The upside is that this will actually provide lots of research funding to small companies. Think of it like the seed round from a VC, but instead of investing into new companies, they try to strategically invest into existing companies to boost future tax revenue.
It'll probably be very German, meaning overly bureaucratic. But the basic idea of financing R&D in small companies to grow them more competitive seems legit to me.
As an example of what was funded by similar German government grants, you can look at voize, which is (by now) also a YC company: https://en.voize.de/uber-uns
EDIT: Here's some German info on the 1.98 mio € research grant from early 2022 (meaning it was awarded shortly before they joined the W22 YC batch): https://www.interaktive-technologien.de/projekte/pysa
Applying for a grant is normally difficult. In Germany, it's outright hellish. I hope I will be pleasantly surprised.
Applying for a grant in the European Commission is a labyrinth of different websites each with their own need to register. Grant Specs are largely in PDFs or Word Documents that are attached to the call. And it takes at least 6-9 months from open to decision. I have applied to about 20 grants throughout 2024 and haven't heard anything back from a single one yet.
EC scientific expert here (occasionally judging FP7/8/Horizon 2020/Horizon Europe grants in multiple areas including AI). I also authored some bigger proposals, one rejected (score: 13/15) and one funded.
It is perhaps not a good idea to apply to that many in such a short time frame, unless you have nothing else to do: the individual efforts need to be really excellent to succeed, so focus should be on quality rather than quantity. Why? There is a funding threshold, and you can have 5 proposals that get 13/15 ("good enough to fund"), but you still don't get any of them funded because there enough competing grants with 15/15 score, and after they receive their funding, the pot of money is already empty (the funding is in order of merit).
In my experience, most applications that fail to get the perfect score required are incomplete: To get excellent scores it is vital to FULLY address ANYTHING mentioned in the call. And to squeeze all that into 40 pages is an art. (There are folks that provide consulting support, which I have not used yet, or you could collaborate with someone who has worked on the other side to learn more about what is important.)
While getting grant money remains hard, I was pleasantly suprised about the judging effort and the EC's personnel energy put into the evaluation process and in making it fair; for each call, their is a special rapporteur going around and documenting that everything that should be done gets done the way it should be, and the EC take great pains to find experts that are diverse across multiple dimensions (gender, country, industry/academia, seniority, field of expertise etc.).
edit: typos
Thank you for your insightful reply. I am also registered as an Expert to the EC. I fully agree with you that completing all requirements in a 40-pager is hard. Which I think is exactly my point. It's competitive (that's good) and time-consuming. But I also believe grant applications are a muscle a startup should have when they want to do business with the government. In SpacecTech, Defense, and AI (my areas) this is largely unavoidable.
You should blog about your experience and submit to HN. I am sure you can get lots of good advice to improve your chances.
This has spawned almost an entire industry. Have a look at Zebra Embassy in Berlin as an example. I think it would be easier to "digitally transform" the process to be more efficient.
The websites certainly have their design quirks, as do the application forms (though you can avoid those traps by partnering with people who've done it before). But tbh a single document and 6 month turnaround for our Pathfinder bid was above average for grants we've won, and compares very favourably with our equity funding round.
I have applied for a few grants in Germany and also got them. It’s honestly not that difficult. If you have a large consortium with many partners it can become complicated but mostly because of the partners and not the government. My secret advice: when there is a grant there is also always a number you call or an email address, if anything is unclear, you can call them and they have always been very helpful.
> when there is a grant there is also always a number you call or an email address
100%. That can also sometime save you a ton of work of putting together information that they may not care about.
It's boring but otherwise harmless. You skim through 20 pages of legalese and fill out the blanks. Your local goverment office has an advisor who will check the forms together with you before you submit them. (I applied for and received a De-Minimis grant.) Plus for the larger grant types, there are advisory companies that work on commission.
