EXIST Concept Paper – Successful Start-up Grant

12 months of funded work on the business model for the innovation

Top ideas from science can become successful start-ups. This is where the EXIST funding program comes in. The application for the start-up grant includes the EXIST idea paper. This idea paper is an initial business plan for the start-up idea. The BMWi actually provides two routes into the world of EXIST funding:

1. EXIST start-up grant for the start-up business plan

Founders can receive a maximum of just under 150,000 euros to write the business plan for their business idea. This includes three salaries for 12 months and a budget for materials and coaching.

2. EXIST research transfer for R&D work

Here, 250,000 euros are possible in the first funding period. Another 180,000 euros are possible in a second funding period. Research transfer makes sense if extensive R&D activities are still required before commercialization is realistically possible.

Three important hurdles to the EXIST start-up grant

The application for the EXIST start-up grant should be well prepared. This is because if less than half of the required points are obtained, a second application attempt is usually not possible. At the same time, the number of applications is increasing.

• Hurdle #1: You need a team
  A maximum of three people are eligible for funding. Putting together a start-up team is a challenge. The team needs professional expertise, personal matching and the willingness of the team members to take on the hassle of founding and funding.
• Hurdle #2: A chair as supporter and applicant
  The application is not submitted by the founding team, but by a chair. The chair also provides the funding to the team. In principle, universities and research institutes have a vested interest in supporting EXIST grants. However, making the right choice remains critical. In the perfect case, professional support, geographical proximity and compatible mindsets and values come together.
• Hurdle #3: The idea paper
  The business idea is required in the form of a 25-page idea paper. This includes the innovative product, some background information and an initial business plan on how the project is to become marketable and viable.

Tips for all those who want to try their hand at the EXIST idea paper without assistance

Frequently asked questions about the ideas paper:

• Is there a template for the idea paper, also known as an idea sketch?
• What formal and substantive requirements must applicants fulfill?
• What evaluation grid do the experts use to evaluate the EXIST ideas paper?
• What effort is realistic for a successful ideas paper?

The first draft

The first draft of the ideas paper is rarely a success. This is neither bad nor surprising. After all, you are scientists and not yet entrepreneurs. That’s why the idea paper initially looks more like a scientific paper than a convincing business plan. But wait a minute: Isn’t the business plan the ultimate goal of the EXIST start-up grant? And now the idea paper should already contain a business plan? Um, yes! Exactly! The structure, layout and content of the idea paper are ultimately identical to that of the intended business plan. The details and the degree of validation, credibility and realism are of course much lower in the idea paper than in the final business plan.

Typical errors in the EXIST ideas paper

1. The executive summary is not a summary, but an introduction

A flaw that scientific papers also often have. Only there it usually doesn’t bother anyone.

TIP for the idea paper: The idea paper is not a thriller. So please, no suspense story. A good executive summary reveals all the relevant key points.

2. To understand anything, you first have to have read everything

Preferably two or three times. With highly scientific topics, this is usually accepted as “there’s no other way”. Although it is not true. For the EXIST start-up grant, as for any other business plan, this is a real success killer.

TIP for the ideas paper: Every academic should be able to understand the ideas paper without major problems. Accompany one person as they read the ideas paper and note where the thread of understanding breaks. This is the first building site.

3. There are many empty phrases and buzzwords and little quantification

Statements such as “… numerous target groups have a need for future-proof solutions such as …” or “… after all, blockchain and bionic microchips are the future …” do more harm than good. The EXIST idea paper should prove that the founding team has a clear idea of how a scientific idea can be realized commercially. Vague generalizations tend to prove the opposite.

TIP for the idea paper: First-hand customer interviews work wonders. A few targeted discussions with future users and buyers create a good basis for quantification. With or without LOI.

4. 90% of the real content is technical details, features and evaluations

It should only be ten percent. Much more important are the questions “Who needs this?”, “Who can do this?” and “Why can you do this and not everyone else?” The technical solution is actually more in the background.

