For startups, the benefits of non-dilutive funding extend well beyond cash

Non-dilutive sources of funding, such as federal grants or industry partnerships, are often overshadowed by the headlines about large VC-led fundraisers. But these sources play an important role in bringing many critical technologies to market.

For example, the Biomedical Advanced Research and Development Authority (BARDA) fueled Moderna’s research that led to the development of Covid-19 vaccines, and is also investing in efforts to develop better home tests.

For startups, the benefits of these programs extend beyond the funding itself. Working with local government programs or universities can also help innovators bring the necessary expertise to their business and navigate their way to commercialization, panelists from MedCity INVEST Precision Medicine said.

“It’s 10 times more valuable in many circumstances to have immediate access to expertise and not the $ 150,000 you might get upfront,” said Tiffany Wilson, CEO of the University Science Center, a Philadelphia-based non-profit organization that helps early stage companies get lab space, help with applying for grants, and other resources.

This expertise is essential for medical technology and biotechnology startups. For example, Small Business Innovation Resource (SBIR) programs can connect founders to a large network of experts, including potential suppliers, members of advisory boards, or regulatory professionals. In turn, this can save founders valuable time in finding the right fit and can improve their chances of securing more funding down the road.

“If you’re a start-up business, you spend between a thousand and ten thousand dollars a day,” she said. “Every day you are not making significant progress towards commercialization, you are potentially wasting money. To the extent that you can partner with some of these organizations… you save time.

Working with these programs can also help founders solve potential problems later, said Kelly Wylam, director of innovation partnerships for Ben Franklin Technology Partners.

For example: are there a shortage of key personnel in a startup? Are they applying for funding from the right agency? Do they have agreements to use their intellectual property if it was developed at a university?

“Timing is extremely important,” she said. “We want to be in contact with an interested author as soon as possible. “

Even if these sources of non-dilutive funding do not take equity, that does not mean that there are no conditions. Keeping up with the pace and the accounting is essential for startups that get federal funding, she said.

Startups should also be expected to act as if they are working for a pharmaceutical company, showing their progress, producing unbiased results and making good scientific decisions, said Tom Hu, interdisciplinary scientist and project manager at BARDA.

But ultimately, the work should be worth it.

Hu recalled working with an intensive care pulmonologist who discovered that an existing drug, activase, could be used to help treat a rare pediatric lung disease. BARDA was also interested in this research for biodefense purposes. There was only one problem: it was a billion dollar drug.

The agency helped her negotiate with the pharmaceutical giant that produces the drug.

“We actually made a commitment with the company to go to the FDA to expand the label indications, so that it could potentially benefit the patient, help national preparedness, and gain additional knowledge in this area of ​​the disease.” , did he declare. “I was really proud of it.”

Photo credit: Topp_Yimgrimm, Getty Images

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