Alternative Funding Sources for R&d

How This Space Tech Startup Secured $5.5M (Without Giving Up Equity). Last year, I invested in Raven Space Systems. They developed a novel way to 3D print aerospace hardware: • Faster • Cheaper • More efficiently Before pursuing VC money, they secured $5.5M through grants from NASA, Air Force, and The National Science Foundation. This was pure capital for R&D to: • Validate their technology • Access specialized facilities • Build government & commercial credibility Incredible benefits, yet not without challenges. Applications are competitive, time-consuming, and often come with restrictions on fund usage. 6 steps for capital-intensive startups to access non-dilutive funding: 1) Find the Right Grant Programs → Focus on SBIR (Small Business Innovation Research) → STTR (Small Business Technology Transfer) programs. → These offer billions annually in non-dilutive funding for early-stage R&D. Key Agencies: NASA, NSF, DoD, (AFWERX), USDA, and others. 2) Prove Your Tech Solves a Big Problem → Funders want mission-critical solutions over "cool" innovations. → Eg: NASA funds projects that improve performance in space exploration. → Use data or case studies to demonstrate the urgency of the problem → And the effectiveness of your solution. 3) Develop a Clear Proposal → Specific R&D milestones → Measurable outcomes → Commercialization plans Align your proposal with the funder's mission and values and highlight how your project advances their goals. 4) Leverage Strategic Partnerships Strengthen by collaborating with universities, labs, or prime contractors. E.g: Raven partnered with the University of Oklahoma for material testing and technical validation. Partnerships mean specialized equipment and critical expertise. 5) Engage with Grant Officers → Reach out to program managers before applying → For insights on aligning your application with agency priorities → Clarify any ambiguities and tailor your proposal accordingly 6) Iterate And Improve → Treat rejections as opportunities to learn → Many startups win grants on attempt 2 or 3 → Refining on feedback can significantly improve success rates After validating their tech with grants, Raven then raised VC to: • Scale manufacturing • Build sales teams • Enter new markets Validate with grants. Scale with VC. Combine both for a winning position. ____________________________ Hi, I’m Richard Stroupe, a 3x Entrepreneur, and Venture Capital Investor I help early-stage tech founders turn their startups into VC magnets Enjoy this? Join 340+ high-growth founders and seasoned investors getting my deep dives here: (https://lnkd.in/e6tjqP7y)

In the midst of federal research funding cuts and grant freezes, we need alternative ways to fund science. Here are some opportunities that caught my attention: ▫️ Astera Institute - founded by Jed McCaleb and Seemay Chou, Astera incubates high-leverage science and technology projects at their earliest stages through their residency and open science programs. They back creative, high-agency scientists, engineers and entrepreneurs who are passionate about pursuing open first, high impact and future focused projects, especially innovators whose work isn’t a match for other institutions. https://lnkd.in/g45bPNgP ▫️ Schmidt Sciences - part of Eric and Wendy Schmidt's philanthropic initiatives. Their Polymaths program backs professors and interdisciplinary misfits with $2.5M+ to explore wild, risky ideas, whereas their Fellows program places the world’s best emerging scientists in new research domains. https://lnkd.in/gwNC7Fda ▫️ Simons Foundation - founded by Jim and Marilyn Simons to champion basic science through grant funding. There is currently an open call for high-risk theoretical mathematics, physics and computer science projects of exceptional promise and scientific importance. https://lnkd.in/g5CX-Gmk ▫️ Lux Capital - Lux just committed $100 million to back academic research that also has commercial potential, such as biotech and artificial intelligence. They offer both counsel and capital to pathbreaking scientists and help push their research and careers forward. https://lnkd.in/gt5vKe_m ▫️ Decentralized Science (DeSci) - science-focused decentralized autonomous organizations (DAOs) are communities and platforms that use blockchain technology and decentralization to reform funding and collaboration in science. e.g. 🔹 ValleyDAO - funds and provides translational support for synthetic biology research 🔹 VitaDAO - funds aging research and democratizes ownership of intellectual property 🔹 Molecule AG - funding and tokenization platform for biopharma intellectual property What other funding models or programs are you excited about?

Where to go when R&D funding dries up? *A LOT* of government funding for the sciences has been reappropriated or put on hold, and VCs don't like funding R&D. In my tech DD work, I've been fascinated by the creative ways some companies are raising R&D cash. Here are some interesting funding plays they are using: 1️⃣ Tokenized R&D (DeSci / DAO) - Issue governance or utility tokens so a global community bankrolls experiments and helps steer the roadmap. Example: VitaDAO pooled $4.1 M from token-holders to buy longevity IP-NFTs and license them back to researchers. 2️⃣ Crowdfunding 2.0 - Turn fans into shareholders or early customers with equity + reward tiers. Example: Kitchen-robot maker Miso Robotics raised $50M from over 18,000 retail investors on StartEngine (although the company has raised > $500 M from over 35,000 retail investors across several rounds, not exclusively through StartEngine). 3️⃣ Subscription “Discovery Clubs” - Members pay monthly for prototype drops, data dashboards, or private tastings. Example: Some cultivated meat companies advertise an insider waitlist for tours and preview dinners. 4️⃣ Advance Market Commitments (AMCs) - Secure a signed purchase promise before you finish the tech; cash releases on milestones. Example: Gavi, the Vaccine Alliance’s pneumococcal AMC unlocked rapid vaccine scale-up by guaranteeing future demand from 60 countries. 5️⃣ IP-Backed Credit Lines - Use patents or trade secrets as collateral for non-dilutive loans. Example: BlueIron IP structures $2-5 M facilities for startups against insured patent portfolios. 6️⃣ Royalty / Revenue-Share Financing - Investors take a slice of top-line until a cap is hit; cap table stays clean. Example: Meal-delivery brand Factor 75 used a Flow Capital royalty deal to fuel 10× growth before exiting to HelloFresh. 7️⃣ Venture Philanthropy - Impact-first funds blend grants with patient equity or recoverable loans. Example: The Gates Foundation’s Strategic Investment Fund backs drought-tolerant maize and other ag-tech targeting smallholders. 8️⃣ Venture Studios - Co-found alongside a studio that supplies labs, talent, and seed cash (for a bigger equity slice). Example: The Production Board incubated Cana - the molecular beverage printer - inside its food-and-ag studio (however, as of 2025, unfortunately, Cana didn't survive the current funding crisis). 9️⃣ A Donor-Advised Fund (DAF) is a charitable investment account that individuals, families, or organizations establish to support their philanthropic giving over time. Check out Jennifer Kan, PhD's post on this! What else have you seen that is helping to plug up the R&D funding gap? (Ha, maybe move to Europe, which just got a $350M infusion for biotech R&D? Or China - Who also dedicate a ton of government funding into biotech R&D?). Fig credit: Brian Buntz, R&D World - Might U.S. R&D spending crumple in 2025 and beyond? Likely not by much