Growth from grants : evaluating the impact of public funding on startup outcomes : growth in income, survival rates and growth prospects

Abstract

Public funding programs are frequently used by startup ecosystems in Asia to stimulate early-stage innovation, but it is yet unknown how effective these programs will be in the long run. Although government subsidies offer non-dilutive financing to speed up initial development, there is no data on long-term effects such as growth and survival. The purpose of this thesis is to assess the immediate and long-term effects of public investment on the results of startup development. In particular, it looks at startup R&D progress, market entry, team hiring, prototype completion and post-grant sustainability. A mixed-methods approach was employed, including qualitative interviews and quantitative surveys with 25 entrepreneurs from Asian startups, including 13 beneficiaries of government grants. Both short-term post-funding milestones and long-term performance metrics were recorded throughout data collection. Compared to their contemporaries who did not receive grants, grant-recipient businesses grew their teams, developed prototypes and entered the market more quickly and had a higher chance of obtaining follow-on investments. However, several reported less strategic agility because of onerous grant-related reporting obligations. In addition, many encountered financial shortfalls once the grants ended. Public funds greatly speed up early business development and expansion, but they also create sustainability issues. These results emphasize how crucial it is to close post-grant funding gaps and reduce administrative workloads in order to guarantee long-term business viability after initial public support.