How can fintechs access non-dilutive funding?
Entrepreneurs experience a myriad of challenges when it comes to raising capital to fuel their growth, especially at the early stages of their business.
Startups and other SMEs can now access a range of non-dilutive funding solutions at key stages of growth, including R&D Advance funding, Grant Advance funding, and Revenue Advance funding. These are alternatives to equity capital that can provide fast-growing innovative businesses with access to growth capital affordably and quickly.
These funding options help businesses by supporting investment into research and development, bringing forward project delivery timelines and helping to manage project cash flow. They also provide flexibility to support strategic investment outcomes, generally. For example, companies are now looking to R&D funding to help extend cash runway, through fundraising activities (e.g. Series A), to support increased valuations and maintain founder ownership levels.
In the UK, R&D advance funding continues to grow. With an estimated 85,900 R&D claims for the year ending March 2020 (an increase of 16% from the previous year) and expenditure on R&D performed by UK businesses also showing ~3.5% YOY growth, businesses are now recognising the valuable opportunity provided through this form of non-dilutive funding.
Globally there are c. USD 350bn of assets owned by companies that have previously been unrecognized by lenders which can now be used as collateral to lend securely. Advance funding is similar to accessing any type of loan – it simply uses future tax credits, grant payments or revenue, as collateral.
Blog article written by Hamish Gregory, Director Strategy & Operations at Fundsquire
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