A year and a half ago, we reached the point in our journey where we needed money. We had bootstrapped to create iPad-only apps, which was no chump-change, but then we needed funding to build the more robust InferCabulary Pro. Most entrepreneurs reach this point. Sooner or later, the likelihood is it will happen to you.
We were fortunate enough to have a steady stream of revenue from the iPad-only sales of InferCabulary and WordQuations which paid for our phone, supplies, and most of our rent on a monthly basis. But where were we going to find $150,000 to build out our enterprise product? We were not comfortable asking the “friends and family” network to raise the money to build our tool. We had already tapped into this network six months before when we needed more funding to take things to the next level.
Chasing Grant Money for New Products
We tried multiple avenues. First, the grant. Several ed-tech startup companies we know have successfully obtained federal funds. One colleague won Phase I and Phase II funding through the National Science Foundation. Another won an elusive Small Business Innovation Research grant.
However, last year fewer than 5 percent of applicants received funding. This is a very time-consuming, tedious process that requires partnering with researchers, and writing a proposal–ours had 60 pages of attachments.
One company founder I spoke with was awarded funding, but complained that management of the funding is incredibly time-consuming. This founder was not sure the work and strict requirements are worth it, though I may have just caught the person on a bad day.
Other Funding Options for Startups
Next thing we tried was competing for Maryland state funding in the form of a VOLT loan for startup companies. The money for this funding comes from revenue from video gambling. However, the funding in our state came with strings: personal liability, which was not attractive to us.
Next, we applied through TEDCO, the Technology Development Corporation, which has a fund for Maryland startup companies in the technology space through a combination of state and private funding. We completed an intense proposal process, and were invited to pitch.
Every month, zero to two or three companies are awarded a $100,000 convertible note. We were awarded, and immediately began building InferCabulary Pro.
Competitions Play an Important Role
Finally, business plan competitions have been a source of $17,000 for us over the past year. This funding helped us build our website and pay for content quality control. We still keep our eyes out for good competitions that might help add significantly to the coffers.
With creativity, hard work, a cool product, the right people, and some tenacity, there are sources of funding that can take your ed-tech startup to the next level. Don’t leave any rocks unturned.