Founder / Funder Translator #3: Non-Dilutive Funding
- Landon steele
- Feb 18
- 5 min read
Updated: Mar 13
In my first Founder / Funder Translator post, I talked about the concept of companies that are VC-Fundable. Most are not, and that’s OK. VC-fundable companies are aiming for multi-billion dollar global markets and doing everything they can to either IPO or be acquired in 7ish years for hundreds of millions of dollars. Many great companies do not fit that mold. (For more info on these companies, see the first post in this series).
Today, let's dive into Non-Dilutive Funding. This post is a continuation of my previous post: Founder / Funder Translator #2 - There are alternatives to VC Funding.
I work with startups in both the US and Canada. So, the details I will share are centered on those countries. Hopefully, folks can add resources I’m missing in the comments, including resources in other countries. The goal is not to create an exhaustive list, but to encourage funders to investigate alternative sources of funding in their own countries.
What does non-dilutive mean?
It means that it doesn’t dilute your equity in your company. You don’t have to sell shares or ownership in your company to get this money. Both grants and loans are non-dilutive, but you don’t have to pay grants back. So, non-dilutive grants are pretty great.
Free money, what’s the downside?
1. The application process can be very difficult and time-consuming. I once took a whole multi-week training class at UCSF just to learn how to apply for a US government SBIR grant for a biotech startup. Those grant proposals can be hundreds of pages long and require weeks to months of work to prepare. They are intentionally complex because they want to see that you’ve done your homework.
2. Like a scholarship, they are competitive.
3. Like a scholarship, they often have eligibility requirements: You may have to work in a certain industry, or be based in a certain geography, to qualify.
4. Sometimes they are small, maybe only $10K or $20K. You have to evaluate the time required vs. reward.
5. A complaint I often hear is that startups that spend too much time chasing grant funding may feel less urgency for what really matters - making sure people want to buy what you are building.
Here are some resources in the US.
Please check the links for current status, funding status, and deadlines.
Start here if you are searching broadly for grants:
1. SBIR/STTR (Small Business Innovation Research / Small Business Technology Transfer)
What: Competitive federal R&D grants across multiple agencies (DoD, NIH, NSF, DOE, NASA, etc.) to support commercialization-oriented innovation.
Amount: ~$50K–$300K (Phase I) → $750K–$2M+ (Phase II), depending on agency
Who it’s for: US-based startups doing novel technical R&D with commercialization potential
Bonus: Strong validation signal for investors; Phase II funding can support meaningful technical scale-up
Link: https://www.sbir.gov
2. NSF America’s Seed Fund (NSF SBIR/STTR program)
What: National Science Foundation funding focused specifically on breakthrough science and engineering innovation with commercial potential.
Amount: ~$275K (Phase I) → up to ~$1M+ (Phase II)
Who it’s for: Deep tech startups in advanced materials, robotics, AI, biotech tools, semiconductors, energy, and other frontier technologies
Bonus: Includes commercialization mentorship and access to NSF’s innovation ecosystem
Link: https://seedfund.nsf.gov
3. ARPA-E (Advanced Research Projects Agency – Energy)
What: High-risk, high-impact funding to accelerate transformational energy technologies that are too early for private investment.
Amount: ~$500K–$10M+ depending on program and scope
Who it’s for: Energy, climate tech, advanced manufacturing, grid innovation, and industrial deep tech startups
Bonus: Strong credibility boost with later investors and strategic partners
4. NIH Small Business Grants (SBIR/STTR via NIH)
What: Biomedical and life sciences research funding aimed at translating scientific breakthroughs into commercial healthcare solutions.
Amount: ~$300K (Phase I) → $1M–$2M+ (Phase II), varies by institute
Who it’s for: Pharma biotech, medtech, diagnostics, digital health, and life science platform startups
Bonus: Non-dilutive funding that supports regulatory and translational milestones
Link: https://seed.nih.gov
After 30 years in the Bay Area, I returned to Canada, choosing to live in Vancouver. I’m struck by the number of programs that provincial and federal governments have to encourage innovation and give a much-needed early boost to startups. They are all competitive and come with their share of paperwork, but are a truly valuable lifeline for Canadian startups, indeed a competitive advantage. Some are standalone. Some look for matching investment or matching costs to ensure the entrepreneur also has skin in the game.
Here are some resources in Canada.
Start here if you are searching broadly for grants:
1. IRAP (NRC Industrial Research Assistance Program)
What: Grants and advisory services for tech innovation.
Amount: $50K–$500K (varies by project scope)
Who it's for: Canadian-incorporated startups doing R&D.
Bonus: Can be combined with SR&ED.
2. Mitacs Accelerate / Elevate
What: Matching funds for collaborations with academic researchers (incl. postdocs & PhDs).
Amount: Typically $15K–$100K+ (dependent on project and institution match).
Who it's for: Startups partnering with universities or hiring researchers.
3. Innovative Solutions Canada (ISC)
What: Federal government procurement challenges.
Amount: Up to $150K (proof of concept), then up to $1M (prototype).
Who it's for: Canadian-owned small businesses developing novel tech.
4. CanExport SMEs Program
What: Export support for market expansion.
Amount: Up to $50K (covers 50% of costs)
Who it's for: Early-stage companies entering international markets.
5. Startup Competition Grants (Non-Dilutive + Exposure)
These aren’t ongoing funding sources but can inject cash with zero dilution. These are just a few examples:
Program | Prize | Notes |
Up to $100k prizes in several categories: Best of the Fest, Women in Tech, Black Entrepreneur, SLGBTQIA+, Impact, Fintech, Student Entrepreneur | Includes Women's Pitch Prize and Grandmother's Fund. | |
Up to $20K | Exposure at a major global conference. | |
Up to $15K | Aging population-focused innovations. | |
Up to $40K | For blue economy startups, not just East Coast. | |
Varies by challenge | Funding for advanced manufacturing project challenges. | |
Women Founders in Tech (e.g. SheBoot) | $10K–$50K | Often grant or convertible note with founder-friendly terms. |
6. Provincial Grant Programs
Each province has its own funding bodies. A few examples:
Province | Program | Details |
Ontario | $30K for early commercialization | |
BC | Grants + mentoring for tech startups | |
Alberta | Micro vouchers, matching grants, and entrepreneur coaching | |
Quebec | Mix of grants and loans, especially in Montreal | |
Nova Scotia | Competitive pre-seed grants and accelerators. |
7. SR&ED (Scientific Research and Experimental Development Tax Credits)
What: Federal tax credits for R&D activities.
Amount: Up to 35% refund on eligible expenses (can be claimed even at pre-revenue stage).
Note: Often complements IRAP.
8. University-Based Startup Grants
If you're affiliated with a university, many have internal venture funds or competitions.
🔍 Pro Tips
Stacking: Many programs can be layered: e.g., IRAP + SR&ED + provincial grant.
Keep pitch-ready: Some grants act like competitions (judged rounds).
Timing matters: Watch for annual deadlines (e.g., StartupFest, WebSummit prep starts well before the conferences).
Consult local innovation hubs: They often help navigate which ones to apply for.
Call in the professionals: Some companies can help you find grants, apply for grants, and even finance your company against your awarded grants and receivables to help you get access to cash earlier. See companies like Bonsai Growth, for instance.
If you liked this post, please share it. If you have comments or feedback, feel free to leave them below. There are so many more resources out there. Share your favourites.
Want to talk more about your own pitch or your own business growth? Contact Me today.
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