The Drachma start up

Bad money by NM La-la-la I'm not listening, I kept saying, I'm not going to waste my time with stupid EU subsidies managed by the Greek government. They're corrupt and idiotic, I'd rather fund it myself or look for proper investors. But look at this one, my friend says: it's a new program, it's aimed for tech startups selling software over the internet using cloud technologies. It subsidizes 70% of your expenses and you can raise 300k euros if you have a little over 100k. Almost has your name on it. Ok, so we checked out how it works. Take a seat, the stupidity might knock you out. Supposedly the program gives you 300k if you spend 400k (roughly speaking) on building your company. You have to apply with your business plan and detailed budget to get approval. This will take a few months, paperwork and fees to people in the know that will help you make a winning proposal. Then you have to spend the money out of your own pocket. Yes, they don't actually give you any money, you're spending your own money, but you have to do it under the strict control of the budget you submitted. Then, maybe a year later, if you meet several conditions (let's assume everything's going well and you do) they will approve to pay you back the money. I'm told that for the Greek government to actually pay you the cash it might take an extra year. Now, what if you actually didn't have the money, which is usually the reason people look for funding. You could ask for an advance payment. This would take some time to approve, it would be partial and in order for them to give you the approval you'd have to first issue a bank guarantee to them for the same amount. So you'd have to give them the money so they can give it to you because you asked them to give it to you because you don't have it and that's why you were looking for a subsidy in the first place. I am not making this up. You'd wonder if anyone actually applies for this retarded program. I wondered, too, for about a minute, then decided I have better things to do with my time. Another friend was telling me about a similar monstrosity a few years ago. It was meant to provide liquidity to small businesses, to invigorate the economy. Among other requirements you'd have to have 3 years profitable record, no debts, and other conditions that would typically not describe a company that has liquidity problems. Oh and you'd have to have the money up front. (Do they even know what "liquidity problem" means?) So, only big, profitable companies who really didn't need that money could qualify for it. But because it was given with great interest rates, a lot of them applied, put them in the bank with a good interest rate for long-term deposits, got a loan for a smaller interest rate, did nothing with the money and made a small profit in a few years. If you were trying to design a program that does not help liquidity and on top of it freezes some cash in long-term deposits, that's the program you'd design. Who the hell makes these things up? Next time you hear some cretin in a government agency advertising how they are going to throw 100 million in the market to incentivize innovation and growth, this is what they mean. Sometimes I wonder, are they serving some corrupt purpose, or are they just that clueless? In other news, I was speaking to our accountant in the UK. She says the government has some tax incentives for startups. They are very simple: for the first 300k of profits you make, you have a reduced tax rate (about 20%) for every 100 pounds you spend on R&D you get 225 pounds deducted from your profits before tax is calculated; in fact if this would mean a tax return, you actually get some money back no pre-approvals for the above, you just declare your spending come tax-time and you know that you will receive the benefit first time entrepreneurs have a reduced dividend taxation at 10% for the first 10 million they make So, they tell you that if you take the risk to start something new they'll let you make enough money at first to make it worth it, they'll give you a tax break if you're doing research and they'll let you keep a bit more of your early profits, because that's what usually fuels your early growth. And it's a simple part of the tax policy. But that's too hard to come up with, isn't it? http://drachmastartup.wordpress.com/2012/06/07/bad-money/