Case Study: INKids on Startup Funding and Government Grants

3D and UX Design for Games, VR and Animation

Case Study: INKids on Startup Funding and Government Grants

April 18, 2012 Uncategorized 0


[In this case study contributed by John McCann of INKids talks about picking the right niche market for your startup and shares tips and advice on successfully applying for government funding.]

Tell us a bit about you and your company


INKids kicked off a couple of years ago, as the first iPads were coming out. We had made a bunch of rubbish iPhone Apps to see if we could make some money, and we taught ourselves a few things along the way. We then decided to pick a fun area that we could pour our energy into to make some “quality” apps…. after a brief discussion we decided on the children’s education market (as it turns out, a lot of other people had the same idea)

We started work on a few ideas, and then eventually settled on creating a fully featured children’s flashcards app for the iPad with a view to make it the best in the category (well, the one that we could conceive at the time anyway, because we had nothing really to compare it to). It seemed liked one of the most of obvious uses for an iPad.

We worked on some extra features like 2nd languages, and put some time and effort into developing a bunch of settings that most other people forgot about when they were building their “my first words” type of apps. It was met with positive reviews when we launched, and was even mentioned on cable news in the US. It’s held water ever since. To date we ve had around half a million download for our Flashcards product alone.

Last year we made an app we did in partnership with a Teacher from Japan who’s now become fairly involved with INKids, you can read more about the Futaba story on


Why did you decide to start INKids?


We both like the idea of creating something useful that people will enjoy, and we both like both like creating software – Jude really enjoys designing UX and it’s fun to work through from an idea and to build something from scratch. With projects like the one’s we’ve worked on it’s been a lot of fun because every day is different. One day we might be finding a translator or voice over talent, and the next day we might be testing in-app purchase for the entire day. It’s challenging and interesting…. and who doesn’t like the idea of working for themselves?

Presently, we are both still working part-time, although because of assistance from the Interactive Media Fund, we’ve both been able to dedicate more time to INKids. Before we received the funding we weren’t paying ourselves any money. We financed the entire operation and kept all of our revenue in the bank so we’d have the leverage to apply for Grants, or to be able to invest the money in a new venture at some stage. It’s probably one of the smarter things we’ve done.


What are your long term goals?


In the long run we’d like to have a range of products that are generating enough cash flow to hire project managers, developers, and someone to do our book-keeping. Having an office and making enough money to pay ourselves would have to come first though. Even this might be a few years away unless we jump into bed with someone… it’s hard to pay yourself or to put cash away if you want to keep investing money in your ideas.

More immediately with “Flashcards for iPad”, we’re hoping to build on our existing success to add new languages and to build new content. We are also creating an Android and Blackberry version of the app. By the end of September we should have around 20 new builds in different

markets in Japanese, Arabic, Swedish, Hindi and Chinese (to name a few languages). If we don’t we’ll owe a lot of money to the NSW Government. So far everything is on course, and we’re creating a separate C++ build. We’re just about to launch an updated build for iOS with a bunch of new content.


Last year you applied for the NSW Interactive Media Fund, how long did the process take?


A LONG time.

We put in our first application towards the beginning of 2011. It took 3-4 days to put together. It was rejected for one reason or another – I can’t remember why. Probably because we applied for a travel grant at the same time which was very poorly reasoned – a bad idea.

I then spent time on the phone to find out how we could improve our application (speaking directly with the Project Manager in the Department of Trade and Investment). We then spent another week putting together a revised application with some detail. I thought I’d done a wonderful job, but I sent it to my friend who works at a Communication Manager at UTS. It came back with red text all over it.

The biggest problem was that we hadn’t addressed the criteria specifically, we’d written a bunch of stuff that sounded beautiful but it didn’t really mean anything. My friend also reminded me to use dot points and to be as concise as possible when I could – “people reviewing the applications would have to read through a pile of them at the same time and I needed to make their life easy” was the advice my friend gave me. I spent a few more days on it. Had some more people read it and then I sent it off again.

We received a phone call and were told our application looked very promising and that it was being passed up the chain of command. We were excited, but then the application was rejected again because the Interactive Media Fund (previously the Digital Media Fund fund) had dried up. We were too late.

Feeling utterly dejected, we got on with our part-time job that didn’t pay us any money. We actually made a really cool app in about a month, and then we didn’t do much for the rest of the year. In October we received a phone call asking us to resubmit our application because there was a chance that there might be extra funding made available at some stage. I spent another 2 days updating our application and sent it off. A a month later, we got a phone call out of the blue and were told that our application for funding had been successful and that we’d have $90,000 to spend on our Flashcards Application.


The fund application requires a budget and cash flow projections – what did you budget for?


The project schedule we included was ~$200K, which we will need every drop of. Most of it is actually going towards resources (translations, professional voice over artists, illustrations, etc).

When we put together the application we had no real idea how important the “Project Schedule” was, or that it would be the basis of a legal agreement. We’ve now basically fully committed ourselves to spending everything we had in the bank, everything the IMF has given us and most of our cash-flow for the rest of the year. We hadn’t put much thought into this at the time, but it’s working out well so far. We are accounting for every cent we have spent on the “enhancements” and were nearly half-way through the project (and our budget).

Creating a product roadmap and breaking each component into its smallest parts was actually a very useful thing to do, and helped us work out how much money we’d need to get everything done. To date, we’ve gone over budget for some line items, and a few of technical approaches have changed, for instance, we’re using Made with Marmalade instead of another Framework, but mostly we’re “on task” and our projected budget is looking good.

Prior to our IMF application, budgeting like this was something we’d never really spend much time on, but it’s something I would recommend doing for every project now.

One other bit of useful advice I heard from Ben Cusack during a “Startup Smart” Webinar AFTER we had completed our application was that a) you need to be able to show you have money in the bank, but not quite enough to achieve your business goals) that you have cash-flow or a demonstrated proof of concept, and that c) you’ve put your own blood, sweat and tears into the project. I can’t actually find the video or a link to the webinar – these aren’t direct quotes but I’m sure he said something along these lines. He also mentioned that you shouldn’t apply for the full funding amount available in each category because it shows you haven’t put any thought into it.

For instance, as part of IMF, up to $250,000 is available for production assistance. We asked for less than half of the total amount available per application. We also asked for less than 50% of our total budget. Putting your own money on the line is crucial, as it shows you’re willing to back yourself before you ask someone else to. As it happened, we’d more or less done most of these things, more by chance then through experience.

Another thing to consider, which we didn’t find out until right before we signed agreement is that if you’re successful with an IMF, you’ll generally only get 75% of the money up front, and 25% at the completion of the project. We might have budgeted differently if we knew this, but now we’re just going to have to make ends meet to get everything over the line.


What are the top five things you recommend new startups keep in mind when making an application for grant funding?


  1. Address the exact criteria in your application. Use dot points. Be specific. Keep it simple.
  2. Be realistic in how much money you are asking for and what you can do with it. We also had to submit a full list of company financials prior to the approval.
  3. Be prepared to put your money on the line (and / or make sure you have some cash on hand before you apply)
  4. Don’t be afraid to ask. If we didn’t, we would have given up after our first attempt.
  5. Make sure you have a good idea.


@INKids are a Newcastle based company who make children’s educational apps, including collaborative games like “Futaba” (which is designed for the classroom). They’ve received a number of iTunes features for their work and their Flashcards for iPad app spent time at #1 in the education category, ahead of TED. They’ve recently been awarded a grant as part of the NSW Government’s Interactive Media Fund to help expand on their App Store success. Sign up for their facebook page or email John directly.