The Power of large scale non-dilutive vs dilutive funding
Before we begin we need to make a distinction between "non-dilutive funding" and "dilutive funding" opportunities. Let's start with the latter: "dilutive funding" is the kind of funding most companies know. That is VC, Angels, bank loans or any type of funding that dilutes the amount of control you have in your company. Relinquishing control can be done through revenue share, giving away a percentage of your company, accepting advisers and members to your board, or all of the above.
"Non-dilutive" funding is none of that. The US Federal R&D grants system is by far the biggest resource of non-dilutive funding for hi-tech R&D(that is outside of parents!). And federal grants can be large scale funding with many options that are in accordance with your companies projected R&D costs. This means that Federal Grants can range from hundreds of thousands to hundreds of millions of dollars depending on the companies road map.
And grants can be leveraged for a much greater value than the initial grant winnings. One way is by turning grants into federal contracts where the government is not only an 0% equity investor but also a large customer.
Another way to leverage grants is to raise large rounds of funding from private sources. This because the grants act as a seal of approval for your development as the agencies are very competent and very elite investors...making it so that every private investor will look for the opportunity to invest in you. And at this stage your company will be further along in development which will allow you to raise more money by selling less equity.
Last but not least, grants should be leveraged to win more grants. Grants lead to more grants and many companies use grants as a way to power R&D efforts and keep profits profits.
To learn about your eligibility for winning federal R&D grants or to discuss specific opportunities, please contact us at: daniella@eaglepointfunding.com
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