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Scale Impact CEO recently sat down with Cauldron Co-Founder and CEO Michele Stansfield and Main Sequence Venture’s partner Phil Morle to share some insights from their journey in securing government funding for Cauldron.

Camilla: 

So, tell me more about, your government funding journey. You and I, Scale Impact and Cauldron have been working together closely to secure you lots of non-dilutive funding. How has Scale Impact provided value?

Michele: 

So it’s been an amazing journey. And for a startup, that’s so important to bring in that non diluted funding. Signalling is a really important part of our journey. The government are effectively investing in Cauldron and by having them do their diligence and make that signal saying that we’re willing to invest in this, it actually sends a huge signal to all investors.

Phil: 

Yeah, I think it’s very important. And having the government coming in to underwrite some of the risk and signal that they think it’s very important and they’ll be behind something that might be established somewhere is really important. It does cause things to happen that might otherwise not happen.

Camilla:  

I’m curious, Michelle, to know where have you found the most value in our work together with Scale Impact and Cauldron?

Michele:  

Your relationships people in the government. So being able to find the right person who can really establish and tell us where the funds are is really important. But most importantly, for startup founders like myself in that you effectively communicate with the government on behalf of the company that you’re working with. What is important to Cauldron and what might be important to Phil, there might be a different scope for the government so being able to translate the very high risk nature that we’re working within into governments and support that, that’s really important.

Phil: 

I think one of the most important things you bring for startups is a strategic and medium to long term perspective, not just a reactive perspective to grant funding. I think my experience has been startups tend to notice that there’s a grant, then may go for it, then may or may not get it. And it becomes a very lumpy source of revenue for the company, but as you’ve helped us to understand, actually, we could double the amount of money we bring in. That money could be non-dilutive, from the government. But what we need to do is have a long-term strategic perspective on how we do that. So I think startups need to have a plan which lasts for years with multiple grants and multiple jurisdictions. And it could be a substantial contribution to the capital that the company needs.

Camilla:  

I love seeing it as the complement to the VC. That it rides alongside and similar to how they’ve got such a great stepped out plan for Seed, Series A, Series B, and slam dunk financing, that this is sort of a complimentary stream running alongside that to support it.

Michele: 

For us, it’s interesting. We’ve had conversations in the past and the amount of work that we will put into a fundraise, which may be say $10m dollar fundraise, the amount of work that you put into that, but they won’t put that into a grant application is very interesting. Another point I think a lot of people probably don’t understand, and this is the value you bring, is the grant system is a lot of the time set up so there’s concurrent grants. So there’s a first investment that the government will make, but then there’s secondary funding behind that and tertiary funding behind that. Understanding that progress and how that might run from Series Seed to Series A to Series B, and that continuity for a startup like us and understanding those funding environments is really important.

Camilla: 

Yes, I believe there is a funding source, a non diluted funding source for each stage of the company, that marries to the raise. So, it’s great that you’ve seen that in the flesh now, you’ve seen it play out. Scale Impact has been very successful in securing Cauldron government grants. Congratulations, you must both be very happy!

Phil: 

Very

Michele: 

We are. It’s vital.

Camilla: 

That is a target – 50% of those early raises could be from non-dilutive funding and that rewards all the early high risk investors and founders.