How we helped a tech startup get Seed-Start Grant funding

Applying for a matched government grant? While each grant matching fund submission is different, applicants typically need detailed financial models to qualify their vision. Here’s how we successfully did it for one business.

We recently helped our client Kindship apply for and successfully obtain mid six-figure funding via a Seed-Start Grant from the South Australian Government, a grant matching fund system to help early-stage startups commercialise their product or service.

A matched grant is a funding model that stipulates that funding will only be paid if/when the applicant matches the amount (by certain pre-designated ratio) provided by the grant organisations. See what Australian business grants you might be eligible for here.

Keep reading to learn how we built the spreadsheet models needed for our client’s submission, and for some great tips from one of the founders about navigating the Seed-Start Grant application process.

The client:

• Kindship is a small Australian tech company building a social networking app for parents of children with disabilities, delays, and neurodiversity
• 6 employees in Australia, 7 overseas developers
• Needed help applying for a ‘Seed-Start Grant’, a small business grant in South Australia, and subsequently meeting the ongoing financial compliance requirements

The grant:

The Seed-Start Grant is a business grant from the South Australian government for early-stage, high-growth potential businesses with two application streams depending on the stage of development a business is at:

• Seed Grants provide 2:1 matched funding of between $50,000 – $100,000 ($2 government funding to $1 applicant funding) to help early-stage startups overcome the initial challenges in getting their product or service to market
• Start Grants provide 1:1 matched funding of between $100,001 – $500,000 ($1 government funding to $1 applicant funding) to help early-stage startups accelerate the development and commercialisation of their product or service

The application process:

Part 1: Submitting an EOI (Expression of Interest)

Kindship's founders knew that securing a government grant would be a strategic way to extend their runway time to build the app before having to commercialise it. This would allow them to focus on building the product to the standard they wanted before launch, without relying on funding options with more complexity.

Kindship co-founder and chief technology officer Andrius Petrošius explained:

“As an early stage startup where you don't have market validation yet, you’re looking for ways to fuel cash flow without selling too much equity. It's really hard to get a good valuation for your business if you’re at the very early stages. So the benefit of the Seed-Start Grant, essentially, is that you eliminate the need to sell a lot of equity very, very early on.”

Like all government funding models, there’s a lengthy process to apply for a Seed-Start Grant (overall, the application process takes four to six months). Kindship requested our help because as their accountant and bookkeeper, we were best-positioned to provide the financial information and models needed. We essentially took on the role that an internal CFO would, which meant they could focus on the other parts of the EOI submission.

To start with, they had to submit an Expression of Interest (EOI). The Project Alfred team played a hands-on-role in making sure the financial side of the submission was taken care of. Because we were already across their financials (we manage their compliance, run their bookkeeping, and do their monthly reporting and cash flow reporting), this was a seamless process despite the complexity (in breadth and depth) of information needed.

Part 2: Preparing the full application

In our opinion, the Seed-Start Grant has a really interesting and effective process. Here’s why: applicants who are successful at the EOI stage are assigned an internal government rep whose role is to provide guidance and even assistance writing the full application, and applicants have 30 days to submit a draft full application after being invited to progress in the process.

Like all grant applications, a range of financial information and projections was needed. We:

• Interviewed the Kindship founders (after reviewing the grant application requirements) to qualify all the assumptions we’d be making in the spreadsheet we were building. We talked about where they want to get to in five years and looked at where business was at currently, and from these two starting points we were able to fill in the gaps in the middle (from a data perspective) about how they’d logically and reasonably get from Point A to Point B.
  
• Built a detailed financial model from 2022 to 2028, which included user numbers, growth rate, churn rate, fees per user, expenses as a percentage of revenue (some at a fixed rate, others with multipliers to account for efficiencies of scale). This provided a cash flow projection to demonstrate the viability of the business.
  
• Attended meetings with Kindship's government rep to answer any financial questions. This meant we had a comprehensive understanding of our client’s whole grant application, not just the scope of the information we were contributing to their submission.

If you’re applying for a grant, don’t assume the panel is going to be looking at your complete submission alongside the spreadsheet; it needs to be completely self-explanatory and standalone. Include all notes that the reader needs to know to understand the model and the assumptions and qualifications underpinning it within the spreadsheet on the first tab.

If financial modelling is outside your team’s area of expertise and you’re interested in applying for a government grant, get in touch with us. We can help you make sense of the submission requirements and give you confidence that your projections are based on realistic assumptions.

Part 3: Attending the independent assessment panel meeting

If the panel recommends an application to progress past the full application stage, the next step is to attend an in-person meeting. We attended the independent assessment panel meeting with the Kindship team ready to answer any financial questions that may have come up during the presentation. Our motto (“We’re not just your accountants, we’re an extension of your team”) in action!

As it turned out, the panel had no questions about our projections, which of course is a great sign that they had great confidence in the model’s assumptions and calculations.

Nevertheless, our clients told us they were relieved knowing we were there while they presented just in case the panel had any questions about the spreadsheet – particularly because it turned out that there were more people there for this meeting than they’d expected!

The result

Kindship's founders were successful in their application, and received mid six-figures in matched small business grant funding from the South Australian government.

