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Are you an early-stage startup founder looking for funding options without giving up equity? If so, non-dilutive funding may be the solution you need. It allows startups to advance research, build credibility and move closer to commercialization while maintaining full ownership.
In life sciences, these funds help startups progress through development without carrying the full financial risk, while also opening doors to new collaborators. Still, non-dilutive capital is not a silver bullet for scaling. Large infusions of venture capital are often required to reach regulatory milestones, conduct clinical trials or build manufacturing facilities.
A common strategy for founders is to delay issuing institutional equity until key milestones are achieved, thereby minimizing dilution. However, the first equity round also sets long-term valuation benchmarks and investor expectations. Wait too long and you risk missing the optimal market window if conditions shift. That’s why the funding strategy in biotech is less about choosing a single path and more about sequencing—layering grants, debt and strategic partnerships to de-risk each step while preserving optionality. To illustrate these dynamics, I’ll explore both the strategic uses of non-dilutive funds and the diverse types available to startups.
Strategic uses of non-dilutive capital
Early-stage startups benefit from non-dilutive funding to accelerate commercialization, including activities like market research, go to market strategy development, production scaling and product launches. In clinical development, it can also offset the massive costs of trials and validation studies, helping move therapies closer to regulatory approval.
Just as importantly, these funds can be applied to intellectual property (IP) protection and regulatory compliance. Strong IP can be leveraged in licensing deals or strategic partnerships. This reflects Gans and Stern’s “market for ideas” model, where startups use non-dilutive funding to build bargaining power before entering negotiations with larger players.
The credibility effect
Beyond the obvious benefit of non-dilutive capital, grants also serve as a signal of quality. Winning a competitive grant provides a stamp of approval that can attract future investors. The rigorous due diligence conducted by grant-making bodies often validates both the underlying science and the leadership team, helping to advance innovation not only within domestic markets but also across the broader national innovation ecosystem—especially when traditional market incentives fall short.
Partnerships
Partnerships with established corporations can be game-changing for biotech startups, allowing them to tap into manufacturing capabilities, distribution networks, or regulatory expertise without giving up equity. This can fast-track commercialization, as seen in Genentech’s historic partnership with Eli Lilly on synthetic insulin—where early grants funded patents that later became the foundation for a licensing deal.
But partnerships also carry risk, especially in sectors where IP protection is weaker. Without strong IP or unique infrastructure, smaller firms can be vulnerable to having their innovations exploited. A safer option can be partnerships with government venture capital investors, who can play a hybrid role. When they act as passive, non-dilutive limited partners alongside private venture capital firms, this setup helps avoid the common pitfall where public funding inadvertently crowds out private investment.
Types of non-dilutive funds
Non-dilutive financing is a broad category and the options available to startups are more diverse than many realize. The following are some of the most impactful types that early-stage founders should consider:
Grants and Awards
- Industrial Research Assistance Program (NRC IRAP) – Advisory and funding for experimental development.
- Strategic innovation fund (SIF) – Large federal fund for scale and commercialization in strategic sectors (including biosciences).
- Innovative Solutions Canada – Federal prototype validation in partnership with government departments.
- Canada Biomedical Research Fund (CBRF) and Biosciences Research Infrastructure Fund (BRIF) – Funds infrastructure, capacity and partnerships in biomedicine.
- Stem Cell Network (SCN) programs – Awards for regenerative medicine / translational research.
- Bio Innovation Grant (Alberta) – Supports bioscience innovation and training in Alberta.
- Ontario BioCreate program (Ontario Genomics) – Funding, mentorship and infrastructure for Ontario-based biotech startups.
- Innovative Medicines Canada – Unrestricted grants and sponsorship opportunities.
Tax Credits
- Scientific Research and Experimental Development (SR&ED) – Federal R&D tax incentive.
- Provincial / Territorial R&D tax credits – Additional provincial innovation incentives.
Accelerators
National
- adMare BioInnovations – National program supporting early-stage therapeutics ventures with capital, mentorship and wet lab access.
- CCRM – Public-private partnership enabling early-stage companies to commercialize their regenerative medicine-based therapies or technologies. Creative Destruction Lab (CDL) – Deep tech accelerator network with advanced therapies, biomedical engineering and cancer streams for life sciences scale-ups.
- CAN Health Network – Federally-funded network accelerating commercialization of innovations across hospital partners.
British Columbia
- Genome BC – Supports genomics and life sciences companies through commercialization programs and partnerships.
- Innovation UBC – University-based accelerator offering mentorship and access to UBC research facilities for life science founders.
- SFU VentureLabs – A scale-up accelerator helping life science firms grow through mentorship and investor access.
Alberta
- Innovate Calgary – Life Sciences Innovation Hub – Provides wet lab space, mentorship and commercialization programs for biotech and diagnostic startups.
- Health Innovation Hub – University-affiliated incubator advancing biotech and health innovations.
- Edmonton research park – life sciences campus – Infrastructure and support for Alberta biotech startups.
Saskatchewan
- Innovation Place – Saskatoon/Regina innovation campus providing wet lab and biotech incubation facilities.
Manitoba
- North Forge Technology Exchange – Startup incubator providing business mentorship and limited prototyping lab access for health innovators.
Ontario
- Toronto Innovation Acceleration Partners (TIAP) – Venture builder investing in therapeutics and diagnostics from academic research.
- OBIO – Supports life sciences companies with acceleration, investment readiness and capital connections.
- MaRS Discovery District – Toronto’s flagship innovation hub with programs and lab access for biotech and health-tech startups.
- University of Toronto Early Stage Technology (UTEST) – Early-stage accelerator funding research-based startups, including life sciences spinouts.
- Synapse Life Science Consortium – Hamilton’s life sciences cluster linking academia, hospitals and accelerators.
- Sunnybrook Medventions – Commercialization fellowship developing clinician-led innovation.
- Ontario Centre of Innovation (OCI) – Provincial program offering funding and commercialization support for life sciences companies.
- Capital BioVentures – Provides early-stage life science startups with wet lab space, expert mentorship and seed-stage support.
Québec
- CQDM – Facilitator of biopharma innovation through funding and collaborations
- District 3 – University accelerator with a BioHub supporting biotech and synbio startups.
- Axelys – Québec’s tech transfer and venture creation organization for life science spinouts.
- Montreal InVivo – Cluster organization promoting growth and collaboration in Québec’s life sciences ecosystem.
- CQIB – Biotech-dedicated innovation campus integrating CQIB’s labs and industry offices.
Atlantic Canada
- Emergence – PEI-based incubator offering mentorship and commercialization support to bioscience firms.
- PEI BioAccelerator – Large-scale biomanufacturing and scale-up campus under the PEI BioAlliance.
- Life Sciences Nova Scotia – Provincial life-sciences industry association providing accelerator programs and capital access.
List of Incubators and Accelerators in Canada – Not exclusively life sciences.
In summary, non-dilutive funding is a vital lifeline for biotech and regenerative medicine startups, enabling them to advance research, protect IP and build credibility without sacrificing equity. While grants, tax credits and government lending programs can fuel early R&D, major milestones often require dilutive capital. The smartest founders sequence their funding strategy – stacking grants, debt and partnerships to de-risk each stage while preserving ownership. Grants not only provide capital but also act as signals of quality, validating both the science and the leadership team. Strategic partnerships with corporate or government-backed investors can accelerate commercialization. By combining available resources thoughtfully, founders can maximize leverage, attract investors on better terms and avoid premature dilution.
Laya Kiani
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