A Guide to Grant Funding for Biotech Startups
Last updated on January 5, 2023 by
As an early-stage biotech or life sciences startup looking to launch a product or service, there are several fundraising options you can pursue to fund your research and development. While we cover grants and public funding in this article, you can learn more about your options in our fundraising overview, Biotech Funding for Startups.
Applying and securing a research or business grant can be a challenging process, but are a helpful way to fund a specific project or initiative within your company that should not be overlooked even if you’re a for-profit company. Grants aren’t only a great option when you’re seeking funding; they can also help you build relationships in the industry, get feedback from respected peers on your work, and give you credibility and prestige.
In this article, we’ll review grant basics: definition, types of grants available, the difference between public and private funding, and more.
What Is a Grant?
Let’s quickly review. A grant is a sum of money or other form of financial assistance that is provided by an organization, typically a government agency or a charitable foundation, to a person, business, or other organization. Grants are typically provided for a specific purpose, such as to fund research, provide emergency assistance, stimulate economic development, or support the arts.
Grants are usually awarded through a competitive process, in which applicants submit proposals outlining their proposed project or program and its goals, budget, and expected outcomes. The organization providing the grant will review the proposals and select the ones that align with its mission and priorities, and are most likely to achieve their stated goals. They may be provided as a one-time payment or as a series of payments over a set period of time.
Recipients of grants are typically expected to provide progress reports and may be required to meet certain performance benchmarks in order to continue receiving funding. Grants are a popular source of funding for non-profit organizations, researchers, and other groups, as they do not need to be repaid. However, they are typically accompanied by strict guidelines and reporting requirements.
What Types of Grants Are There & What Are They Used For?
There are many different types of grants and grant programs, and they can be broadly classified based on their source, purpose, and recipient. Some examples of different types of grants include:
- Research grants
- Business grants
- Project grants
- Student grants
Research grants provide support for research projects in a variety of fields, including science, technology, engineering, the arts, and social sciences. Research grants may be provided to individual researchers or to teams of researchers at universities, research institutions, and other organizations.
Business grants are used by businesses, particularly small businesses, to support their growth and development. Business grants may be provided by government agencies, industry associations, or private foundations, and may be used to fund a variety of business-related expenses, such as research and development, marketing, or employee training.
Project grants can be used to support specific projects or initiatives, such as community development projects, educational programs, or cultural events. Project grants may be provided to non-profit organizations, schools, and other groups.
Student grants are for, obviously enough, students. Students can use them to help pay for their education, such as tuition, fees, and living expenses. Student grants may be need-based or merit-based, and may be provided by the government, universities, or private organizations.
What’s the Difference Between Public Grants & Private Grants?
Public Grant Funding
Public grant funding is financial assistance provided by government agencies at the federal, state, or local level to support projects, initiatives, and activities that benefit the public. When the federal government is providing the funding, it’s referred to as federal funding. This is perhaps the most common type of public funding.
Public grants may be provided to a wide range of organizations, including non-profit organizations, educational institutions, and businesses, as well as to individuals.
This type of grant funding is provided for a specific purpose, such as to fund research, provide emergency assistance, or support the arts. Federal grants may be awarded through a competitive process, in which applicants submit proposals outlining their proposed project or program and its goals, budget, and expected outcomes.
Federal funding is used to advance the priorities and goals established by the agencies that provide the grant or grants. For example, the National Institutes of Health might fund the development of a new pharmaceutical, or an app designed to connect providers to their patients for medication management.
Federal agencies providing the grant will review the proposals and select the ones that align with its mission and priorities, and are most likely to achieve their stated goals.
Funding may be provided as a one-time payment or as a series of payments over a set period of time. Recipients of public grants are typically expected to provide progress reports and may be required to meet certain performance benchmarks in order to continue receiving funding.
Public funding is an important source of capital for many organizations and individuals working on projects and initiatives that benefit the public. They are typically accompanied by strict guidelines and reporting requirements, and may be subject to additional regulations and requirements, such as compliance with affirmative action and equal opportunity laws.
At any given time, there are thousands of grant opportunities available through federal, state, and local government entities, which support different verticals within the life sciences at different phases of business growth and development. Some of these entities include (but are not limited to) the National Institutes of Health, National Science Foundation, Department of Energy, and even the Department of Defense.
Because there are so many grants to apply for, it’s important that you look for the ones that are best matched to your work, stage of growth, founders, and other characteristics unique to you.
The Environmental Protection Agency and Department of Energy have entirely different priorities. For this reason, it’s impossible to give a general idea of what grants are used for and how much money you can expect to receive.
