As we have seen, for this series of posts that serve as a guide for entrepreneurs to seek public funding, we have established three types of companies, which will access these grants differently by their nature:
- High-potential startups that innovate in their business model but not in technology, to which we dedicate the first part of this series.
- Startups whose business model focuses on exploiting significant technological innovation.
- Companies with already developed businesses, who want to expand through the development of new technology.
In this post we will focus on the second group: 2. Startups whose business model focuses on exploiting an important technological innovationUntil recently, the companies in this second group were doing quite well, thanks to the existence of plans such as Neotec I, Netoec II and PID. Unfortunately, this has changed and the change has not been for the better: The Neotec II, guarantee exemptions for loans under €500,000 have been eliminated and the amount has been reduced and the requirements for granting the Neotec. Therefore, at this particular time, it is not easy for this type of startup to raise funding from public administrations either. The advantage they have over group 1 companies is that they have the possibility of applying for a CDTI PID loan or access the Plan Avanza (in this case, provided that the theme of the company's project matches those proposed by the Avanza Plan for the year in question) .The problem is that, as we mentioned before, in both cases the warranty exemptions that existed until March 2012 have been eliminated. If the company does not have sufficiently strong financial statements (no startup at this point usually has, nor did Google or Facebook probably have them at the time), CDTI will most likely ask for guarantees, which, for a startup, is practically equivalent to refusing the loan. To understand why we recommend this, it is enough to know that, according to recent studies on professional investors who invest in groups, it has been possible to determine that they lose all or almost all of their money in 50% of projects.Intelectium does not recommend that any entrepreneur provide personal or real guarantees for one of these loans. A startup is a very high-risk initiative and no sane entrepreneur should provide guarantees about a project, no matter how much faith they may have in it. The PID program must change its “business model”, since it currently leads to an enormous waste of time for both entrepreneurs and CDTI analysts. In the case of the Avanza Plan, and for now only for 2012, the guarantee requirements are one third of the total loan, something that can be achieved if a bank agrees to grant the guarantee by making a pledge of a similar amount. Finally, an alternative to those mentioned above, is for the startup to join a consortium of several companies, since this opens the door to obtaining a loan within the framework of the program Innacto (which does not require guarantees up to amounts of 250,000€). In addition, this is a good way to generate experience in R&D work within consortiums, a positive background for participating in future R&D projects and, incidentally, funding, even if the amounts are relatively low.
