Finding Funding For Innovative Ideas That Scale

Science commercialization is often framed as lab-to-market, but the real question is: who funds the “too applied for grants, too early for VC” zone? I've seen it firsthand: a chicken-and-egg problem where VCs want traction before they'll commit, and founders need capital to create the very traction investors demand. Too often, brilliant scientists with world-changing technologies get trapped here. How science founders can navigate this valley: 1. Build your funding stack based on alignment — Grants, philanthropy, corporate partnerships, and venture capital each comes with different north stars and risk tolerances. Understand how your science fits now and in the future and plan accordingly. 2. Approach expert funders — Seek out capital providers who deeply understand your space. They’re best positioned to see the potential and impact of your work before it’s consensus. 3. Stage-gate your milestones — Show a path where $X unlocks validation, $Y proves scale, and later capital accelerates commercialization. Make each milestone reduce one major risk for follow on funders. 4. Activate alternative capital — Donor-advised funds, venture philanthropy, mission-driven corporates, and government innovation programs can back early science that’s obvious to experts but not yet to markets. Use them to build incremental validation. 5. Design for optionality — Build multiple paths forward: non-profit arms for public good research, commercial spinouts for market applications, licensing deals for near-term revenue, and strategic partnerships for distribution. 6. Create urgency — Patent deadlines, grant reporting requirements, and pilot customer commitments can become forcing functions that accelerate decisions. Use them to your advantage in funding negotiations. What strategies have you used to bridge this valley? I'd love to hear examples that others can learn from, especially creative financing structures or unexpected funding sources that worked.

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)

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