Free money for promising ideas

This post is also available in: Danish

Developing a startup costs time and money, and especially innovative early-stage startups should consider the possibility of raising soft funding.

Soft funding is a form of financing that provides financial support to startups without requiring ownership of the business. Funding is typically provided by public authorities, non-profit organizations and other institutions that support entrepreneurship and innovation – often with higher goals of growth and job creation or broader societal agendas in mind.

There are many soft funding programs with different focus areas, but some of the activities you can get soft funding for include research, development, pilot testing, purchasing new equipment and hiring external consultants.

A boost for the risky ones

Soft funding gives startups access to funding that they may not be able to get from traditional sources such as business angels or venture capitalFuel for startups' rocket ride. Venture capital is pro investors who create pool funds to seek innovation, and to mentor. It is high risk, high reward journeys. More. This can be especially true for early-stage startups that don’t yet have a proven business model or revenue stream, causing investors to assess the valuation of their company very low.

Soft funding often targets areas that may be too risky for traditional investors in the early stages – such as complex innovation with high risk, social and environmental impact or projects that aim to create more diversity and inclusion in the startup ecosystem. Other times, soft funding can be used to leverage early stage investors’ money.

Soft funding often aims to benefit society as a whole in some way. However, soft funding is not altruism: startups are expected to build a viable business, and most soft funding programs also require co-funding from the company in the form of cash or man hours. In addition, many soft funding programs offer mentoring, training and other forms of support to help startups grow and succeed.

Get help with the opportunity

There are many opportunities for soft funding; at regional, national, Nordic and European level. This means that it can be difficult and resource-intensive to find the relevant grants and programs before preparing an application that may not be approved.

Fortunately, there are several options for help. For example, there are highly specialized consultancies like Nordic Innovators that can help identify and subsequently prepare applications for Danish (e.g. Innobooster), Nordic and European funding programs.