Editor’s note: “The Angel Connection” is a regular feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share advice for entrepreneurs seeking angel investors and/or venture capital investment. He is chairman of the Triangle Accredited Capital Forum, an angel investor network with over 100 members throughout the Southeast.

RESEARCH TRIANGLE PARK, N.C. – With private equity being squeezed by the economic downturn, sources of start-up financing are becoming harder to find. If you don’t have some immediate cash flow to bootstrap your business, or assets against which to borrow money from a bank, you face an ugly world where money is harder to come by.

So far, government programs like the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grant programs are still going strong. These programs are a very good way to get some early financing to perform your market research and then to perform commercialization on your business idea. Usually divided up in two phases, an entrepreneur can initially get $100,000 for research and then another $500,000 to $1,000,000 for commercialization work, depending on which agency you are working with.

These programs are quite selective in that only a few government agencies sponsor them and there are strict timeframes in which grant applications can be made. The beauty of these programs is that the grants to do not have to be paid back and there are matching programs from certain states, like North Carolina, that can add further funding on top of the government grant.

To learn about these programs the place to go is the Small Business Technology Development Center (SBTDC). , including guidance on how to apply for government grants. They know all about how to apply and know the process for each of the agencies. Talk to John Ujvari, who can help you get started. Note also the events page for upcoming seminars. There is one scheduled for December 10th and 11th, in Fayetteville. You can learn about the “art” of completing one of these applications.

Although a long and competitive process, this can be quite an effective way of getting early financing. Many companies have gotten their start on these kinds of grants and sometimes continue applying for additional grants to carry them through the first few years when cash flow is minimal. Of course, you should also search for other foundation grant programs in your area. Check with your local economic development organizations or state department of commerce for guidance as to what programs are available in your area.

About the author: Bill Warner is the managing partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.