty of cost subsidy schemes out there for companies focused on technology and/or sustainability. Examples include: Deutsche Bundesstiftung Umwelt, ProFIT Projektfinanzierung, ProFIT Frühphasenfinanzierung, Gründungsbonus, and Coaching Bonus, to name a few. One advantage cost subsidies have over public accelerators and EXIST is that you’re not committed to physical premises or a specific program, meaning that you just get up to half your costs covered in form of grants or cash handouts. What it implies is that you can receive such subsidies as a venture backed company, or in other words, going after the “private track” doesn’t preclude you from receiving subsidies.
We put competitions in a category of its own since they can’t turn into a long term funding strategy. While competitions provide opportunities for quick wins and lots of publicity, they also distract you from “building product”. Among the top mistakes first time founders make is poor prioritization: They often prioritize “Sizzle over Steak” as Michael Seibel from Y-Combinator put it. “They prioritize press, hiring, conferences, investors (and competitions) above putting products out there and talking to users”.
We’d say, go to competitions to do some patch work here and there, but don’t let them distract you too much.
Interested in High-Tech SeedLab’s program and learning about subsequent funding opportunities? We will open up applications in October for batch 2021. Take a look at our website to learn more about our program requirements and contact us if you have any questions: [email protected]
This program is financed by the European Social Fund (ESF), as well as the State of Berlin.