Finally: a good use for LLMs ;)
Not if they ban, errr I mean regulate them ;)
I'm CTO in a startup in Germany. We've applied for and gotten various grants. It's not a big deal. And there are agencies that can help with this. I know various people in different companies that benefit from this as well. There is money at the state level, at the federal level, and the European level that can be unlocked via grants.
Germany has got a well deserved reputation for its bureaucracy and lack of flexibility. We were dealing with the tax office at the same time we were dealing with grants. One part of the government trying to give us money, another taking it away. We had our first deal with not enough revenue to even pay ourselves. That was calculated as "profit". As a bootstrapped company, we got very close to emptying our accounts a few times. And stuff like this isn't helpful. But we survived and we're still around. Partially thanks to these grants.
I think this incoming government is saying the right things and looks like they are planning to do things that sound like they are good ideas. Making the process of founding a company easier, incentivizing R&D, etc. There's a lot of potential in this country in terms of companies that are very specialized and high tech, well educated people, etc. They are definitely over dependent on older companies that are a bit past their prime, e.g. in automotive.
Germany mainly needs to deal with it's risk averse bureaucracy and culture. People that want to take risk here need to move more freely and faster. It shouldn't take months to found a company. Or thousands of euros to deal with all the bureaucracy (which it does if you add it all up).
Germany tends to stifle innovation by bureaucracy, restrictive & complex rules, and a finance climate that actively discourages investment and taking risk. Especially foreign investment. If you look at a lot of big name scale ups in Germany, you'll find that they have headquarters in places like Dublin, London, or Amsterdam. There's a good reason for this: if you want foreign investors to invest, a Gmbh is simply a somewhat toxic legal construction. These companies are German in all but name. That's about more than just taxes.
That needs to change. I think people are well aware. Merz certainly seems to be. But bureaucracies have a way of pushing back and this country is run by bureaucrats, politicians, lawyers, notaries, etc. that all benefit financially from the system being the way it is. They actively resist change and insist how crucial they are to the whole thing. Everything they touch tends to get more complex and convoluted. My worry is that they'll just end up adding to the problem instead of solving it.
I am based in Germany and have helped a couple of dozen individuals and small groups to successfully apply for grants and incorporate. It’s really not that difficult once you overcome the typical psychological barriers which if you look closely are a combination of prejudices and negative self talk.
On all levels, once you really breathe that there is a human person you are directing your inquiry to, and that you can help them do their job, they will be happy to direct money towards you. That principle applies from local startup funds to federal grants to EU level project officers. The “bureaucracy“ can be annoying in the sense of feeling like a waste of time (which, since you should factor in the cost of application into your later grant, is simply not true. It is actually really well paid boring labor.), but it’s really not complex or hard. If you believe they are hard for you (“hell“), you are engaged in negative self talk.
If you approach these things as highly annoying, and direct your annoying energy to the people who are handling your application, you will annoy them, which will make you feel like they are there to annoy you. The alternative is to approach them with the understanding that they’re not trying to make your life hard but are simply doing their job. They know much better than you that some things should be changed but it’s not up to them to change them, and they are not the right target to lobby for change.
Are you working as a consultant on these topics? I‘m looking for someone to get assistance with incorporating and grants this fall.
I used to, but I changed field and I’m not available, sorry. Good luck!
the good thing now with AI you can write all those pages of bullshit nobody reads bit you will accountable to if things dont work out
Didn't we get MP3s this way? Or is that a slightly different pathway
Fraunhofer is (by now) only financed 30% through tax money and 70% comes from the royalties on their past developments like MP3 and H264 and H265 and MPEG-H.
Anyway, Fraunhofer gets recurring tax funding. What voize got is a one-off research grant to a group of companies:
- voize
- Charité - Universitätsmedizin Berlin (a medical university)
- Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Berlin (a government AI research lab)
- Connext Communication GmbH, Paderborn (a tech company)
- Kleeblatt Pflegeheime gGmbH, Ludwigsburg (a retirement home, i.e. potential end user)
- Pflegewohnhaus am Waldkrankenhaus gGmbH, Berlin (another retirement home)
For this grant type, it's quite common that you pay the inventors, some assistant companies, some researchers, and some end users a lump sum to force them all to work together on commercializing the invention.
