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> we can go very far with very little funding, so why sell shares when we can get a 50k grant in exchange for some (admittedly tedious) paperwork? To be entire

> we can go very far with very little funding, so why sell shares when we can get a 50k grant in exchange for some (admittedly tedious) paperwork? To be entirely frank, it depends on the field, but I imagine it's easier in many ways to get VC funding than a grant for many projects. Grants are a pain to apply for (there's a reason that full-time grant-writers exist) and the feedback loop is very slow. Compare that to the VC world, where you can quite easily raise a small amount of seed/pre-seed capital quickly, and even when you're rejected, you're likely to hear back quickly[0]. This will be a challenge for YC, because it inherently creates an adverse selection problem. The companies that YC (and all venture funds) want to attract the most are the ones who could win a grant if they applied, not the ones who are seeking venture funding simply because they can't actually survive the grant process[1]. The grant application process is terrible for a lot of reasons, but it does have the side-effect of filtering out a lot of people who simply aren't that serious or invested in their work. For YC, it means a lot more companies to sift through to identify the gems. There are certainly some billion-dollar companies that could not survive the grant process (or simply would prefer not to go through it), but if we're looking strictly at the ratios, it's going to be a lot more challenging for any venture fund to find these 'needles', because the 'haystack' is simply much larger (relatively speaking). [0] If you never hear back from a VC, that means you're probably either rejected or being punted on ("not now, but maybe later"). But that's a good thing - at least you know! If you don't hear back from a grant application after 2 months, that doesn't actually mean anything other than your application may not have been reviewed yet. [1] Possible reasons for failing to win grants: project/business model is simply not valuable, project is not well fleshed-out, company does not have the runway to survive the drawn-out application cycle, etc. All of these apply to the venture world as well, but the cycle there is much faster.

leohutson 11y ago
> Grants are a pain to apply for (there's a reason that full-time grant-writers exist) and the feedback loop is very slow Case in point, I saw this on the retraction watch twitter the other day: http://aushsiblog.com/?p=252 http://aushsiblog.com/?p=252 There was a grant application rejected because the header font was 13pt rather than 14pt. Most of us have to deal with some level of petty bureaucracy, but that level is just absurd.
omginternets 11y ago
It most assuredly depends a great deal on the field. I'm in a particularly advantageous position, and I recognize this. "Wet" science typically requires a lot more equipment, but bear in mind that this is also greatly mitigated by working with a university. Regarding grant writing, it is a pain in the ass, but the terms very generous, and universities have no qualms about letting you borrow their grant writers. At the end of the day, it makes little sense to sell shares for 1 million USD when $100k ensures that the same shares will sell for 5 million in one year. >There are certainly some billion-dollar companies that could not survive the grant process Billion-dollar companies are looking for billion-dollar grants. It's a question of how much one needs. For small seed funds, grants make a lot of sense. In any case it should be obvious that, as you said, it all depends on the field. What's undeniable is that grant money comes with far more favorable terms than VC funds. At the risk of tooting my own horn, I'm surprised YC is moving towards wet-science instead of investing in projects similar to my own; they're life-sciences with a highly computational aspect, which implies the tight development cycles they're used to. It also means they can understand what I'm talking about, at least on the implementation level.

leohutson 11y ago

> Grants are a pain to apply for (there's a reason that full-time grant-writers exist) and the feedback loop is very slow Case in point, I saw this on the retraction watch twitter the other day: http://aushsiblog.com/?p=252 http://aushsiblog.com/?p=252 There was a grant application rejected because the header font was 13pt rather than 14pt. Most of us have to deal with some level of petty bureaucracy, but that level is just absurd.

omginternets 11y ago

It most assuredly depends a great deal on the field. I'm in a particularly advantageous position, and I recognize this. "Wet" science typically requires a lot more equipment, but bear in mind that this is also greatly mitigated by working with a university. Regarding grant writing, it is a pain in the ass, but the terms very generous, and universities have no qualms about letting you borrow their grant writers. At the end of the day, it makes little sense to sell shares for 1 million USD when $100k ensures that the same shares will sell for 5 million in one year. >There are certainly some billion-dollar companies that could not survive the grant process Billion-dollar companies are looking for billion-dollar grants. It's a question of how much one needs. For small seed funds, grants make a lot of sense. In any case it should be obvious that, as you said, it all depends on the field. What's undeniable is that grant money comes with far more favorable terms than VC funds. At the risk of tooting my own horn, I'm surprised YC is moving towards wet-science instead of investing in projects similar to my own; they're life-sciences with a highly computational aspect, which implies the tight development cycles they're used to. It also means they can understand what I'm talking about, at least on the implementation level.