If you have a great software idea but lack funds, don’t back out; instead, use grants for software development to get started. There are many organizations that offer help building a powerful digital asset in return for something or even nothing. And if you’re confused about why any company or institute would give you this favor, this is where you get your answers.
In this article, we have discussed what grants are and how you can get software development funding. Moreover, you will also learn about the 5 sources to get grants for software development with the eligibility criteria.
What are Grants for Software Development?
Grants are one of the ways to turn your software idea into reality by finding funding sources. The sources that provide grants could be government or private institutes. You can use their funds to develop a great digital product by finding a reliable tech partner.
Why Do You Need Grants for Software Development?
Not every startup or small business has the required money to develop its own software. And building a digital asset that meets your business vision needs robust research, a great team of developers, and a heavy IT structure.
Bank Loans vs Grants for Software Development
Bank loans may be a great source. But there is a plethora of restrictions and a responsibility to pay back the original funded amount along with interest. Since banks or financial institutions lend you money, you are legally bound to return the borrowed money.
On the other hand, according to Granted Consulting, you don’t have to pay back grants as they are considered ‘free money.’ Nevertheless, it also depends on the source that is allocating funds to help you with your software development journey.
A Few Common Types of Grants for Software Development
There are usually three types of grants.
Rebate grants for software development are provided for the homework you have already done, like Research and Development for a product.
2. Competitive Grants
Competitive grants are given for the activities you will perform in the future to build your software. For example, you have a great idea and want the money for R&D to start building the software yourself. Or you want to hire a software development company to work on your project.
3. Technology Grants to Nonprofit Organizations
These are grants for software development offered to nonprofit organizations to scale their activities to scale their humanitarian services. For instance, Twilio.org provide grants to nonprofit institutes which help people from underrepresented communities become great software developers.
Similarly, the Product Grant Program by Cisco donates communication and networking technologies to nonprofits. And Tech Forward provides technology grants of up to $10,000 to nonprofits.
Example of Grants for Software Development – Funding for Research Software
This example explains how research software engineers (RSEs) can get grants for software development to build software based on their research. Keep in mind an RSE is a person who works with different researchers in any field to identify the problems they face.
By getting the knowledge and information, they develop software products to solve researchers’ problems by hiring skilled developers or outsourcing companies.
A research software engineer may source grants from different organizations, such as commercial institutes, charitable organizations, and research councils. However, the grants for writing programs which they may receive could be in small parts.
To request grants for software development, they need to elaborate on the following:
- Proposal and software development plan
- Software activities required to be fulfilled
- Duration of activities and delivery time
- The number of developers needed (or development charges of a company)
The above information helps get an idea of the total cost required, which is then forwarded to institutes offering grants.
5 Best Sources to Get Grants for Software Development
In this part of the article, we have talked about 5 types of sources that can help you give grants for software development.
1. Government Grants
Government grants for software development are a popular way to get your software funds. Many countries give this option, for instance, there are excellent grants for software development in the UK. Therefore, you can find a government program or an agency that will provide funds at a provincial or federal level.
Nevertheless, some government setups might only offer a percentage of the required funds for a specific part of software development. For instance, a government program only grants 30% of the total funds for research purposes. Therefore, try to include as much information as possible about your software idea, including description, software benefits, and the entire cost.
2. Venture Capital
Venture Capital (VC) is a type of private equity funding provided to startups and emerging businesses with growth potential. There are many venture capital firms that offer grants for software development.
VC investors are mostly wealthy investors who give funds in exchange for participation in their projects or share ownership. Some VC capitalists may also seek at least one position on a board of directors.
But ensure the VC firm you are approaching is reliable and has good experience with potential software development organizations. You can share your software development plan and let the venture capital take time to review your proposal.
3. Angel Investors
You can also consider joining hands with angel investors to have grants for software development. The investors may require your company’s net worth to be around $1 million with a yearly income of $200,00 at least. Angel investors give grants from their own earned money, and in return, they may ask for an equity stake.
4. Business Line of Credit
According to the Bank of America, a business line of credit is an unsecured debt. It means you don’t have to sell your digital assets to pay lenders in case you cannot pay the amount. Many lenders only offer a pool of capital to companies for a minimum of 6 months with a specific credit limit.
You can use the amount from the pool to develop software within the credit limit. Moreover, you are only obliged to pay interest on the amount you have taken. For instance, if you are offered $1 million in 6 months. And you only utilize $0.5 million, you will only pay interest on the amount you have used.
Crowdfunding can also help you have grants for software development. In this process, you collect funds from multiple funders by sharing your software idea on different crowdfunding platforms.
But to get grants from such platforms, you need to demonstrate an MVP or a model of your software product to get funds. That is why established software companies have more chances of receiving grants through crowdfunding, as they have a real example to show.
Also Read: 7 Steps on Building a Great MVP
You can find a crowdfunding website and set up a strong campaign with a description of your company. You must also tell the software type you are developing and the money you want to raise.
Interested investors will look into all the information and usually donate funds in return for an optional reward. For example, you can promise to give investors great discounts on your digital product.
Getting grants for software development is possible if you know the right organization to approach. For example, you can request government grants or contact venture capital firms. Likewise, there are a few more options, including angel investors, business line of credit, and crowdfunding websites.
At Slash, we develop top-notch software and digital solutions catering to your needs. Our expert software engineers have the right skills and experience to understand your requirements, ensuring excellent value for money. Contact us to hire best-in-class developers to build a winning tech product.
FAQs – Grants for Software Development
Q1. How do I get funding for my software development?
You can contact government and private institutes to get funding for your software.
Q2. What are the most common grants for software development?
The most common grants for software development are rebate grants, competitive grants, and technology grants.
Q3. Is it hard to get grants for software development?
You can easily get grants if you have a proper proposal and the required cost for your activities related to software development.
Q4. What are the 3 pros and cons of grants for software development?
Grants for software development can help you quickly get started with your project. You may need to return the amount in terms of rewards, and with a good history, you can get more grants in the future. Contrarily, grants require detailed research and documentation. You may need to wait for several days or months for approval. Besides, you may not get the full required amount.
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