For start-up companies, entrepreneurs, founders and innovative technology companies, in particular, non-dilutive funding is worth actively pursuing. Providing businesses with funds without any stakeholders having to give up ownership, non-dilutive funding is a crucial way for companies to innovate and attract investors all while retaining control.

Helping businesses attract and secure non-dilutive funding, at Williamson & Croft we are an accountancy firm that is proactive in our solutions. As R&D tax specialists, we can assist your business in qualifying for as much non-dilutive funding as possible, helping you to grow quickly and efficiently. Looking for sustainable growth from reliable, enterprising accountants, choose Williamson & Croft. 

What Is Non-dilutive Funding?

Let’s start by defining exactly what non-dilutive funding is. Essentially, non-dilutive funding is when a business gains money without having to sacrifice a stake in their company. Most investor funding opportunities come hand-in-hand with a loss of equity as lenders look to take advantage of growing companies that have the potential to offer higher returns in the future.

Non-dilutive funding can come from a variety of sources, including grants, crowdfunding, tax breaks and R&D tax credits, offering businesses a tempting way to grow and innovate without losing any control or ownership. Easier to gain than angel investment or venture capital, non-dilutive funding is considered to be one of the simplest ways to grow a business for the long term while maintaining authority. 

What Is the Difference Between Dilutive and Non-dilutive Funding?

Essentially, dilutive funding is the exact opposite of non-dilutive funding. Dilutive funding deals lead to business owners surrendering a portion of their equity in return for financial investment, while non-dilutive financing means no shares are lost. You may be offered far greater capital during a dilutive funding deal, but this comes at the potentially significant cost of the loss of ownership. 

The Positives and Negatives of Non-dilutive Funding

While, for some businesses, non-dilutive funding is utterly ideal, others may prefer the lack of limitations that come with venture capital investment. Both non-dilutive funding and dilutive funding come with their own set of positives and negatives. 

Positives of Non-dilutive Funding

  • Retain control and authority: The most self-evident positive of non-dilutive funding is the fact that those receiving the capital will be able to retain control over their company. Without needing to surrender a stake in the business their authority will not be affected.  
  • Repayment: While not all forms of non-dilutive funding are completely free, many forms do not have to be repaid, such as grants, crowdfunding and tax credits, meaning you can easily improve your cash flow.
  • Reputation: Earning non-dilutive funding from crowdfunding sources and grants, for example, can amplify the credibility of your business, opening the door to further financing opportunities with other companies. 

Negatives of Non-dilutive Funding

  • Lower capital: If you’re looking to secure a large amount of capital to help fund major innovation projects, you’ll likely prefer the larger offerings of dilutive funding opportunities, with non-dilutive options giving you a far more limited cash injection.
  • More effort and resources: Unless you choose an accounting company like Williamson & Croft to help you out with your R&D notification claims and much more, applying for non-dilutive funding can take considerable time and business resources. 
  • Strict limitations: While business owners can claim non-dilutive funding without surrendering control of their company, this money often comes with strings attached. Government grants for small businesses, for example, often come with limitations, restricting what you can spend the money on. The same goes for R&D tax credits, which can come with major restrictions. 

Different Types of Non-dilutive Funding

There are various types of ways in which you can apply for non-dilutive funding, with each method appealing to different kinds of businesses. 

Loans

Perhaps the most popular type of non-dilutive funding, loans can come in all shapes and sizes, with short-term and long-term options often being favoured. Simple to apply for, short-term loans offer considerable funding but can leave the customer lumped with high interest rates. Meanwhile, long-term loans typically offer far lower interest rates but are harder to secure. 

R&D Tax Credits

As experts in R&D tax credits, we know just how lucrative this form of funding can be. Specifically supporting especially innovative companies in the science and technology sector, R&D tax credits allow businesses to claim large cash refunds. 

Wondering how far back you can claim R&D tax credits, or how to include qualifying indirect activities? We can help. 

R&D Advance Funding

Attain access to up to 80% of your R&D Tax Credit six months before the end of the financial year, allowing you to take advantage of the capital in advance. Improving cash flow by giving you instant access to funds, using R&D advance funding can hasten your company’s innovation without unnecessary delay. 

Innovation Funding

Research organisations or businesses based in the UK can apply for government-backed innovation funding. This money can be used to develop new processes or products, test ideas and collaborate with other like-minded businesses. 

Government Grants

Funding in the form of government grants can come in several shapes and sizes. These grants often need to be used for a specific purpose, giving organisations a chance to develop, innovate and grow without the worry of eventually paying it back. With various different grants on offer, explore the government website to find a grant for you. 

Business Grants 

Similarly to government grants, business grants do not have to be repaid by the recipient, allowing them to use the funds to expand their business. Multiple different types of business grants exist across the UK, with many targeting specific sectors, such as the environment, energy and exports. 

Crowdfunding 

One of the most recent popular forms of non-dilutive funding is crowdfunding. Using platforms such as Indiegogo and Kickstarter, you can help you increase capital with the support of your friends, family and wider network. Although this money does not have to be re-paid, businesses often include incentives that encourage people to invest. 

Venture Debt

For businesses that are already funded by venture capital, venture debt can be a good way to increase cash flow. An additional source of funds often provided by banks and lenders, venture debt supplements venture capital and does not result in a loss of equity stake.

How Williamson & Croft Can Help

Looking for specialists in accountancy who can help your business innovate and grow? At Williamson & Croft, we are the perfect partners to help guide you towards the most suitable non-dilutive funding options for your business, supporting your applications to ensure compliance and give you a better chance of approval. 

Still need more persuading? Just check out our glowing testimonial from Telcom below: 

“We were very impressed with the expertise and professionalism that Williamson & Croft provided to us during our recent group restructuring and we would highly recommend their services.”

Looking for other ways in which you can raise funds for your business, as accounting experts we also provide the following helpful guides: 

Contact our team of specialists at Williamson & Croft today.