Grants tend to be quite specific, so your application will have the best shot if you target funding opportunities that match well with your company’s specific goals. They usually have an upper limit of funds they will provide, and guidelines on how much can be spent in different areas of business development.
Understanding the details of the grant you plan to apply for and what is required of you is essential if you’re pursuing public funding.
Private Grant Funding
Private grant funding refers to financial support provided by private organizations, foundations, or individuals to fund specific projects or initiatives. It is different from government grants, which are typically funded by tax dollars and awarded by government agencies.
Private grants are usually provided to nonprofit organizations, educational institutions, and other types of organizations to support projects or programs in a variety of fields, including education, the arts, social services, health, and the environment.
Like public grant funding, it can be quite competitive and typically requires an individual or organization to submit proposals or applications to be considered for funding.
Where Does Public Grant Funding Come From?
There are many, many government entities that provide funding for companies in the life sciences, but the place to start is the National Institutes of Health (NIH), which is the largest funding body for scientific research.
As a life sciences company, research and development is a significant part of your work, especially early in your journey.
In addition to research grants, the NIH provides grant funding specifically for small business development. This comes through America’s Seed Fund, which is composed of two programs: the Small Business Technology Transfer (STTR) and the Small Business Innovation Research (SBIR), which are overseen by the Small Business Administration (SBA).
Both of these programs are focused on helping life science technology companies take their businesses to the next level by accelerating R&D, attracting investors, and commercializing their products or services. They are also intended to help entrepreneurs from underrepresented communities bring their visions to life.
Participants in SBIR and STTR must be for-profit companies with fewer than 500 employees and at least 50% of their ownership in the United States. These criteria were updated several years ago, and can possibly change in the future, so it’s important to always check SBIR.gov for the most up-to-date company requirements.
Depending on what your short-term goals are, you might be better suited to one than the other. If you need more funds for R&D, the SBIR program is likely more appropriate for you. If you have or plan to have a research partner (academic or otherwise), STTR is more appropriate for you.
All participants in STTR are required to have an official partnership with a nonprofit research entity, which can be a university, a research organization, or a federally funded R&D center. The NIH has a breakdown for you that explains the main differences.
As we mentioned earlier, almost every government agency that is science-oriented will have grant opportunities. Each organization typically keeps their website up to date with grant opportunities. However, you can also find grant opportunities at websites like:
These government-ran websites host large and up-to-date databases full of financial assistance and loan opportunities.
In addition to looking at grants provided by the federal government, we recommend looking at the funding available in your state. As is the case for government agencies, each state has different priorities for business growth and development, so it’s worth seeing if your business goals align with any of them. These opportunities are also likely less competitive since a smaller pool of applicants is eligible.
How Are Grants Funded?
Grants are typically funded by organizations or government agencies that have set aside money for the purpose of providing financial assistance to individuals, businesses, or other organizations. These organizations and agencies may fund grants through a variety of means, such as:
- Tax revenues: Many government grants are funded through tax revenues, which are collected by the government from individuals and businesses.
- Donations: Some grants, particularly those provided by charitable foundations and non-profit organizations, may be funded through donations from individuals, businesses, and other organizations.
- Investment income: Some organizations, such as foundations, may fund grants using income generated from investments, such as stocks and bonds.
- User fees: Some government agencies may fund grants using fees that are collected from users of their services, such as park entrance fees or fishing licenses.
- Industry fees: Some industries may be required to pay fees or taxes that are used to fund grants related to that industry, such as fees paid by tobacco companies to fund anti-smoking campaigns.
There are many different ways that grants can be funded, and the specific funding source can vary depending on the type of grant and the organization providing it.
How Do I Determine If I’m Eligible?
To determine whether you are eligible to apply for a grant, you’ll need to review the eligibility requirements for the specific grant you’re interested in. The requirements are typically outlined in the grant application materials or on the website of the organization providing the grant.
Eligibility requirements for grants can vary widely, and may include factors such as:
- Your location: Some grants may only be available to organizations or individuals located in a certain geographic area.
- Your field of work or study: Some grants may be targeted at specific fields or sectors, such as education, the arts, or health care.
- Your status as a non-profit organization or for-profit business: Many grants are only available to non-profit organizations, while others may be available to for-profit businesses or individuals.
- Your income or financial need: Some grants may be need-based, meaning that they are only available to individuals or organizations with low income or financial need.
It is important to carefully review the eligibility requirements before applying, as failure to meet these requirements can result in your application being rejected. If you are unsure whether you are eligible for a particular grant, you may want to contact the organization providing the grant to ask for more information.
