Tristan Dikkers: 'A funding application requires thorough preparation'

Tristan Dikkers: 'A funding application requires thorough preparation'

Whether you are starting a business or looking to grow as a company, there is actually always a need for money. But getting funding doesn't happen overnight. There is a lot you have to look out for and meet. In this blog I tell you how we assess funding applications at NOM and how a lead screening process works in general.

As an investment analyst, I see several leads come by every week. They approach NOM by phone, through the website or come in through our network. To make an initial assessment, these leads are subjected to a screening by me and the other investment analysts. If we think the funding request is sufficiently interesting, an investment manager joins us. Together we assess whether it is really worth starting an investment process.

Unfortunately, we regularly have to disappoint entrepreneurs. Simply because the application does not fit within the set frameworks or the business plan is insufficiently substantiated or incomplete. Indeed, applying for funding requires thorough preparation and, above all, a good understanding of the criteria of the various funds. Because in addition to NOM, there are also the regional funds we manage: the FOM (Fryslân), the MKB Fonds Drenthe and the Groeifonds. Each with their own investment conditions. Complicated? No way. On the website, which I regularly use myself as a reminder, there is an overview of all the hard criteria and other relevant information for each fund. So it is advisable to take a look there in advance.

How does it work?

Back to lead screening, as we call reviewing funding applications. So how does that work? When an application comes to us, the entrepreneur has usually already completed a short checklist. In it he or she indicates whether or not the company is located in one of the northern provinces, how high the desired funding amount is, whether there is already a business plan, and in which sector the company is active. This gives us an immediate impression of whether the proposition might fit in with the NOM or one of the regional funds.

How and why?

Of course, the information from the checklist is only limited. If the company is not yet known to us, we will therefore (first) contact the entrepreneur by telephone to find out more about the company and the how and why of the application. For funding from the NOM, for example, it is a condition that the company is innovative and/or distinctive. This quite often makes for interesting discussions. Ideas about what is or is not innovative can sometimes be quite different.

What does NOM understand by innovative and distinctive? There must be an innovative solution to an existing problem or a new market. In short, the product or service must carry a demonstrable improvement and not just serve the current standard. Preferably, the innovation is also linked to at least one of the three transition themes on which NOM focuses: More Sustainable, Healthier and Smarter. In other words, themes that contribute to important social issues. And in which the seven (top) sectors in the Northern Netherlands can play a major role of significance: Chemistry, Energy, Agrifood, Life sciences & health, ICT, High Tech Systems and Materials (HTSM) and Water technology.

As mentioned, the criteria mentioned above apply to NOM. The regional funds have different funding requirements. If it turns out that your company has access to several funds, you can of course apply to all of them. I wouldn't even hesitate for a moment. It regularly happens that NOM finances together with the regional funds.

Is there serious growth potential?

After the initial telephone conversation, if there are enough leads, we go further in depth. A comprehensive investigation then follows. This starts with requesting the business plan. The plan is reviewed by the investment analysts. If we are still so enthusiastic after that, all those directly involved with NOM can give their opinion on it. Often followed by an introductory meeting between the entrepreneur, the investment analyst and the investment manager.

But what do we really expect from a business plan? Why is it so important and what should it meet? Quite simply, we expect a business plan to describe all the relevant components of your business, such as:

The product

What kind of product (or) is it and what problem does it solve? And what makes it so innovative and/or distinctive?

The market

Is there, in the short and long term, a sufficient market for your product? Does market research show a real customer need or is it based on your own assumption? And with what strategy will you approach the market?

The business model

It's great when the product and market are promising. But it is at least as important for an investor to know how you generate sales and make a profit. So in the business model you describe your company's value to consumers and pricing strategy. Well-founded, of course.

Our team

We must have full confidence in the current team. For both NOM and the regional funds a crucial condition to invest. Or more precisely: all the competencies needed to make the company a success must be present in the team. If not, it must at least be clear to the team what complement is needed. Of course, during the interviews, this is largely covered, but we also want it to be reflected in the business plan.

The financial plan

At its core, this is a numerical translation of your business plan. For example, what are expected revenues and expenses. But yes, many leads that come to us are start-ups that have not yet generated much, if any, revenue. In that case, we mainly look at what they will spend the intended investment on, what it will achieve in the coming period, and whether the investment is realistic in the phase in which the company is currently operating.

Good insight into the growth potential of your business

In short, it comes down to being able to clearly and realistically state what you want to achieve with your product or service and how you want to do it. But also: what are the risks involved and can they be verified? In other words, before we actually decide to invest, we expect a good insight into the growth potential of your company. If that is positive and you also meet the set criteria, yes, there is a good chance that the funding process can be completed successfully.

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