Non-dilutive funding refers to capital that companies can access it without giving up equity or ownership. Some forms of non-dilutive funding come in the form of grants, tax incentives, and commercialization support from government agencies, nonprofit organizations, and public-private innovation programs. In the health and life sciences space—where product development cycles are long, red tape and regulatory challenges are abundant, and R&D costs add up quickly—non-dilutive funding plays a vital role.
Benefits of Non-Dilutive Funding in the Health and Life Sciences Space
You keep control and cap table integrity.
Equity is a finite resource. Giving it away too early or too frequently can make later-stage financing difficult and dilute founder and early stakeholder ownership. Non-dilutive funding allows you to raise critical capital while maintaining your company's cap table and valuation. For founders in high-IP sectors like biotech or medical devices, retaining ownership is often tied to long-term strategic flexibility.
It supports R&D, hiring, market expansion, and regulatory efforts.
Health and life science ventures often need capital before they generate revenue. Non-dilutive funding can support:
Preclinical research or early prototyping
Clinical trial design and ethics submissions
Hiring engineers, researchers, or regulatory consultants
Conducting usability or pilot studies
Building health economics models for payers
Expanding to new markets with FDA or Health Canada compliance
For example, a startup working on a wearable for chronic condition monitoring could apply for funding to validate their device in a real-world pilot or hire a data science team to optimize their backend algorithms.
It often de-risks future fundraising by validating your tech.
Investors tend to be risk-averse—especially when it comes to complex regulatory or clinical milestones. If your company has secured non-dilutive funding, it signals to VCs and other investors:
You take an dependent validation of your concept or approach
You work with credible team capable of securing competitive capital
There is alignment with national or global health priorities
This external credibility can serve as third-party validation, making your company more attractive to institutional investors. It also shows that you've built a strong operational foundation to execute on technical or regulatory challenges.
It bridges the "valley of death."
The "valley of death" refers to the gap between early proof-of-concept and commercial readiness. It's when companies are too early for growth capital but too late for small angel checks or bootstrapping. For MedTech and biotech companies, this period is often marked by:
Expensive testing or clinical validation
Lengthy product iteration cycles
Uncertainty around reimbursement or market fit
Non-dilutive funding extends your company's runway, allowing it to reach milestones—whether that's demonstrating viability in a pilot study or clearing a regulatory review. It helps you stay operational and focused without being forced into a financing round too early, at less-than-ideal terms.
Who This Applies To
Non-dilutive funding isn't just for academic labs or large research institutions. A wide range of companies across the health and life sciences spectrum are eligible, and in many cases, they're ideal candidates.
If your business is developing technology, conducting applied research, building healthcare tools, or working toward a regulated product or therapeutic, there is likely a non-dilutive program for you.
Here are examples of the types of companies that can benefit from these programs:
Aesthetic Medicine
Are you creating new cosmetic medical devices, skincare technologies, or AI-driven diagnostic tools in dermatology? In that case, you may qualify for programs that fund device testing, clinical studies, or innovation in patient care.
Ambulatory Services and Centers
Organizations offering outpatient diagnostics, mobile health units, or virtual care infrastructure can tap into funding for health access and delivery innovations.
Electronic Health Records (EHRs)
If your company is improving clinical data interoperability and user experience or integrating AI into EHR platforms, you may be eligible for federal innovation funding. Program financing aims to improve processes and decrease bottlenecks.
Medical Devices and Diagnostics
From Class I to Class III devices, companies developing hardware or software-enabled tools for diagnostics, surgical assistance, remote monitoring, or imaging can apply for funding that supports feasibility studies, design iteration, and regulatory submissions.
Health & Drug Screening
If you're developing rapid screening methods, digital platforms for substance use tracking, or novel diagnostics for early detection, non-dilutive funding can support validation and pilot deployment.
Personalized and Precision Medicine
Companies using genetic, molecular, or real-time patient data to tailor treatments may qualify for funding through programs that support breakthroughs in individualized care and treatment effectiveness.
Animal Health
Veterinary technologies and therapeutics are often overlooked—but many programs, particularly in Canada and through the USDA in the U.S., provide funding for tools that improve animal diagnostics, welfare, or disease control.
Mental Health Platforms
Digital health startups focused on behavioral health, therapeutic interventions, or remote patient support can access grants targeted at mental health equity, access, and tech innovation.
Pharmaceuticals and Biotech
From early-stage therapeutic discovery to preclinical and IND-enabling studies, biotech companies can secure large-scale non-dilutive grants to support scientific advancement and data generation.
