The Best Funding and Programs for Startups (in Utah & Beyond)

By Jacqueline Mumford

Whether your entrepreneurial journey has just started, you’re ready to sell, or you’re somewhere in between, one thing will always be true: you need money.

This was the topic of a recent Lassonde for Life workshop, “Funding and Programs for Startup,” led by multi-hyphenate entrepreneur Tim Cooley.

As a University of Utah MBA graduate, former executive director of Park City Angels, and current director of entrepreneurship for the Governor’s Office of Economic Opportunity, Cooley’s professional life is dedicated to supporting Utah’s ventures.

By thinking through the points below, you’ll be able to identify which funding sources are best for your startup.

Know what industry you are in

“99.3 percent of Utah is considered part of a small business, with over half a million people employed by a small business,” Cooley said.

Of this huge swath, only five sectors bring in most of Utah’s tax revenue: advanced manufacturing; life sciences and healthcare; aerospace and defense; software and IT; and financial services.

While pitch competitions or VC firms may still be a good source of capital, if you’re looking to develop a new medical device or computer program, the government has funding set aside for you.

“There are lots of grants and opportunities in those spaces,” Cooley said, “because of how attractive they are to the state.”

It’s not just statewide: programs like the Small Business Innovation Research and Small Business Technology Transfer (SBIR/SBTT) can provide grants of up to $2 million for medical devices and drugs, and VC Deep Tech Funds exist solely to fund IT and tech-related ventures.

Although there are plenty of other industries in Utah’s business landscape that could benefit from your startup, if you’re in one, Cooley advises diversifying your funding portfolio.

“In sectors such as general services, hospitality, tourism, or consumer packaged goods, from a government perspective, you’re at a disadvantage for raising capital,” he said.

Know your startup’s stage

Generally, Cooley looks at funding like a funnel. From an idea (the narrowest section) to the exit stage (the funnel’s brim), the type and amount of funding available increases. Knowing if you’re in the idea, minimum viable product, minimum sellable product, growing, or exit stage can inform where you pitch.

“Funding aligns 100 percent with risk,” he said. “As you get further in the business, the risk gets lower and the likelihood of receiving funding gets higher. The rule of thumb is: if I invest money, I want to get it back.”

In the idea phase, depending on your industry, almost no funding is available.

“It’s the highest risk,” he said. “Your best options are family and friends and personal funds.”

In the minimum viable product (MVP) phase, you have a prototype, but it’s not yet ready to sell.

“This is still high risk, but pitch competitions can now come into play,” he said. “Especially if you’re a student, there are great programs across the state, including for Silicon Slopes, Utah Tech Week, and here, at Lassonde.”

During MVP is also when microlending becomes feasible.

“You can prove your idea can become something,” he said. “Still – you’re not making money, so the loan holder is going to rely on collateral, like your house or another asset. Keep this in mind when looking for loans.”

In the minimum sellable product phase, you finally have cash flow – and a lot more open doors.

“You’re now in the moderate-risk phase,” Cooley said. “While your best bet is still friends and family and personal funds, microlending becomes easier to get with a proven revenue stream.”

Cooley suggested looking at county-specific microlending funds, like the Summit or Davis County groups.

“These local sources typically offer really good entry loans to help get your company moving forward,” he said.

Additionally, a new program, the Utah Small Business Credit Initiative is designed for companies at this stage.

“If you want to raise a million dollars but your lender turns you down, with this program, the government will split the loan with the bank, shrinking your burden,” he said.

If your startup is in the growth stage, “you know who to sell to, and your company is taking off,” Cooley said.

“This is where you’ll start seeing tons and tons of funding,” he said. “Venture capital and angel funds are more likely to be interested, and your chances of getting regular loans are higher.”

The APEX Accelerator and the Economic Development Tax Incentive Funds (EDTIF) are government funding opportunities that are also accessible at this stage. While APEX helps companies can government contracts, EDTIF can offer rebates on taxes paid for companies who hit certain performance metrics.

“Both are programs you should look into at the growth stage,” Cooley said.

Finally, if you’re ready to exit, you likely won’t need to look hard for funding.

“At this stage, everyone wants to put money in – banks, brokers, the government,” he said. “If you’re hoping to be the one acquiring, the Small Business Administration has the SBA 7(a) loan for people who want to acquire a business: entrepreneurship through acquisition.”

Common questions

Cooley participated in a brief question and answer session where he responded to his most frequently received questions.

Are there grants available for my idea?

“Generally, I don’t recommend you go after grants,” he said. “Those applications are lengthy, difficult, and confusing – if you’re not exactly what they’re looking for, it’s often a waste of time.”

Additionally, receiving the grant isn’t the end of the process.

“Grants have a reporting component on the backend with time-sensitive expectations,” he said. “The work is ongoing.”

Is it better to rely on equity or loans?

“If you want to keep your money, I recommend loans,” he said. “They’re much cheaper – they’re harder to get large amounts of money from, but that’s why microloans exist.”

It’s possible to secure a microloan, and then leverage the debt to apply for another, bigger loan.

“Venture is good if you’re owing rapidly and need money faster,” he said. “However, if everything works out, you’ll be paying back a percentage of your earnings to your owners, sometimes up to 30 percent.”

What do I do if I don’t have any money?

“No one has to start a company,” he said. “If you feel like your idea is going to take off, start simple: invest your paycheck into a new venture before you go out looking for other sources.”

Above all else, though, Cooley counseled to spend rationally.

“The key thing in any venture is don’t go broke,” he said. “It’s not easy to be trapped in an entity that’s running out of money. It’s not healthy physically or emotionally. Be very cautious with your money and try to get sales as quickly as possible.”

Funding and programs mentioned

About the Author:

Jacqueline Mumford Jacqueline is a master of accounting graduate from the University of Utah. Specializing in tax, she works as an accountant studying the intersection of government and business. In her free time, she runs, plays Candy Crush, and reads novels. Twitter: @jacqmumford and LinkedIn here.

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