Are early-stage companies better off using non-dilutive funding?
Are early-stage companies better off using non-dilutive funding? Carlos Guiterrez, Larta’s Chief Strategy Officer, thinks so. On Tuesday, June 21st, Carlos teamed up with USDA/NIFA SBIR Program Coordinator, Scott Dockum, at GAI’s AgTech Week in San Francisco to discuss and demonstrate how SBIR non-dilutive grants are often an overlooked valuable tool for startups seeking to be capital efficient, and how the investment community can take advantage of SBIR innovations that have been re-risked and are ready for third party investment.
SBIR grants are there to fill that gap for high risk companies that are too early for VC or other investors, the pair explained.
“Early stage, high-risk companies are not attractive to VCs because they are still testing assumptions. Their science is unproven. Their technology is new, novel and unknown,” Carlos said.
“That’s the gap SBIR funding services,” said Scott. “We go where VC’s wont. We are like America’s seed fund.”
Non-dilutive funding also has the added benefit of supporting young companies through their R&D phase so that they don’t have to give up equity in the company at a lower valuation.
USDA SBIR grants come in two sizes. Phase I grants are eight month grants that award $100k. Phase II grants are 2 year grants that award $600k.
Carlos and Scott pointed to several USDA CAP companies achieving capital efficiency through SBIR grants. Thriving companies such as Eldertide, started by small farmers, NBD Nano, a surface technology company and AgSquared, an agtech company that acquired another agtech company early on – all got their starts with SBIR funding.
Larta Institute and USDA have an eight year partnership that has sought to strengthen the business acumen of the companies receiving non-dilutive funding to help ensure they will make it to market.
USDA provides the initial investment, while Larta helps cultivate the companies through their CAPs and their other ag programs such as Ag Innovation Showcase and GAIN, and make the introductions to a larger swath of industry and investors – a powerful network for which Larta is well-known.
Earlier in May, Rohit Shukla and Scott Dockum teamed together for a successful panel on the same topic at GAI’s New York conference.