How Do I Apply for a Public Grant?
Grant writing is competitive, which means that your application will take time to prepare and needs to be nothing short of excellent. Before you even think about grant writing, make sure you have a solid business plan.
First, you need an idea that is innovative, feasible, and backed by a comprehensive literature review. You’ll also need a plan for further research that is well-designed, takes into account ethical issues, establishes appropriate controls and plans for statistical analysis, and outlines future collaboration with other institutions and experts. Any data you already have should be properly collected, analyzed, and clearly displayed.
With a comprehensive business plan in hand, you’re ready to look for funding opportunities and available funding that would fit you best. There are thousands of opportunities, so using sites like Grants.gov to filter by the criteria that apply to your business and your team, and anything else that’s important to you, will save you a lot of time.
Read the requirements carefully; you might find that you’re not quite ready to apply to the ones you’re most excited about, but don’t despair. This can be an aspirational exercise and can help you figure out important next steps for your business.
Even though each individual grant is different, you will follow roughly the same process for all government grants. After you have done your due diligence on application requirements, developed a proposal, created a realistic budget, you’ll be reviewed by a group of peers who understands your vertical as well as you do.
Don’t try to create the budget you think your panel of reviewers wants to see. Create a budget that will allow you to do exactly what you plan to do with room for unexpected challenges.
Once your application is approved, your funds will be distributed, and you’ll have to use them within a designated period of time. You’ll also be required to report regularly on your progress and how the funds are being used throughout the lifecycle of the grant.
Tips for Finding Grant Funding Opportunities
The grant funding process is challenging. From finding a grant to applying, the entire process is time-consuming. To make matters more difficult, most grants are highly competitive, and require a lot of documentation. Here are some tips for finding grant opportunities.
- Determine your needs: Before you start looking for grants, it’s important to have a clear idea of what you need funding for. This will help you focus your search and identify grants that are most relevant to your needs.
- Research potential funding sources: There are many organizations and agencies that provide grants, and it can be helpful to research potential funding sources that are relevant to your needs and goals. You can search online databases, such as Grants.gov and the Foundation Center, or reach out to professional associations, trade groups, and other organizations in your field.
- Review eligibility requirements: Before you apply for a grant, make sure you meet the eligibility requirements. These requirements may vary depending on the grant and the organization providing it, and can include factors such as your location, field of work or study, and status as a non-profit or for-profit organization.
- Start early: It can take time to research and apply for grants, so it’s important to start the process early. This will give you plenty of time to gather the necessary materials, write a strong proposal, and prepare any required documents.
- Follow the application instructions carefully: Make sure to read the application instructions carefully and follow them to the letter. This will help ensure that your application is complete and meets all of the requirements.
By following these tips, you can increase your chances of finding and securing grant funding for your project or initiative.
Grants Aren’t Just for Academics & Nonprofits
While there are many grants available to academic institutions, researchers, and laboratories, in addition to nonprofit organizations, there are also a number of grants for small businesses and for-profit organizations. So even if you’ve left academia and are currently fundraising for a biotech startup, there are numerous grant opportunities out there.
Whatever your situation, don’t let the long process discourage you. For academics and early-stage companies, grants can be instrumental in moving your research or business into the next phase or commercialization process, while giving you a huge boost of credibility.
Even if you’re not selected, the self-audit required to prepare your application is still worthwhile. It’s a way to clarify your mission, vision, and what you need to prioritize to get there.
We know this process can be overwhelming, so we have compiled some other resources below for you that can help along the way. For a comprehensive list of government grants, check out grants.gov. You can also subscribe to funding opportunity announcements and download their app for easy access. Additionally, you can find a plethora of resources on many organizations’ websites:
- National Science Foundation
- Department of Health and Human Services
- Department of Energy
- Congressionally Directed Medical Research Programs
- National Institute of Food and Agriculture
- Environmental Protection Agency
Sign up for weekly emails from the NIH on funding opportunities here, and learn about NIH grants and the application process here.
Does Your Research Require New or Refurbished Equipment?
Excedr can help. Many of our for-profit and non-profit clients are grant recipients, and have used their grant funding to support research and development, using some of the funds they’ve secured through a grant to lease lab equipment.
The high-quality equipment we lease helps laboratories optimize workflows, increase throughput, and reach developmental milestones that are both mission-critical and attached to other types of funding, such as a seed or Series A round.
If you’re interested in leasing, get in touch today and let us know what equipment you’d like to lease. Or, If you’re just looking to learn more about our leasing program, you can check out our FAQs.