Catalytic Funding Grants
Catalytic funding grants will be provided to startup and early stage enterprises that help stimulate private investment by first-time angels and to encourage investment syndication between seasoned and less experienced investors. The core success metric of the grants will be whether they result in private investment while also providing funding that enables entrepreneurs to develop and grow their business. Two instruments will be used, including pre-investment and co-investment grants:
- Pre-investment grants: will involve grant funding to enterprises that have not received any third-party investment, and show business and investment promise but are still not considered ‘investment ready’ by investors. The purpose of these grants will be to provide funding for entrepreneurs to address shortcomings identified by investors and to improve the likelihood that companies can subsequently secure angel (or other relevant early stage) investment within a short time frame (targeting 3–6 months).
- Co-investment grants: will provide supplementary funding to enterprises that are able to raise investment from business angels and other eligible early-stage investors. The purpose of these grants will be to provide additional funding—beyond what investors are willing to make—to help early stage enterprises develop and grow. The grants may also help lower the risk perception of investors by better capitalizing the enterprises, thereby providing a longer ‘runway’ to achieving business development milestones that lead to stronger businesses. In addition, supplemental grant funding could encourage investors to spread capital across more investments (portfolio strategy), thereby leading to more entrepreneurs receiving the benefits of angel investors as partners.