For Kiwi businesses looking to grow and innovate, securing funding is often the first hurdle. While many turn to venture capital or lending to fund growth and innovation, non-dilutive funding is another powerful option that doesn’t require you to give up ownership or take on expensive debt.

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What is Non-Dilutive Funding?

Non-dilutive funding is financial support that businesses can access without giving away equity. Simply put, you get the funds you need to grow without selling shares or paying back a loan. For startups and established businesses, non-dilutive funding provides the capital to scale—without any financial strings attached.

As Nick Prattley, Director of Swell, puts it: "Non-dilutive funding, which typically comes from government grants and tax incentives, is an incredible way for businesses—whether you’re a startup or established—to secure capital without giving up control. So many companies spend months raising investment and speaking to banks about lending, but they often overlook government funding as way to support innovation and growth.

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Non-Dilutive vs. Dilutive Funding

The main difference between non-dilutive funding and traditional equity funding is ownership. With equity funding (also known as dilutive funding), you give away a piece of your business in exchange for capital, reducing your ownership and potentially losing some control over decision-making. On the other hand, non-dilutive funding allows you to retain more equity in your business for longer.

Nick points out that many businesses in New Zealand are just beginning to realise the benefits of non-dilutive funding. "A 2023 sample survey of New Zealand businesses showed that well under half of those doing R&D were taking advantage of the R&D tax incentive. This is a credit that eligible businesses are entitled to, so it’s a shame to see it being so under utilised,"he says.

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Examples of Non-Dilutive Funding

In New Zealand, common sources of non-dilutive funding include:

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• Government Grants

‍Funding provided by government agencies for specific projects and activities like across R&D, technology commercialisation, decarbonisation, and sustainability initiatives among others.

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• Tax Incentives

‍Programs like the R&D Tax Incentive (RDTI) and R&D Loss Tax Credit allow businesses to get a cash credit or reduce their tax bill based on their expenditure on eligible research activities.

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These funding streams provide immediate financial relief and foster long-term innovation and economic growth. "New Zealand has set a goal of reaching 2% of GDP in R&D spending by 2027. With the right support, we could see more jobs, more intellectual property, and greater overseas investment in Kiwi businesses," Nick adds.

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Why Non-Dilutive Funding is Ideal for Sustainable Growth

Non-dilutive funding is particularly valuable for businesses aiming for sustainable, long-term growth. You can innovate and expand without sacrificing ownership or taking on risky debt by securing grants and tax incentives. It’s also a smart option when traditional funding sources, like venture capital or loans, are more complex to secure or come with hefty terms.

Nick has noticed a shift in the market: "Over the past year, 50% of our new clients had never tapped into any government funding before. With debt and venture capital becoming more difficult or expensive, businesses are turning to non-dilutive funding to keep their growth on track."

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How Swell Helps Businesses Access Non-Dilutive Funding

Navigating the world of grants and tax incentives can be complex, especially if you’re new to the process. We specialise in helping businesses identify and secure non-dilutive funding, offering expert support to navigate grant applications and take advantage of tax incentives.

"It’s not always easy," Nick admits "Securing significant funding can take months, sometimes up to a year. But the payoff—a five or ten-million-dollar non-repayable grant—can be a game changer for your business."

At Swell, we streamline the process to make sure businesses don’t miss out on the funding that’s out there. If you want to explore non-dilutive funding options and see how they can help your business grow, we’re here to guide you every step of the way.