Glossary Term
Non-Dilutive Funding
Definition
Non-dilutive funding refers to financial support provided to a company or organization that does not require the company to give up equity or ownership in exchange for the funds. Unlike equity financing, which involves selling shares in the company, non-dilutive funding allows companies to retain full ownership while receiving financial assistance. Common sources of non-dilutive funding include grants, loans, government programs, and revenue-based financing.
Relevance to the MedTech Industry
In the MedTech industry, non-dilutive funding is crucial for startups and established companies to finance research, development, and commercialization of medical technologies without losing ownership or control. It enables companies to maintain their equity while pursuing innovative projects or meeting regulatory milestones. Non-dilutive funding is particularly valuable for medical device companies in the early stages of development, as it helps reduce financial pressure while maintaining ownership of intellectual property and control of the business.
Additional Information & Related Terms
Key Sources of Non-Dilutive Funding
Government Grants:
Many government agencies, such as the National Institutes of Health (NIH) or the European Commission, provide grants for medical research and development projects. These funds typically do not require repayment or equity exchange.
Research and Development (R&D) Tax Credits:
Some countries offer tax incentives to businesses that invest in R&D. These credits help offset the costs of innovation and product development.
Loans and Debt Financing:
While debt financing requires repayment, it does not involve giving up equity. This can be a form of non-dilutive funding if structured properly.
Revenue-Based Financing:
This form of financing provides funds in exchange for a percentage of future revenue, but it does not involve giving up ownership.
Philanthropic Funding:
Some organizations or foundations offer funding for medical research and development projects, particularly those focused on addressing unmet medical needs or improving public health outcomes.
Related Terms
Grants: A source of non-dilutive funding, often provided by government or nonprofit organizations, which do not require repayment or equity exchange.
Debt Financing: A form of non-dilutive funding where a company borrows money and agrees to repay it with interest, without giving up equity.
R&D Tax Credits: Tax incentives provided to companies that invest in research and development, helping offset costs without requiring equity or repayment.
Revenue-Based Financing: A method of non-dilutive funding in which a company receives capital upfront in exchange for a percentage of future revenues.
Philanthropic Funding: Funding provided by charitable organizations or foundations, typically for social impact projects or innovations addressing public health challenges.