Medical Imaging and Labs
Companies innovating in imaging modalities, diagnostic lab automation, or AI-based image interpretation can benefit from research and development funding that reduces technical and clinical risk.
Healthcare Monitoring Solutions
Wearables, remote patient monitoring platforms, and chronic disease management tools often qualify for funding under remote care, digital transformation, or aging-in-place initiatives.
Medical Supplies and Consumables
If you're developing new, sustainable, or improved medical materials (such as antimicrobial coatings, biodegradable devices, or supply chain innovation), you may qualify for funding that supports testing and manufacturing scale-up.
Medical Data and Billing Systems
Innovations in claims automation, value-based care tracking, or health system efficiency—especially when linked to AI or big data—are priorities for many federal and provincial innovation programs.
If your company is committed to improving patient care, better health outcomes, or more accessible and affordable healthcare delivery through tech, non-dilutive funding should be on your radar.
Programs often look for:
Clear technical or clinical novelty
Alignment with current public health issues
Strong team and technical feasibility
Early-stage R&D or commercialization potential
If you're unsure where your company fits in this landscape, working with a non-dilutive funding partner like Panna can help you assess your eligibility across dozens of relevant programs.
Top Non-Dilutive Funding Programs for Health Tech in Canada & the U.S.
Navigating the non-dilutive funding landscape can be overwhelming. Different agencies, deadlines, and eligibility criteria make it hard to know where to start. To help, here's a breakdown of key funding programs available in Canada and the U.S., specifically tailored to health and life sciences companies.
These programs support a range of activities, from early R&D to commercialization, clinical validation, and market expansion.
🇨🇦 Canada
Type: Tax Credit
What it Funds: Salaries, subcontractors, materials, overhead for experimental development or applied research
Ideal For: Companies doing technical or scientific work with measurable uncertainty (e.g., medical device R&D, biotech process innovation)
Benefit: Up to 35% refundable credit for Canadian-controlled private corporations (CCPCs), 15% for others
Type: Grant
What it Funds: Salaries for technical staff working on innovative projects, often pre-commercial
Ideal For: Early to mid-stage health tech companies building prototypes or conducting feasibility studies
Benefit: Covers 60–80% of salaries for eligible technical roles
Type: Grant
What it Funds: International market development — travel, trade shows, marketing materials, regulatory consulting
Ideal For: Health companies expanding into new geographic markets
Benefit: Up to $50,000 in reimbursement for export activities
SDTC (Sustainable Development Technology Canada)
Type: Grant
What it Funds: Clean-tech innovations with environmental and economic benefits
Ideal For: Health companies with sustainability-linked innovations — such as biodegradable medical supplies or energy-efficient lab tech
Benefit: Non-repayable contribution of up to 40% of eligible project costs
Provincial & Sector-Specific Programs
Examples:
OBIO EAHN (Ontario) – Supports pre-commercial testing and adoption of health tech
Alberta Innovates – Provides R&D and commercialization support for health sector
MEDTEQ+ (Quebec) – Co-investment for medical technology validation and scaling
🇺🇸 United States
Type: Grant
What it Funds: Health-related R&D, from early feasibility to clinical trials
Ideal For: Biotech, Medtech, diagnostics, mental health, aging tech, and digital health companies
Benefit: Phase I: ~$300,000; Phase II: Up to $2 million+
Bonus: Clinical trial-specific opportunities (e.g., PA-24-246 and PA-24-248)
Type: Grant
What it Funds: Deep tech innovation, including health software, AI, and advanced materials
Ideal For: Digital health, EHR, data science in medical settings
Benefit: Phase I: $275,000; Phase II: Up to $1.1 million
Type: Grant / Partnership
What it Funds: Diagnostics, medical countermeasures, pandemic preparedness
Ideal For: Startups working on antimicrobial resistance, sepsis, rapid diagnostics, vaccine platforms
Benefit: Funding ranges widely; often includes access to BARDA support and commercialization pathways
Navigating It All
These funding programs comes their own application requirements, deadlines, technical criteria, and reporting obligations. It's important to:
Match your project to the most relevant funding source
Build a strong application with technical, financial, and operational support
Understand how different programs can complement each other over time
If you're unsure which program fits best, or how to time your applications to avoid overlap or compliance issues, working with a non-dilutive funding expert like Panna can save time, reduce risk, and boost your success rate.