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When nondilutive money is a distraction and an opportunity

on June 22, 2012 Source: Kauffman Foundation

A consensus at the Kauffman Foundation Life Science Ventures Summit is that too few startups chase non-dilutive funding: grants, loans, challenges and other dollars that won’t require giving up equity. It is, as many will tell you, the best money there is because you don’t give up an equity stake, board seats and other bits of control that come with angel and venture investments.

Geoff Clapp, a Rock Health advisor who helped lead the Health Hero Network to an exit to Robert Bosch Healthcare, also thinks people can get caught up chasing too many grants. “If I’m a VC, I don’t want to see you going after every single challenge,” Clapp said. “Every time there is a new X PRIZE, I don’t want to hear you’re going after it unless it really clearly fits with what you’re trying to do.”

Clapp’s advice: find grants and challenges that fit your mission or, if they’re only slightly off, consider using them as exercises that can broaden your team’s approach to their work.

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