This capital is pivotal to them having enough time to complete the build of their app before commercialising it, as it extends their runway by seven months. Had they not secured this funding, it may not have been possible for them to get their product to a point they were happy with before having to commercialise it. Alternatively, they may have had to secure extra external funding, such as more VC investment, which has the downside of diluting equity very early on.

Kindship co-founder and CTO Andrius told us he felt extremely confident, and trusted in our work throughout the entire grant application because of our diligence and, in his words, how we “took full responsibility” for making sure we had the information we needed.

“We worked on the grant application in a Google Doc and literally every single financial question would be highlighted, and we would have a half hour call with Liam from Project Alfred and I’d just show him the financial questions I needed him to answer. He would ask me to specify what's the vision – so if everything works out really well, five years from now what's kind of the ideal vision – and I’d communicate that.”

How we’re helping Kindship manage the grant’s ongoing compliance requirements

Something that many people don’t realise when they consider applying for a matched grant like Seed-Start is that once you successfully win a grant, that’s (far) from the end of the story! In this situation, our clients had to sign the grant deed and agree on the payment milestones and deliverables.

In this instance, our clients will receive their matched grant in three instalments, each linked to certain deliverables, i.e. they won’t receive the next instalment unless they meet the deliverables of the previous one. They also need to provide the South Australian Government Financing Authority (SAFA) (who administer the grant) with details of all their eligible expenditures and supportive evidence to show how they’re fulfilling their obligations.

We’ll be assisting Kindship throughout the duration of the Seed-Start Grant to provide this compliance and reporting information, allowing them to focus on the non-financial processes. We’ve implemented a system to keep eligible expenses in specific accounts on Xero, and will be maintaining a spreadsheet that specifies the expenses and transaction details needed to provide appropriate evidence, so that come reporting deadlines, all information is at-hand.

Tips for businesses applying for a Seed-Start Grant:

We asked Kindship's founders if they’d be willing to share a few pointers for others submitting an application for matched funding under the Seed-Start model. Here’s what they recommend based on their experience:

1. Build relationships with the people within the grant department prior to submitting an EOI. Talk to the reps and get an idea of what your strengths and weaknesses are and get feedback as early as possible. It's better to make sure you understand what concerns they see for your business before you submit your EOI, because this gives you a chance to proactively address gaps.
   
2. Be persistent: don't get discouraged if the grant department isn’t overly enthusiastic about your idea, or if they seem kind of sceptical and question a lot of things that you do. This is kind of an unspoken way to filter people out.
   
3. Put as much time and energy into your grant application as you would a capital raise. The process is long and complicated, but worth it. If your application gets past the EOI stage, nothing is guaranteed, but you can have reasonable confidence in your chance of success. If the government is willing to invest in assigning you an internal rep to support your application process, you know your idea has legs and that they see potential in your vision and work to date.
   
4. Really make the most of your relationship with your rep. It’s actually really cool that you have someone internal who’ll actually help you identify strengths and weaknesses of your application before the final submission. [Project Alfred: Kindship's founders have successfully applied for other grants previously, and found this application process to be one of the best, even though it was extremely thorough – see their next point.]
   
5. Be ready to answer lots (and lots) of questions. The department needs to justify spending taxpayer money on your business. Every single weakness of your application will be highlighted (in a good way) so if there's no substance to what you're trying to do, that will get exposed very, very quickly. [Project Alfred: In our client’s words: “We’ve been through two VC due diligence processes before, and this grant application audit was much more comprehensive.”]
   
6. If you win a Seed-Start Grant, make sure you’re really clear on what SAFA requires from a reporting and compliance perspective (consider booking in a meeting with them). If you’re not, when it comes to achieving your milestones, there could be gaps in your reporting, leading to complexities and extra approvals to go through, so make sure you make it easy for them to approve your eligible expenses.
   
7. If for whatever reason your financial situation changes and you don’t have the matched funding ready, make sure you address that before signing the deed as SAFA will expect evidence of matched funding (e.g. the bank statements to prove it). Keep in mind that throughout the Grant you’ll also need to demonstrate that your expenses do reflect what you projected in your application – you need to show that you’re spending your own money, as well as claiming expenses from the Grant at each milestone!
   
8. Optimise project milestones in such a way that you’re 100% confident you’ll deliver on them. There can be some back-and-forth to get these signed off on, and it’s important to make sure the milestones are within your control (i.e. reaching X amount of users = out of your control, but testing a marketing plan = within your control). Anything that’s dependent on others (e.g. suppliers), or that’s too generic (and thus hard to provide comprehensive evidence that you’ve done it) should be carefully considered before being included – take the time to get the wording right, and strongly in your favour, because the administrators are very strict on the due dates!

Need expert help with your grant application and management?

The Project Alfred accountants are experts in financial modelling, cash flow projections and scenario planning, so no matter how complicated the grant you’re applying for is, we’ve got you covered.

Send us a message today, or book a discovery call to find out more about how we can help your business apply for the funding you need to go after your goals.

Interested in reading more startup success stories? You can check out our interview with Paytron co-founders Francois Henrion and Jaco Veldsman about their journey launching a successful fintech startup here.