Let's Talk About Grants!
I sat down with Amir Reshef, CEO and Co-Founder of dealcloser, to chat about his experience with applying for funding through government programs at the provincial and federal level.
Amir and his team have a healthy perspective on how to make the most of this type of funding. Four big lessons he shares:
- You need to have a plan to move forward with and without the funding. Being able to show your funding representatives how much more you can do with funding vs. without funding is one of the best ways to build your case.
- Relationships are still key to securing government funding and grants, but they are a lot different than your relationships with investors. With a government program, you can't influence the timing cycle and you're often not dealing directly with the decision maker.
- Government funding of any stripe is a massive responsibility and that's why it's a labour intensive process to apply and report on what you're doing with it. Amir does a great job reminding everyone that your startup is being trusted with taxpayer funds because your efforts will benefit the larger economy.
- Grants are short-term funding options and not a long-term financial strategy to scale your startup. Amir walks us through the projects that make the most sense for dealcloser to tackle with this type of funding.
Check out our full conversation below. Scroll to the bottom for some interesting insight into how it feels to hire talent and pay them more than what you earn as founder!
Stephanie: Thanks for chatting about grants with us today. How and when did you decide to grow the team at dealcloser?
Amir: That's a good question. I guess it was lacking skills. It was based around if we need sales and marketing, and we don't know sales and marketing, let's find someone! In terms of the grants, we knew we needed these skills, but we also were like we can't afford the kind of talent we want, so let's do the best that we can. And then I got introduced to a rep from IRAP and found out that they have these grant programs where you can apply for funding for a specific project, and you would tailor that project to what you need in terms of a hire.
First, we needed someone with marketing experience, so we applied for funding for a marketing project. It is an internship, so it's not like your VP marketing type of person, but we didn't need that. We needed someone who understood how social media campaigns work, had a good eye for design and could start our efforts on content creation. We knew we needed to hire someone when we realized we could use this skill, and we don't have it.
Stephanie: How do you go about preparing to manage someone just starting in their career, in a field you don’t have any expertise in? It seems like it could be a bit of a stumbling block.
Amir: I know! It’s stressful when you don't know what it is you're asking them to do, but know that you need their work to be effective in a short amount of time.
This tied into the next grant we got, which was for a more senior-level person, and that was from Alberta Innovates. Our marketing intern is awesome, but you're right, it's an internship so the pay is in line with an internship. It’s not a permanent position, and we don’t have the experience to support her professional development specific to marketing and communication.
With our Alberta Innovates grant, we realized now that we have someone who's doing these marketing functions, who we can bring onboard to oversee and tie these tactics into a coordinated marketing and sales strategy, who’s more far along in their career, and who we can have with us for a more extended amount of time.
For us, that’s a VP of Business Development and for someone like that, you could probably imagine, that's far along in their career, would be very costly.
Around the time, when I was exploring the IRAP programs with our rep, I was introduced to Alberta Innovates. In those initial meetings, it was similar to how you get to know investors. They needed to learn more about us and we needed to understand what was available and the responsibilities that come with funding.
As we got further and further along in our progress, we kept Alberta Innovates informed and when we got to the point where we needed to pursue a VP Business Development, because our IRAP funding came in and we had our Marketing Intern in place, it wasn’t a surprise to them and they already could see how we were a great candidate for funding.
The Alberta Innovates grant is specific to high-level strategic hire. The team members that can help with the strategy and not just the day-to-day tasks that we all power through. Stacking our funding and the timing worked well for us to make the best of both program streams.
Stephanie: One of the things that can be burdensome about this type of funding is the reporting. How do you build that reporting mechanism and timeline into your workflow when you have so much to do with your company and then all of a sudden, there's this extra level of administration because of a grant?
Amir: Getting the grant is a whole thing too, lots of paperwork, but then once you have the grant, you're right, there are all the reporting requirements. I guess it’s just being as organized as possible. I have folders set up for every claim so I have the same documents I know I need to fill out and then I have reminders set up every month to give me a week's time to fill that out and then just stay organized.
There's no getting around it. It adds extra work. It's more you have to deal with—more paperwork, more admin, and I'm doing it myself.
Stephanie: Let's talk about the difference between the process for your IRAP funding and your Alberta Innovates grant. How many meetings did you have before you applied for IRAP support? Did you have a good idea if it would be approved before you even started the application process? What was the timeline from considering IRAP to getting money in the bank?
Amir: IRAP was faster because the amount is much smaller, and the representatives for both Alberta Innovates and IRAP that we work with are awesome. They were super helpful.
With IRAP we met maybe three or four times over the course of eight months. The first time we met was just showcasing what dealcloser is, and everybody who is involved in this space. They want to see growth and traction, not even customer traction — they just want to see you're accomplishing things. They want to see that every time you meet there's been something that's happened. And I think it really was the third or fourth time we met and I was telling our rep what it is we were looking for and he was like, "Well you can apply for funding for that specific thing."
I thought about it in roles. We want a marketing person and this is what they're going to accomplish in a set amount of time. If you can think about it that way, as a project, it makes it easier when you're applying because it fits the format of the application. I think it probably was only a five to ten-page application because it’s a smaller level of funding.
The Alberta Innovates application was a lot more time consuming. I don't want to say onerous, but there was a lot more required.
Stephanie: So, it was about three or four meetings and eight months from the first time you talked IRAP, to figuring out what you need, to then identifying the way they could help, and then having funding for the position?
Amir: Yes, and what was really great about the IRAP representative is he actually asked us "Hey, do you need this now? We have some funds available." We felt there was a good chance we would receive the funding because they understood our progress and plans.
