Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups

15

The Entrepreneurship Financing Ecosystem

Grants, Venture Capital, Accelerators, and Other Players

THROUGHOUT THIS BOOK I've touched on some of the other participants in the world of startup investing—individuals and organizations that in some cases may be viewed as competitors with angel investors for the funding of startup ventures, but that—far more often—complement what angels do. As in any vibrant ecosystem, a variety of organisms has evolved over time, and the result is a complex, continually changing world in which resources of all kinds—not just money, but also ideas, talent, knowledge, connections, opportunities, and energy—have a good chance of finding their way to the fledgling companies that need them most to fuel their transformation into large, successful businesses.

In Chapter 4, we looked at the financial life of a startup and identified the typical sequencing of different types of capital. Now it is time to take a closer look at these other players and how you are likely to interact with them.

Government Grants

The closest thing to “free money” for a company is when the government gives it cash and doesn't expect it back. Governments at virtually all levels, in virtually all countries, provide grants of some type to small companies with the goal of supporting entrepreneurial development.

In the United States, the Small Business Innovation Research (SBIR) program, established in 1982, encourages domestic small businesses to engage in federal research and development ...