Grow Without Giving Away: Five Non-Dilutive Funding Strategies for Ambitious Startups

Seeking funding without losing equity? Our non-dilutive funding guide for startups shows you how to secure capital and maintain ownership.

Megan Williams
June 10, 2024
Grow Without Giving Away: Five Non-Dilutive Funding Strategies for Ambitious Startups

You've nurtured your startup from a bright idea to a potential market disruptor. The next step? Securing the money needed to catapult your business to the next level.

Traditional routes like venture capital and angel investment require surrendering a precious piece of your company. But what if there was an alternative?

What if you could inject essential funds into your business while keeping the reins firmly in your hands?

This is where non-dilutive funding comes in.

What is non-dilutive funding?

Non-dilutive or non-equity finance gives you vital working capital without parting with any stake in your business. Unlike in the Dragons’ Den, where entrepreneurs offer investors a percentage of their business for a specific amount of cash, non-dilutive finance gives you the funds you need to grow while keeping 100% ownership.

Dragon's Den isn't for everyone.

Types of non-dilutive funding

Non-dilutive funding always involves gaining capital without losing equity, but each type has its own eligibility criteria and process for securing the cash.

Certain non-equity routes might be perfect for one business type, product concept or development stage but wholly unsuitable for another.

Let’s look at five common types of non-equity funding and the businesses they suit.


You use your own resources and the revenue your business generates to fund its growth without external investment.

Bootstrapping your business can be a good idea if you…

  • want to retain full control and autonomy
  • can manage a lean and efficient business model, as spending is limited to what you can afford
  • are happy to focus on customer-driven growth, as the need for revenue is immediate
  • want to avoid the pressure and time involved in securing external funding, allowing for a quicker start and focus on the product or service
  • would like a badge of credibility, showing potential customers and partners that you’re fully committed to and confident in the business
Bootstrapping example
A software developer has created a simple, easy-to-use project management tool catering to freelancers and small teams. With a functional prototype built using their coding skills and minimal external resources, the developer is in the early stages and well-positioned to bootstrap the business, given the low initial capital needs and ability to rely on personal skills and resources.

Bootstrapping allows the developer to maintain complete control as they organically grow the business by reinvesting earnings from early adopters, enabling sustainable expansion without external pressures.

However, if you’re working on a high-risk idea or need more money than you currently or will imminently have, seeking external finance might give you a smoother ride.

The mop was an allowable business expense.


You borrow money from a bank or financial institution that must be repaid with interest, without giving up any equity. Interest can be fixed or based on your turnover (called revenue-based financing).

A business loan could be a smart funding choice if you…

  • have a proven revenue model and a clear plan for growth (so you can safely repay the loan plus interest)
  • have significant upfront costs like equipment, premises, or inventory
  • will benefit from building up your creditworthiness

One option is a Start Up Loan from the British Business Bank. If you’ve traded for less than three years and meet other criteria, you could receive a loan for up to £25,000 (although the average is typically under £10,000).

You retain full ownership and control of your business and can use the funds to pay for equipment and stock, rent, marketing, and more.

Of course, like any other loan, the money must be repaid. For a £25,000 loan repaid over the maximum term of five years, you’d pay a total of £3,999.20 in interest at £483.32 per month.1

Business loan example
A small, local café in a bustling town centre has been trading for just over a year, steadily building a loyal customer base.

Now, it’s ready to expand and needs new equipment, maybe a better coffee machine, and funds to boost marketing to reach more customers. A £25,000 loan would perfectly cover these costs.

With growing revenue, the monthly repayments are manageable. The loan fuels growth without diluting ownership – the owner maintains full control over the café's unique character and future direction.

A business loan might not be viable in uncertain or variable markets when you’re still refining your business model or if your revenue streams are unproven or irregular. In such cases, regular repayments could become another thing to fret about.

You might instead benefit from funding that requires no loss of ownership and no debt.

Testimonial Author Image
“Each funding method has its pros and cons. Bootstrapping can limit a company's scale and hinder its ability to gain a first-mover advantage.

Loan repayments can drain funds needed for R&D, and securing pre-revenue financing is often challenging.

In contrast, grants offer transformative funding, providing the resources and speed to market that bootstrapping and loans may struggle to achieve.”
Luke Westergreen-Thorne
Chief Delivery Officer (CDO), Grantify


You raise small amounts of money from many people, typically through online platforms. Common platforms include Kickstarter and Indiegogo.

Crowdfunding can work wonders if you…

  • have a unique, consumer-focused, market-ready product or idea
  • can tell a compelling story that resonates with a broad audience
  • want to build a community of supporters and early adopters
  • need to validate market appeal before full-scale production
Crowdfunding example
An eco-conscious entrepreneur has developed a line of natural toy building blocks made sustainably from bamboo. The product aligns with crowdfunding backers motivated to support good causes.

A compelling video and social media presence highlight the product's origins and sustainability values. As market demand is still unknown and specialised manufacturing equipment and facilities beyond the founder's resources are required, funding via bank loans or bootstrapping may be difficult.

Crowdfunding can be a more uncertain path than a business loan, for which you’re approved or denied. You may not reach your goal, and even if you do, it could take a significant, sophisticated marketing effort to convert enough general interest into a financial pledge.

If your product or service isn’t easily understood and visualised by the public, there might still be non-dilutive means to fund it without taking on debt.

