Grant or Investment: Pros and Cons of Funding from Azizbek Kurbonov

Azizbek Kurbonov, city — Tashkent, co-founder of the startup Sug’urta Bozor

We have all repeatedly read and heard that depending on the startup project's cycle, there are several options for project financing.

However, if we look at startup financing from a bird's-eye view, there are four types of funding regardless of the development stage:

1. Own money, savings, without external investments, i.e., bootstrapping. You don't need to give up equity to others.

2. Investments. These can be private equity, VC, private money, and so on.
This is money in exchange for equity in the company.

3. Loan or credit. This case is not very common. There are many reasons for this.
For this money, you usually don't give up equity in the company; you pay them back with money.

4. Grant. Not a very common method, but also effective. It depends on how you perceive it.

In this article, I want to focus on comparing investment money and grants. To make it clear, let's draw a table.

In general, it's up to you, but according to my experience, founders perceive grants as free money, and they are often spent not for their intended purposes.

Investment money comes with responsibility and support. Moreover, they have a different energy; they attract more money. This type of funding keeps founders on their toes and doesn't let them relax.