That’s not quite right for Fraunhofer: The financing model is also heavily dependent on research grants. The base funding is indeed around 30%. But another 40% are from publicly funded research projects. The last 30% are from research contracted by industry. In 2023, license fee revenue was €157M / €2991M, so roughly 5% of total contract research volume.
https://www.fraunhofer.de/en/about-fraunhofer/profile-struct...
Thanks! Today I learned... :)
Definition of government funding:
Funding for everyone except you.
Even worse: only for those who suck up to those who get to choose. Which usually means if you give me funding, I'll help you back.
I dont want the govt to fund any research funding. As a tax payer i did not vote this. I want to decide who i fund or not. It just means, my taxes will not go down. :/
I suppose then you won't get nearly as much medical research, technological research, scientific research. Seriously, you may not realize just how much genuine academic research at colleges, universities, and technical institutes rely on government grants.
At least that's how it is in the US. I'm unsure how different, if at all, it is in Germany.
Tip: All highly industrialised, wealthy nations are the same. Central govt provides huge sums for academic research with the hope that it can be commercialised.
In many fields of study, the money that goes into academic research is essentially more of high-level-talent education expense, so that local companies have pools of PhDs to hire from, rather than needing to produce a invention that will be commercialized.
E.g. if you look at PhD graduates only one in a few hundred (even in STEM fields) will end up on a path that commercializes their research, with most of the other ones moving into industry and likely not working on a directly related subject to their thesis. That's not necessarily a bad thing.
That does not scale. We cannot ask every single citizen about every single decision. You want to decide on each funding. The next will want to decide on every tax law change. Government decides, and if majority of population thinks they’re doing a shit job and someone else can do a less shot job they get replaced after a couple of years. Otherwise it’s micromanagement hell.
I disagree. Lets say i own 100 percent of my money. Just that i have to write it down, makes me shiver, what we as people accept to happen.
Am i interested in progress? Of course. Am i not smart enough to see or think long term, most likely. Give me a robo advisor, that helps me distribute my money. Give me best practises. I do not need a bloated government and their politics and interest groups for a simple decision, what i do with MY money that I have earned by working. Govt is the middle management that everyone complains about. A black hole.
I don’t get it. You want everyone to decide what they do with their taxes? roads in the middle of nowhere would never get maintained for example. Orphan sickness would see even less research than they do today. Etc.
Roads in the middle of nowhere are not needed, of course i would not want that. I want them there where they are needed. Like, connecting two big citied with a lot of nowhere in between. I want the robo advisor to make that calculation for me.
And the other thing: yeah, people know, what charity is. But there is no big charity, if the welfare state already takes half of your money. The responsibility to take care of people around you is offloaded to an anonymous entity.
Ok, that means you think that everyone should move away from countryside and into cities. I think that illustrates very well the problem with your approach. Minorities have zero chances of being represented.
The argument about charity and tax levels is not substantiated by any research as far as I can tell. There is however research showing that rich people give LESS to charity proportionally, compared to poorer people.
Making charity donations tax deductible, that does help though.
When people want to live on isles or in nowhere regions, so be it. But i do not want to support this lifestyle with my money. It does not mean, that everyone has to live on cities. If there are enough people to live abroad, then they live with the consequences. It's their home. And certainly becomes noticeable financially, when you go abroad making holidays to these awesome nowhere places.
About charity or tax level and who gives more, that question i do not ask. I would not ask anyone, what are you are willing to give and how much? Little, more, much, welcome. I just would not allow free-riding on things others have paid and worked for and their life blood is in it.
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The government has two jobs: 1. Steal your money, 2. Send you to die in a war.
Unless your country is a war, that means they can focus entirely on stealing your money. You're never going to be able to change that. The only thing you can do is protect your money outside their reach. Then you can decide freely how it is used.