More than $2M in non-dilutive funds available to every founder

When we started Frich, we honestly had no idea how many programs (& how much free cash!) existed for tiny teams and early-stage founders. There are billions of dollars in federal and state incentives designed for entrepreneurs and pre-profit startups but most founders have no idea they exist.

If you’re building with a small team, working with contractors, or still figuring out product-market fit, there is real money on the table for you. Sometimes it’s tax-free benefits, sometimes it’s credits you can use later, and sometimes it’s literal cash back to your company. This is the cheat sheet we wish someone had handed us on Day 1 ⬇️

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1️⃣ The R&D Payroll Tax Credit - up to $500K/year (even with no profit)

If you pay people to build your product (engineers, designers, technical work), the government gives you money back for it. Here's how it actually works:

• You spend money building your product
• The IRS offers a credit to support businesses doing technical or innovative work
• Instead of waiting until you’re profitable, the credit gets used to lower the payroll taxes you already pay every time you run payroll

Here's an example:

Why it’s amazing for startups:

• You don’t need profit
• You don’t need revenue
• You’re getting money back for work you’re already doing

Companies like Pilot and Mainstreet calculate the credit and file everything for you.

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2️⃣ State R&D Credits that give an extra 3–10% back

Many states give you additional credits for the same engineering and product work. It’s basically a second layer of savings on top of the federal R&D payroll credit. How it  works:

• You pay engineers or technical staff
• Your state says: “If this work happened here, we’ll also give you a credit for it”
• This credit usually reduces your state income tax
• If you’re not profitable yet, many states let you carry the credit forward until you are

Here's an example:

You can check your state program directly or use R&D providers (like Mainstreet or Pilot) that handle both federal + state filings.

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3️⃣ State Angel Investor Credits that can make raising money 25–50% easier

Some states give your investors a big tax credit (usually 25–50%) just for investing in your startup. This doesn’t reduce your taxes but it makes it much easier to close checks because investors get part of their money back from the state. Here's how it works:

• You apply to be a “qualified startup” in your state
• Investors who put money into your company get a state tax credit (usually 25–50% of their investment)
• This makes your round more attractive because investors take on less risk

Here's an example:

To set this up, search your state’s program: “[Your state] angel investor tax credit”.

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4️⃣ Hiring Credits - get up to $2,400–$9,600 per hire

You can get a tax credit for hiring certain employees. These credits work even if you’re not profitable yet (they carry forward). Every time you hire someone, they fill out a short WOTC form during onboarding:

• If they fall into one of the eligible groups (long-term unemployed, SNAP recipients, veterans, or youth workers) you can receive a credit of $2,400–$9,600 per hire.
• You don’t pay anything extra.
• You just get rewarded for giving someone a job.

Why it’s great for startups:

• Helps lower hiring costs
• Works for early-career roles (support, ops, SDRs, retail, etc.)
• Credits carry forward up to 20 years
• Takes almost no effort once set up
• Even summer interns (age 16–17 in certain areas) can earn you $1,200

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5️⃣ Non-Dilutive Grants: $50K - 1.5M you don’t have to pay back

This is money you get without giving up equity and without paying it back. Here's how it actually works:

• The U.S. government runs grant programs (SBIR/STTR) that fund R&D and product development
• Many states and cities also have innovation grants or matching grants
• You apply with a short proposal → if approved, they send you money to build your thing
• You don’t repay it and you don’t give away equity

Why it’s amazing for startups:

• No dilution
• No loan
• Money specifically to build product, run pilots, or do R&D
• Gives you “traction runway” before raising or instead of raising

Here's how to set it up:

• Federal:
  
  • Browse active SBIR/STTR grants
  • General federal grant search
• For state & local search:
  
  • “[your state] startup innovation grant”
  • “[your city] small business innovation fund”
  • “[state] SBIR matching grant”

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6️⃣ State “New Business” or “Startup” Tax Credits ($1K–$20K)

Many states give immediate tax credits or refunds simply for:

• registering a new business,
• hiring your first employee,
• moving your business to the state, or
• operating in a “targeted industry.”

Here's how to qualify:

• You apply once to your state’s economic development agency
• They grant your business a credit or refund for starting operations, creating a job, or opening an office
• Some credits are automatic and reduce your franchise tax or income tax immediately
• Some programs give you cash reimbursements for early expenses

Frich team hacks:

• Texas, Colorado, New York, Georgia, Utah, and Tennessee all have “new business credits” ranging from $1,000 to $10,000
• Some states give refundable credits (meaning: if you don’t owe taxes, they send you the money)

Why it’s valuable now:

• You get the benefit immediately in your first year
• Even 1-person LLCs in many states qualify
• Refundable credits = real cash back

To find these, search:

• “[your state] new business tax credit” or
• “[your state] small business incentive program”
• Or go directly to your state’s Department of Economic Development.