Non-Dilutive Funding Options

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Startup funding comes in two forms: dilutive and non-dilutive.

Equity funding is dilutive in that the fundraising reduces the ownership of the founders.

Debt is non-dilutive in that the fundraise doesn’t change the founders’ ownership.

Here’s a list of non-dilutive funding options.

Loans -- these tend to be short-term loans from a bank.

Grants -- these are most often acquired from government agencies that make grants to startups to foster innovation.

Rewards/prepay crowdfunding -- this generates funding for startups in the form of prepayment for a product to be delivered later.

Licensing -- funding comes in the form of licensing the technology to other companies who use the technology in their product.

Tax credits -- funding comes in the form of tax breaks, such as an angel tax credit offered by many states.

Factoring -- funding comes in the form of short-term loans for manufacturing the product.

Venture debt -- a form of loan that uses the startups' raised capital as collateral.

Subscription-based financing -- loans to startups with recurring revenue that use the subscription revenue as collateral.

Consider these non-dilutive funding options for your startup.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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