When you're preparing to launch a startup, it's tempting to think, "If I just land one government grant, I'll be set." But in reality, plenty of companies fail even after receiving one. Here's what I learned from a talk by Harrison Choi, CEO of ExitUp (a Korean accelerator).
Common Misconceptions About Government Grants#
Government grants aren't a "nice-to-have, no big deal if I miss out" kind of thing. You should prepare as if you'll definitely be selected — that's the mindset.
But here's an important counterpoint. Don't become dependent on grants. Some founders stay in the black and skip fundraising, only to shut down when external shocks (like COVID) hit.
And one more thing worth knowing. Investors tend to avoid items that failed to win a government grant. "Never applying" and "applying and getting rejected" are two very different stories.
Funding by Growth Stage#
The kind of investors you'll meet changes as your startup grows.
| Stage | Main Investors |
|---|---|
| Seed ~ Pre-A | Angel investors, FFF, accelerators |
| Series A ~ B | Accelerators, venture capital |
| Series C ~ Pre-IPO | Venture capital, specialized finance firms, asset management firms |
FFF stands for Family, Friends, and Fools — the close circle who often fund you in the earliest days.
MVP and MBP: How Long to Prepare#
Two deliverables matter most when you're seeking investment.
- MVP (Minimum Viable Product): The minimum functional product. Expect 3 to 6 months.
- MBP (Minimum Business Plan): The minimum business plan. Expect 3 days to 1 week.
MBPs can be drafted quickly, but an MVP needs real time to build.
How to Do Market Research#
Market research doesn't need to start with anything grand. Two steps are enough to get going.
- Use Google search to gauge market size
- Define your customer segment
Choosing the Right Market Matters#
One of the hardest parts of writing a business plan is answering, "What market am I actually in?" Take a calendar app as an example.
- Online calendar market? Most people use it for free — how do you monetize?
- Calendar app market?
- Productivity app market?
- Online advertising market?
Look at how services like KakaoTalk, Danggeun Market (a Korean neighborhood marketplace, similar to Nextdoor), or Toss define their business models and target markets. You'll find useful hints.
User Acquisition Market vs. Revenue Market#
The market where you acquire users and the market where you generate revenue can be totally different. KakaoTalk is a classic example — they gather users through messaging and monetize through ads and commerce.
You need to explain this well during pitches. Better yet, write the plan so clearly that readers instantly see how you'll acquire users and how you'll make money — without needing verbal explanation.
Tips for Writing a Grant Proposal#
If you only write what the template asks for, you might get rejected. You need to add something beyond the minimum to score extra points.
The approach also differs by program stage.
- Early-stage Startup Package: You need revenue-based market validation
- Pre-launch Startup Package: Customer surveys alone can get you through
Among the evaluation criteria, feasibility and growth strategy carry the heaviest weight.
Reviewers don't always fully understand your product. So write in a way that anyone can follow — no insider context required.
What Government Agencies Measure#
After issuing grant money, agencies track your performance on three fronts.
- Revenue
- Hiring
- Investment raised
Keep these metrics in mind as you operate — they'll help you in follow-on funding and reviews.
Watch Out During Investment Negotiations#
When signing with investors, watch out for toxic clauses. Terms that look good now can strangle your company later. Always review contracts with a legal expert.
One resource worth checking out is Angel Lounge — a Korean platform that connects founders with angel investors.
Wrapping Up#
Government grants and investment rounds are valuable resources, but they shouldn't become crutches. What really matters is proving your product's value on your own.
- Prepare for grants assuming you'll be selected
- Separate your user acquisition market from your revenue market
- Write plans so your BM is visible without explanation
- Track revenue, hiring, and investment consistently
Instead of waiting for the perfect plan, start by drafting an MBP with what you have today.
The way to get started is to quit talking and begin doing.
— Walt Disney