TIP for the idea paper: The technical details are not the most important criterion for success. A good idea paper largely gets by with a “black box product”. Practice this black box thinking. This helps in the idea paper and far beyond.

5. The text consists of copy-paste elements of published papers from the last 5-10 years

This can be seen in duplications, inconsistent terminology and the lack of a common thread. Efficiency and reuse are certainly a good idea. However, sometimes the result is better if you think again about what you actually want to express. And it’s quicker too. Nevertheless, a quick copy-paste draft is still better than sitting in front of a blank sheet of paper for weeks like a rabbit in front of a snake.

TIP for the idea paper: Every paragraph has a message. Write the message you want to convey next to each paragraph. This makes it immediately clear what is superfluous, what is duplicated and what is out of sequence.

6. too much text

The requirement for the EXIST ideas paper is 25 pages. This is not strictly binding. But experience shows that it is worth taking this limit seriously. Because it increases the chances of success. And because it is important to get to the point. But the first draft is usually twice as long and contains only 25% of the necessary content.

TIP for the idea paper: Reuse is a nice concept. It sounds like efficiency. Forget about reuse until you have a coherent central theme. Only then reuse text modules if necessary.

Typical weaknesses in the EXIST ideas paper using the example chapter “Competitors”

Most of the time, the EXIST ideas paper for the competition says something like:

We are unique and there is no competition. Our technology is superior and unique because (… enumeration of highly scientific, technical details …).

It is obvious that founders think this. After all, everyone is telling them that this must be their conviction. Especially when it comes to the investor pitch. A conviction that certainly strengthens motivation and can drive the team forward. But one level deeper, the founding team naturally needs to know better. Because this flatly formulated message says nothing other than:

We have not seriously engaged with other market participants. Our self-confidence is slowly turning into hubris, arrogance and blindness. Reality will hit us like a cold punch in the neck.

The message that should actually be conveyed is rather:

We know what is happening on the market, what alternatives customers are considering and why we will still have a chance.

Actual necessary content In the “Competitors” chapter of the ideas paper

A. The problem is real

This is why customers are looking for solutions. The existing solutions are workarounds that alleviate the pain but do not satisfactorily eliminate the problem. Quantification is often difficult but always possible and is unbeatable in terms of argumentation at this point. How big is the problem and how well do previous attempts solve the problem?

B. Today’s solutions have a raison d’être

The existing attempted solutions and established competitors have strengths in areas a, b and c. These strengths can be, for example, price, established customer relationships, efficiency of problem solving, integration into existing work processes, high level of awareness, technical maturity or ease of use.

C. Our innovative product has special strengths

The approach described in the concept paper is superior in points x, y and z. A solution that is superior to all alternatives in all points seems unrealistic. And it usually is. The temptation to suggest absolute superiority is probably just as dangerous as hiding one’s own light under a bushel and not clearly stating advantages.

D. We know in which niche we can achieve initial success

We therefore see great opportunities for success in the following use cases and target groups in particular…

E. A picture is worth a thousand words

A presentation on two axes is useful here. The two axes can be important decision criteria from the perspective of the future customer. Or important aspects of market segmentation from the perspective of the future company.

TIP for the concept paper: Don’t use the term “competitor” to mean “other companies that offer a comparable technical solution”. Much more important is which providers and solutions represent alternatives from the customer’s point of view. This also includes incomplete or poor alternatives.

Formal background information on the EXIST start-up grant and EXIST research transfer is provided by the BMWi.

Successfully apply for EXIST with TOM SPIKE

TOM SPIKE accompanies established industrial companies and start-ups to successful products and business models of the future. As an experienced innovation consultancy with cross-industry experience, we combine two important success factors: detailed expertise in technical disciplines and the necessary distance and vision for strategies and business models. We maintain an excellent network of contacts, particularly in the B2B, industry and technology sectors.