Stephanie: And that only comes when you build that relationship first.
Stephanie: Often with grants and government programs, founders put them in a separate category from investment, but it's a very similar process. They need to know you and have a relationship with you.
Amir: One difference is that the reps aren't doing the review — there's a separate review panel or committee for the program. There is a separation there, but I think the better relationship you have with the reps, the more likely they are to put you down the most successful path for funding.
Stephanie: The reps know the process. They know what they're looking for, and don’t want to waste time.
Amir: It was important to build that relationship with the rep. He wanted to see that we were a right fit before he giving us government money. It's non-diluted funding, but it's not free money in the sense that it does come with reporting obligations and time commitments. Before they just hand out cash they need to see that you’re a good investment for the people they represent. As an early stage company, you can't come in after one meeting and expect to get a grant.
Stephanie: Can you share how the Alberta Innovates grant was a more intensive process?
Amir: We met with our rep less, only twice, but the grant application had to convey a real opportunity because it was a lot more money. It’s a substantial grant and they need to see, just like IRAP, just like any grant, that if they give you this money it will turn into a benefit for Alberta — that this grant will turn into revenue which is taxable, and you'll be hiring people who are also taxable. It all comes down to just more tax revenue for the provincial and federal governments.
You have to convince them that there's an opportunity there, that there's a market there, that there's traction there. The more you can show that this is a real viable possibility for success if you can bring on a VP level team member to fill gaps on your founder team experience levels, the candidate must be the right candidate.
With IRAP, they ask to see the candidate’s resume, but beyond that, I don't think they're too concerned about who you are choosing.
With Alberta Innovates, it is much more specific about how this individual meets the needs of your team to deliver the growth you want to achieve. Reference letters, why you think they’re the best fit for the project and so on. It's important not just to justify a huge amount of money, you have to also show that you have done your work to choose a person that will accomplish the project.
Stephanie: That puts you in an awkward position as a founder that you're having to recruit highly desirable talent without guaranteed funding. What were some of the stressful points in that process?
Amir: Well, we got really lucky, but we had a backup plan. Before starting to recruit, we had a no grant scenario, and a with grant scenario for how we were going to spend the funds we had available. We talked about in our application, because clearly with the grant we could do 75% more because we could only afford 25% of consulting time with the candidate if we couldn’t bring them on full-time.
It's just honest communication with the person you want to hire. In our case, she was willing to work with us in either scenario, it just would've been as a contractor on a much-reduced hourly, monthly basis. Yeah, it was stressful! Then you’re prepared to wait for six weeks to hear back, lucky for us it was only four weeks and we had her up and running.
Stephanie: You mentioned a few times the Alberta Innovates grant allows you to hire a high performance, executive-suite person on salary. I assume that salary is negotiated in advance because Alberta Innovates would need to know for the application. Will this person be the highest paid member of your team and getting paid more than the founders?
Amir: Oh, easily.
Stephanie: So, how are you going to deal with that, and what does that feel like?
Amir: I mean right now she's changing our company. It's like an investment and every dollar that goes to her is much better than any dollar that goes to me or the other founders, so it's not even a question of is it the right thing to do.
She'll help us hit our goals for this year, and to have that help we need to pay her, and I’m not as useful in hitting those goals right now. It's not even a question. She deserves every penny of it.
Stephanie: That's a great approach! I think founder hubris or bravado can get in the way sometimes. Especially when you're looking at dollars and cents and you feel like you've been working so hard, but there's no grant program for you to get paid. It’s refreshing that you approach it as a path to success for all of you.
Amir: Yeah, I'll make my money if-and-when we sell this company, but that's the trade-off.
I mean if you can't look at it as what's best for your company and you look at it as what's best for you personally, then it's not a great way to make decisions for success as a company. We’re always focused on what’s going to get us further and where should every dollar go.
Stephanie: My last question about grants is when you were setting up the idea for dealcloser and started to think of what your financial future was going to be, how early on in that process did you think that government money would be part of your journey?
Amir: At the end of last year, we were in the process of doing a fundraising round that closed in January. In December, that’s when we started to think more about what grants would let us do in the coming year.
Before getting the cash in the bank, we started budgeting with grants, like I said we had with grant scenario and with no grant scenario. It’s always key.
Basically, as soon as we had the raise completed, we decided that we were going to apply for these two funding programs, but we couldn’t assume we would get them. We needed to plan for both scenarios. It impacted how many customers we thought we could acquire, it didn’t mean that we relied on the grant to move forward, but we budgeted much more conservatively to make sure we could still make progress.
Stephanie: Absolutely, I think that sometimes grants can be a distraction rather than just a tool to help you move forward faster. It’s good advice that you should think about it long term and then map out all the options so that the grant money isn't the only option. That way you're not waiting on their timelines. You have a plan to move forward.
It’s different in the way that private investment works, where you can hassle and challenge the timelines, and ramp up your conversations. You can't do that with grants, it's all in their court. I can’t stress enough how important it is to map out all your options and keep moving forward regardless of what happens.
Amir: You can't wait and you need to know where you're at with every dollar you spend. If you spend like you already have the grant, you could be out of money months or quarters sooner than you expected because of assumptions. We thought we had a solid application but we had no idea if were going to be successful.
We focused on speaking to the size of the opportunity, and how big the problem is, and why we were the right people to solve that problem, and why we needed that one person we were applying for to come and round off what was missing in our team.
We’re looking forward to seeing how the year progresses with our new team members!