Raising a Series A round is a major milestone. It signals that your business model is working, your team is delivering, and there's confidence in your ability to scale. But as exciting as this moment is, it also brings a new set of pressures—growth targets, new hires, product expansion, and stakeholder expectations. This is where non-dilutive funding can become essential to your capital stack. Contrary to popular belief, non-dilutive funding—grants, tax credits, and government-backed incentives—isn't just for pre-seed startups or academic spinoffs. It's a strategic tool that post-Series A companies can use to extend runway, reduce burn, and accelerate growth without giving up additional equity.
What Is Non-Dilutive Funding—and Why Should Series A Companies Care?
Non-dilutive funding refers to capital you can use to fund your business without giving up ownership. This includes:
Government grants (e.g. SBIR, NIH, IRAP)
Tax credits (e.g. SR&ED in Canada)
Export development programs
Regional or sector-specific incentives
For Series A companies in capital-intensive industries like biotech, digital health, software, and MedTech, this type of funding can reduce pressure to raise additional rounds too quickly or over-dilute the cap table. It's especially valuable in sectors with long development cycles, complex regulatory paths, or where product-market fit requires iterative testing.
Key benefits of non-dilutive funding post-Series A:
Preserve equity and ownership for future raises or exits
After a successful Series A, founders often feel pressure to scale quickly — but every additional round comes with dilution. Non-dilutive funding (like government grants, tax credits, or innovation programs) gives you capital without giving up more equity. This helps you retain a stronger position on your cap table, leaving more room for employees and reducing pressure during future funding rounds or exit negotiations. For your investors, it means less dilution of their own stakes — a win-win.
De-risk product development and clinical trials
Many post-Series A companies are still in the thick of technical development, clinical validation, or regulatory navigation — all of which carry significant cost and uncertainty. Non-dilutive funding is uniquely suited to cover this kind of risk. Programs like NIH SBIR, IRAP, or BARDA can fund milestone-based work without expecting ownership. That reduces the burden on your core budget, spreads risk, and gives you more freedom to focus your equity capital on high-growth initiatives.
Fund activities like R&D, technical hiring, export expansion, or regulatory planning
Grants and innovation incentives are often designed to support activities that are foundational but not always VC-funded, such as:
Hiring engineers, scientists, or technical staff
Conducting early feasibility or validation studies
Preparing for FDA/Health Canada submissions
Building partnerships for international expansion
While these activities are crucial in product development, they may not produce immediate revenue. Non-dilutive programs are designed to bridge that gap and keep your team moving forward without tapping into your equity reserves.
Improve capital efficiency for you and your investors.
Every dollar you don't have to raise, is a dollar you get to stretch further. Non-dilutive funding can strategically extend your runway, allowing you to reach more meaningful milestones before your next raise. This increases your valuation potential and makes you more attractive to later-stage investors. It's also a powerful signal to your current investors that you're resourceful, fiscally disciplined, and actively improving capital efficiency.
Signal traction and credibility through competitive awards
Winning competitive grants like NIH, NSF, or provincial innovation funds doesn't just mean funding — it shows external validation of your technology, business model, and impact potential. The credibility that comes with winning a grant can support your investor narrative, help win strategic partnerships, and open doors to follow-up grants. It also shows that your team is capable of navigating complex application processes — a quality that can influence investor confidence and stakeholder trust.
Why It's Not "Grants vs. VC"—It's "Grants + VC"
There's a misconception that once you raise a Series A, non-dilutive funding is no longer relevant, which is not the case. Many of the largest government funding programs are geared towards growth-stage companies—businesses with working prototypes, early revenue, and commercialization potential. In Canada, this includes SR&ED, IRAP, and CanExport. In the U.S., you'll find SBIR/STTR grants through agencies like NIH, NSF, BARDA, and the Department of Defense.
Series A is often when companies:
Move from proof-of-concept to productization.
Securing a grant or innovation fund can transform your early prototype into a fully developed, user-ready product. Grant funding often supports activities like strengthening system architecture, technical refinement, usability testing, and early-stage integration. Productization can be capital-intensive and time-consuming — non-dilutive funding bridges the financial gap so you don't have to rely solely on equity capital to reach commercialization milestones.
Example: A HealthTech startup moving from a prototype wearable to a clinically tested, manufacturable device could apply for NIH or IRAP funding to accelerate development and validation.
