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What funding gaps do corporates and grant providers typically miss when supporting early-stage startups?

September 9, 2026 The Responsible Finance Podcast · Kate Barnard

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Grants systematically exclude sales, marketing, and commercialization costs—the very activities needed to generate the traction that grant providers demand as proof of viability. Corporates should fund these critical gaps rather than duplicating support that traditional funders already provide, and ensure startups receive the full investment upfront rather than waiting for reimbursement.

This misalignment creates a structural trap for early-stage ventures. When grant programs refuse to cover the commercial activities required to prove a product works in the real market, they simultaneously hold startups accountable for achieving market traction without the funding to reach it. The result is a funding paradox that leaves startups dependent on precisely the corporate sponsors who could bridge this gap.

Kate Barnard's advice to corporate funders is direct: identify and fund the gaps nobody else will touch. Rather than layering yet another grant on top of existing support structures, corporates add real value by taking on the risky, unglamorous work of sales and marketing—activities that feel entrepreneurial and necessary but that traditional grant schemes systematically exclude.

Why sales and marketing remain unfunded

Grant administrators often view commercialization costs with skepticism. These activities feel less like innovation and more like ordinary business operations, making them ineligible under most grant criteria. As discussed in The Responsible Finance Podcast episode, this logic creates a blind spot: startups need revenue to survive, yet the mechanism required to generate revenue is not funded.

The second layer of this problem is timing. Funders typically award grants based on evidence of early traction or product-market fit—but generating that traction requires marketing spend and sales effort. It's a chicken-and-egg situation, and early-stage founders often find themselves unable to secure grant funding because they lack the traction metrics, even though achieving those metrics requires the very spend grants won't cover.

Corporate funders who understand this gap position themselves as genuine enablers of startup success, not just additional sources of capital. They become strategic investors in the execution phase, not just the research or product development phase.

The case for upfront funding instead of reimbursement

A final operational detail matters: startups should receive corporate funding upfront, not in arrears. Many funding structures reimburse expenses after they're incurred, forcing early-stage teams to float costs they can't afford. Upfront funding removes this cash-flow barrier and signals trust in the team's ability to spend wisely.

For more context on how different funding mechanisms interact with startup development, explore the full episode on Listenly, where Kate Barnard details her experience navigating corporate funding and grant eligibility while building Enjoy the Air.

"The local authorities in the UK have a legal legislative requirement to document and provide evidence of their air quality and it is quite surprising how many do not meet it."

The funding gap Kate Barnard identifies reflects a broader misalignment in how corporate and grant-based support systems treat startup risk. Traditional grant schemes protect themselves by funding only research, development, or activities that feel innovation-focused. But startups are not institutions; they're teams racing against cash-flow cliffs. Corporate funders who recognize this—and who step in to fund sales, marketing, and the real-world commercialization work—become irreplaceable partners in the journey from prototype to viable business.

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