How startup grants actually work

Grants are one of the few ways to fund a startup without giving up equity. But they work very differently from a seed round, and treating them like one is a common mistake.

Non-dilutive, milestone-linked

A grant is money you don't pay back and don't trade shares for. In exchange, the funder almost always ties disbursement to milestones — a prototype demo, a pilot signed, a report filed. You rarely get the full amount up front.

Plan your runway around the tranches, not the headline number.

The three cost categories most grants cover

1. Product / R&D — engineering, materials, testing, certification.
2. Market entry — pilots, early sales, go-to-market experiments.
3. In-kind support — cloud credits, lab access, mentoring.

Very few grants let you spend on founder salaries or generic overhead. Read the eligible cost heads section of every scheme before you apply.

Where founders get tripped up

• Applying to a scheme they're not eligible for (wrong stage, wrong sector, wrong incorporation age).
• Underestimating the reporting burden after the money lands.
• Missing that some "grants" are actually convertible instruments or soft loans.

Use the Grant Finder to filter by what you actually qualify for before you spend a week on an application.