When I was an entrepreneur raising grant capital in 2011 I found it frustrating:
Why were these grantors making it so difficult for me to do my job?
Why did they delay payment?
Why did they ask me so many questions?
It was all getting in the way of me serving my customers: installing biogas equipment.
What I didn't realize at the time was that we had two products we were selling:
biogas equipment to farmers and
impact to grantors.
Seeing grantors as a customer and raising grant money as a sales process fundamentally changes the way you go about raising money. All of the normal sales processes apply:
build trust
establish scarcity
provide value for money
personal relationships
marketing. It's just a fact that someone who has seen your brand before is more likely to buy from you than someone who hasn't. It's not that grantors are biased. It's just that they are human. We trust things that we know. That's just the way it is.
Let's talk more about what the product is you’re selling to a grantor: what is the value they are getting.
If funders really are the customer there must be some product you sell to them, right? What could it be? You don't transfer anything physical to them. You don't even provide them some consulting service. You can't give them a bottle of whiskey — that might be misunderstood as a bribe. So what is this thing grantors are buying from you?
The answer is Impact. You raise 1,000 people out of poverty for $1m, let’s say. That’s a Unit Cost, from the funder’s perspective of $1,000 per person raised out of poverty. We, as a biogas company, were not competing against other biogas companies for funding; we were competing against ALL other organizations that can raise people out of poverty.
From the funder’s perspective, was $1,000 per person cost effective? Could they get more people out of poverty for less money with someone else?
There's always a bigger fish
While you're looking to raise funding from a grantor, they're looking to raise funding from... someone else.
Bill and Melinda Gates fund the Gates Foundation, and the US taxpayer funds USAID. Whatever the case, there’s always a bigger fish.
The grantor you raised money from needs to explain to their funder that they spent the money well. They need to show it generated the impact they had promised. They probably raise the money in a 5 to 10-year fund to accomplish some social good. Did they accomplish it?
The easier you make it for a grantor to prove to their funder that they accomplished their goal the more likely you are to win the grant.
That's why when I'm applying for a grant I always look for the contract the grantor signed with their funder when they started the fund. (Surprisingly, this information is often available if you really look for it🤯) What promises did the funder make to their funders? If the funder promised to impact 1m farmers with a $100 million fund that means they're willing to spend $100 per farmer to achieve that objective. If we come in with $1,000 per farmer, even though the impact per farmer might be higher, we are priced out of the market.
Book of the week
I just read How Innovation Works. Perhaps you'd like the book, too. Here’s one (of many, many) nuggets of wisdom I learned from it: Big companies are bad at innovation, not necessarily bad at invention. Kodak invented the digital camera. Xerox invented the computer mouse. But neither commercialized their inventions because the digital camera and mouse would cut into their film and photocopying profits, respectively.
Kyle, this is so true, the mindshift in searching for grants to a business approach Is the key to a win win situation for both. Thanks for sharing these gems. I’m sure our search for partners in our business just took a turn this morning 😁
Kyle, this is so true, the mindshift in searching for grants to a business approach Is the key to a win win situation for both. Thanks for sharing these gems. I’m sure our search for partners in our business just took a turn this morning 😁