One option is R&D Tax Credits – a way to recoup some of the costs associated with innovative projects, effectively reducing the overall financial burden of research and development.

Tax Credits (e.g., R&D Tax Credits)

You receive incentives from the government to encourage certain business activities, like research and development. The UK's R&D tax credit scheme allows companies to reduce their tax bill or receive a tax refund.

R&D Tax Credits can be highly beneficial for your business if you…

  • engage in qualifying research and development activities within the UK
  • incur significant costs in developing new processes, products, or services
  • aim to resolve scientific or technological uncertainties
  • are a small or medium-sized enterprise (SME) or even a larger company facing R&D challenges
  • seek financial relief to reinvest in your innovation journey and grow your business
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We helped our clients claim back £3.2m in R&D costs in a single year
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R&D Tax Credits example
A biotech startup developing innovative nanotechnology-based drug delivery systems is conducting extensive R&D, including lab experiments and trials, consumable materials, utilities, software, and scientists.

R&D Tax Credits are ideal, as the work qualifies for significant credits – with £200,000 in qualifying expenses, the loss-making startup could claim back up to £66,000, a major financial relief.

Reducing your business’s tax liability or a cash refund could be instrumental in fueling growth, but R&D Tax Credits are only a viable option for businesses that already have money to spend.

For innovative companies engaged in expensive R&D without a cash runway, another non-dilutive option worth considering is competitive business grants.

World-changing products often require costly R&D.


Government bodies or private organisations award you funds for specific projects or purposes. No repayment is required. Examples include Innovate UK and EIC Accelerator grants.

A business grant can be an excellent strategy for…

  • innovative, cutting-edge projects with potential for commercialisation and significant economic return
  • accessing financial support at critical development stages, allowing you to focus on bringing disruptive ideas to market
  • sectors like technology, science, or environmental innovation, where initial research and development costs can be prohibitive.
  • earning credibility and validation that enhance the business’s appeal to future investors or partners
Testimonial Author Image
“Writing a grant application, even if you don't win, is a masterclass in business refinement. It forces you to confront your assumptions, solidify your value proposition, and tighten your market targeting.

This process isn't just about winning grants; it's about getting investment-ready. The same compelling narrative you craft for funders resonates powerfully with equity investors.”

Luke Westergreen-Thorne
Chief Delivery Officer (CDO), Grantify
Business grant example
A small tech company is working on a cutting-edge environmental project – a new type of sensor technology that could significantly improve energy efficiency in industrial settings.

This innovation has the potential to not only change the game in their industry but also contribute positively to environmental sustainability. The development costs, however, are substantial, involving research, prototype development, and extensive testing.

The company needs funding to support its ambitious project’s scale and scope, allowing the time and resources to realise its disruptive idea fully.

If you’re an innovative company trying to test an idea, bring a new product to market, or collaborate with other businesses or research organisations, grants could be the best funding for you.

Testimonial Author Image
“Grants can be a crucial source of 'bridging' funding to support early-stage R&D, which other sources like investors or credit providers may consider too risky to financially support.

Once a more established product has been developed with grant funding, equity investment and business loans may become easier to access.”

Mike Ko
Funding Consultant

The government offers R&D grants through UK Research and Innovation (UKRI). Within UKRI, Innovate UK – the country’s innovation agency – has up to £25 million on offer for game-changing and commercially viable R&D innovations that can significantly impact the UK economy.

You can apply for a grant of £200K-£2M (we recommend applying for a max £500K project).

With business grants you…

Sounds pretty dreamy. So what’s the catch?

Well, business grants are essentially competitions. First, you have to be eligible to enter (and many businesses only discover they aren’t suitable after slaving over their application for many hours).

If you are eligible, your project submission needs to score over 80% across a wide range of assessment criteria to succeed. And the boxes assessors need to tick are constantly changing.

With the Innovate UK Smart competition, only 5-10% of companies succeed.

But don’t let that put you off.

If you have game-changing and commercially viable innovation that can significantly impact the UK economy, check if you’re eligible for grant funding immediately. A grant could be what your business needs to catapult it to the next level.

Save valuable time and energy, and apply for a business grant with Grantify’s AI-driven platform.
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Grantify's customers submit their grant applications 7X quicker than applying solo.
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In a recent round of government funding, 64% of all winners were produced by the Grantify platform.
Let's make sure you're eligible then have a chat!
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Which type of non-equity funding is right for my business?

Navigating the world of non-dilutive funding is about strategically aligning financial support with each phase of your business's growth.

Bootstrapping might help get your innovative concept off the ground, allowing you to refine your ideas with personal resources.

As your project becomes more defined and enters the research and development stage, R&D Tax Credits can be crucial, helping to mitigate some of the early development costs.

Once your innovation shows potential for significant market impact, securing an Innovate UK Smart Grant could provide the substantial backing needed for development and scaling up your technology.

Perhaps further down the line, a business loan could come into play for aspects like market expansion, branding, or establishing a robust sales infrastructure – areas typically not covered by an innovation business grant.

See which grants you qualify for or how we’ve helped thousands of business owners get the financial backing they need.

  1. Based on accessed 29/01/2024

Seeking funding without losing equity? Our non-dilutive funding guide for startups shows you how to secure capital and maintain ownership.

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