Government Startup Funding: Good or Bad?

by AVC

What’s the verdict on seeking out government money to fund your startup?

There are competing opinions, actually. Yes, the government will provide an entrepreneur with money. In most cases, this will need to be paid back without interest. However, the funding will typically come with a few strings, such as limitations on the scope of your work in some cases or forcing you to spend the money by a certain date.

“I’m not a fan of this form of financing,” says Fred Wilson, a VC and principal at Union Square Venture Partners. “First, in principle I think that government ought to stay out of the business of picking winners and let the market do that. But more practically, I’ve never seen an entrepreneur change the outcome of their startup with government money.”

If you’ve been looking for investors to find growth capital and government funding seems like a sound alternative, it may be worth exploring. For more on venture-funding with government money, read the full article by Wilson.