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Glossary

Non-Dilutive Funding

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Related terms

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501(c)(3) and fiscal sponsorship

A 501(c)(3) is a U.S. tax-exempt non-profit; a fiscal sponsor is an existing 501(c)(3) that lets a project receive tax-deductible donations and grants under its umbrella before the project incorporates on its own.

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Grant

A grant is non-repayable funding awarded by a government agency, foundation, or corporation in exchange for delivering on a specific scope of work. No equity given up, but heavy reporting and compliance attached.

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Accelerator

An accelerator is a fixed-term, cohort-based program that invests a small amount in early-stage startups in exchange for equity, then runs intensive mentorship that ends with a demo day.

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Burn Rate

Burn rate is how much cash your company spends each month. Gross burn is total expenses; net burn subtracts revenue.

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Non-dilutive funding is capital you receive without giving up equity in your company. The most common forms are grants (government and foundation), cloud credits, revenue-based financing, and competition prizes.

Why it matters

Every dollar of non-dilutive funding is a dollar you don't have to raise from equity investors, which means you keep that ownership stake yourself. For early-stage founders, $50K of grant money is roughly equivalent to not having to give up 1–5% of the company at typical pre-seed valuations.

Common sources

  • Government grants. SBIR/STTR (US), Innovate UK, EU Horizon, state and provincial programs.
  • Foundation grants. Knight, Open Philanthropy, Skoll. Mostly for nonprofits and impact-aligned ventures.
  • Cloud credits. AWS Activate, Google for Startups, Microsoft for Startups, Snowflake Startup. Often $5k–$100k per program.
  • Revenue-based financing. Capchase, Pipe, Founderpath. Repaid as a percentage of revenue.
  • Prize money. Pitch competitions, accelerator demo days (the prize portion, not the program investment).

Tradeoffs

Non-dilutive doesn't mean "free." Grants usually come with reporting requirements, restricted use of funds, and often a slower disbursement schedule. Build the application time and compliance burden into your decision.