Non-Dilutive funding – pros and cons: an insider’s look by a Client Strategist

If you are new to grants as strategic means for funding, chances are that the world of grants and non-dilutive funding might initially seem somewhat inaccessible to you. In this blogpost, we’ll take a closer look at some pros and cons of non-dilutive funding; and explain why we advise to include grants as an important part in your road to growth and development. At Argentum, we strive to focus on the positive and to always ask how our clients can benefit from non-dilutive funding programmes, and what we can do to enhance your chances of success. Therefore, let us start with the positive aspects of non-dilutive funding:

Non-dilutive funding – Pros:

• It’s in the name… well, it is! Non-dilutive funding is first and foremost a type of funding that does not dilute your company. Unlike certain investments, with grants as a form of non-dilutive funding, you do not bring on external board-members. Likewise, non-dilutive funding does not require you to hand out company shares. That’s a good start, isn’t it? But there’s much more…
• R&D for the win! Grants and non-dilutive funding are greats means to advance your R&D roadmap and gain an edge over your competitors. Whilst investments are typically based on your past activities, grants focus on the future. With Argentum’s expertise, we can help you translate your specific innovation and expertise into the best possible grant proposals. Winning grants can therefore be a significant tool in turning your dream R&D project into reality – and all this, while retaining control over your IP and assets.
• Branch into new tech and sectors – following-up on the previous point, grants favour innovation and disruptive technology, and thinking outside of the box is strongly encouraged. Have you just been waiting for the right opportunity to try out something truly new and groundbreaking? If so, non-dilutive funding is the right way! With specific grants for both advanced projects (close to commercialisation) and early-stage projects alike, grants can allow you to truly leap from ideation to active development. Worried that a project might be too early stage for funding? Think again! Research-based grants are common, and often have 100% funding rate, and require zero self-funding!
• Make new friends – and not just friends, but partners and future clients. Most European non-dilutive funding programmes require partnerships, ranging from bilateral programmes to large consortia. Do you currently lack the right network to join a consortium? That’s what we are here for! Argentum has a vast ecosystem that we can utilise in order to match you with project coordinators and partners – from leading research institutions, to ground-breaking SMEs, to strong industry players. Furthermore, consortia allow you to bring your A-game to the table. Rather than being responsible for the entirety of the project, within a consortium, if you can contribute to 10% of the proposed project scope – you are a valuable partner!
• Reach new markets – since most non-dilutive funding requires partnerships, another great benefit of this type of funding is breaking into new markets, including outside Europe. The relationships formed via consortia are often long-lasting and can translate into future commercial ties. Since several European grants programmes include major non-European partners, from almost all continents (such as Canada, South Korea, Singapore, and South Africa – so many Ssssss!) – you have a unique opportunity to use grants as a steppingstone into a wholly new geographical market!
• Something for everyone, and something just for you – grants can be complicated to navigate, not least because there are simply so many programmes! Currently, Argentum has 120+ funding opportunities to offer clients, differing by scope, partnership requirements, budgets, and many other criteria. We can offer you myriad options: ranging from single application programmes to large consortia, and all the way to prizes and competitions. With grants, there’s always something on the horizon, and there’s always something just right for you.
• Become a player in the grants world – although non-dilutive funding takes time to get used to, once you are in the game, you often stay in the game. The more programmes you apply for, and the more partnerships you form, the higher your chances of success are! This, in a nutshell, is the rationale of Argentum’s MSS – Multi Submission Strategy – directly designed to get you truly engaged with European grants and maximise your chances across the board. And once you’ve gained a name for yourself, partners and coordinators will be coming after you, bringing forth new and exciting funding opportunities for you to benefit from.

Now, all this is great stuff, but what about the ‘Cons’ of non-dilutive funding? Great question! At Argentum, we take care to present our clients with all the relevant information, so that you don’t have false expectations about the process. So, let’s look at a few aspects of non-dilutive funding that, whilst for some might be highly positive, can nonetheless be negative for others.

Non-dilutive funding – Cons:

• Future tense – as discussed above, grants are for future activities. If you are very keen on getting funded based solely on your previous achievements, then you should consider opting for investments rather than for non-dilutive funding. However, if you are eager to take your company to the next level, and are excited to bring to the table new projects and activities, then perhaps you should stop reading the ‘cons’ list…
• Active R&D – because grants look to the future, they likewise require you to have ongoing and active R&D. If you do not have R&D activities and personnel; or are outsourcing all of these activities, non-dilutive is perhaps not right for you at the moment. But… if you are concerned that your R&D department is not large enough, don’t worry! As long as you have on board a few full time R&D employees, you’re good to go!
• I don’t play well with others – If you are wholly opposed to joining partnerships – be those bilateral, medium-sized, or large consortia, then European grants probably have too few options for you. As a Strategist, I’ve often discussed this issue with clients, and have repeatedly found out that in most cases, clients reverse their aversion to consortia once they realise the numerous benefits attached to partnerships. And if your refusal to join consortia is based on concerns over sharing IP – don’t worry! Partnerships don’t take from you, but give to you.
• All this waiting…. – Yes, getting funded takes time. Typically, from submission to signing a non-dilutive funding agreement, about six months (or more) are required. So, if you are interested in grants because you need the money tomorrow – that’s unfortunately not going to happen… The reason grants take time is because, unlike investments, you are essentially getting free money, and the funding bodies providing this money want to ensure that it’s going to the best possible applicants. That’s why preparing a top-notch proposal is so crucial… which brings us to the next point…
• Why is it so complicated? If you have taken even a cursory glance and proposal preparation forms, you have undoubtedly noticed how complex they are, with proposals often requiring 50-100+ pages! Grants are a whole world – one that requires specific expertise and knowledge. That is why so many applicants rely on consultancies. Of course, it’s entirely feasible to submit an application without working with Grant Consultants. Winning the grant, though, is a different story… In our experience, clients who took our professional advice and strategic recommendations, had significantly higher chances of success. And this leads us to the next issue, one that you have probably been wondering about.
• Get to the point: what’s the success rate? Non-dilutive funding is competitive. Some grants are highly competitive, and for good reason – winning millions of Euros as funding for your company is truly an enticing prospect. Nonetheless, let’s focus on the reality of success rates. Even if a programme is considered highly competitive, you should ask yourself: am I doing everything possible to enhance my chances of success? Working with professional consultants is one significant way to increase your chances. What is more, as part of Argentum’s MSS (Multi Submission Strategy), we provide you with a Strategic Assessment that aims to balance your intended grants portfolio, so that it includes both more accessible funding programmes with relatively high success rates – with some, Argentum’s current success rate is as high as 80%! – alongside competitive calls that although having an on-paper low success rate (below 10%), are still a great opportunity for you – if you plan ahead and spend the advised timeframe on preparing the proposal with us. Our mission is to turn a low success rate into your advantage!

Now that we’ve reviewed the pros and cons of non-dilutive funding – ask yourself: are you in the right position to go for grants? If yes – Great! We’d love to hear from you and start discussing your grants portfolio. But if not… are you sure? Maybe take another look at the ‘cons’ list and see if the negatives aren’t actually positives when looked at from a different angle. Not sure? Set up a call with us, and we’ll find out together.