Government grants and equity funding support startups in different ways. Grants may fund eligible activities without requiring founders to sell equity, while equity investment provides capital in exchange for an ownership stake. Neither option is automatically better for every business.
A grant may suit a startup undertaking eligible research, prototype development or another activity specified by a scheme. However, grants can involve eligibility conditions, competitive selection, restricted spending, documentation and reporting. Approval and disbursement are not guaranteed.
Equity investment may be useful when a startup needs capital and strategic support to pursue a growth plan. Founders must consider dilution, investor rights, governance and expectations about future growth.
Evaluate both options against the business stage, funding requirement, intended use of funds, timeline and ability to meet the applicable terms. Some startups may use a combination of funding sources where permitted.