Scale from pilot customers to repeat sales
Launching pilot programs is an essential part of market validation. However, scaling to repeat revenue requires investment in product-market fit, customer success infrastructure, onboarding, and support. Non-dilutive funding can help subsidize this critical transition by covering costs related to implementation teams, post-pilot feedback loops, and systems that enable scale. With the right support, you can turn early interest into a reliable revenue engine — without dipping further into your runway.
Example: A digital health company that completed a successful pilot with a hospital network might use a grant to fund interoperability improvements or compliance efforts before scaling sales across other institutions.
Hire critical engineering and R&D teams
Hiring technical talent — especially in regulated or complex industries — is costly. Non-dilutive programs often allow you to offset salary costs for engineers, scientists, and researchers who are directly contributing to product development, data science, or regulatory milestones. This allows you to build out your technical roadmap faster, without the full cost burden impacting your cash flow.
Example: Through IRAP or SR&ED, a MedTech company can fund 50–80% of salaries for core R&D roles working on sensor calibration, cloud infrastructure, or device compliance.
Expand into new markets or geographies
Expanding into international markets requires upfront investment in business development, regulatory filings, localization, and go-to-market strategy. Non-dilutive funding programs like CanExport SMEs (Canada) or SelectUSA (U.S.) can fund up to 75% of market entry costs — including travel, legal, marketing, and compliance services. That support allows you to test new markets and grow globally with less financial risk.
Example: A Canadian personalized medicine startup entering the U.S. can leverage CanExport to fund FDA advisory costs, attend strategic conferences, and localize their marketing materials.All of these activities are eligible for non-dilutive support.
Why Investors Care About Non-Dilutive Capital Too
For VCs and angels, non-dilutive funding means more than just good optics—it's capital efficiency.
Here's how non-dilutive capital benefits investors:
Extends runway without additional dilution
De-risks the portfolio: Grants often include due diligence and technical review
Accelerates milestones: Grants help companies move faster on R&D, trials, or hiring
Adds credibility: Winning a competitive grant can validate the business in new ways
Strengthens future rounds: Milestone-driven, non-dilutive progress builds momentum for Series B or later
In short, it's a win for everyone: founders keep more of their company, and investors get more leverage on their capital.
Examples of Programs Available to Post-Series A Companies
Here's a snapshot of top funding opportunities in Canada and the U.S., many of which are well-suited to Series A+ companies.
Real-World Use Cases
Scenario 1: A digital health platform expanding into the U.S.
After closing a Series A, a Canadian company qualifies for CanExport to support its entry into new U.S. markets. They also apply for IRAP funding to support their clinical validation and regulatory compliance.
Scenario 2: A biotech startup scaling lab operations
With Phase I SBIR funding already secured, the company applies for Phase II to fund scale-up and preclinical studies. Meanwhile, SR&ED tax credits help offset R&D costs on the Canadian side.
Scenario 3: A medtech company preparing for FDA clearance
The team uses IRAP funding to support hiring engineers and regulatory experts. They apply for BARDA funding to validate pandemic-readiness and future emergency use approval.
Where Non-Dilutive Capital Fits in Your Financial Strategy
You don't need to replace VC capital—you need to layer it intelligently.
Here's how to integrate non-dilutive capital into your Series A roadmap:
In your budget: Build grant milestones into your forecasting model
In your ops: Assign team members to work with a grant partner or advisor
In your board reporting: Use non-dilutive wins to show capital efficiency
In your investor updates: Highlight how grants are accelerating product timelines or de-risking technical goals
Common Pitfalls to Avoid
Waiting too long: Many programs have long lead times or firm deadlines
Ignoring alignment: Applying to a grant that doesn't clearly align with your business model will waste time
Underestimating the effort: Some applications require weeks of prep, especially for large awards
Overpromising: Make sure your technical and financial claims are grounded and well-supported
Going it alone: Hiring an expert or working with a grant partner (like Panna) increases your chances of success
Wrapping Up: Smart Funding Is Layered Funding
Raising a Series A round opens doors—but it also sets expectations. You're expected to scale, to perform, and to do it with discipline. Non-dilutive capital can give you the breathing room to do that well.Whether it's supporting your engineering team, breaking into new markets, or prepping for clinical trials, grants and tax credits offer meaningful support that helps you go further with the capital you've already raised.
And if you're not using this tool post-Series A, you're leaving funding on the table.
Ready to Stack Smart Capital?
At Panna, we help Series A and growth-stage companies identify and secure non-dilutive funding that aligns with their R&D, commercialization, and expansion goals. From U.S. SBIR grants to R&D tax credits, we simplify the application process and work as your strategic partner every step of the way.