Describes whether or not the investor in your project gets the right to some of your business equity and profits (called “dilutive” because your equity and profit is diluted by their investment) or does not get any of your equity or current or future profits (called non-dilutive because your equity does not get diluted by their investment). You can set aside some shares to not be diluted by a dilutive investment so that you do not lose ownership of your company.
Examples:
Examples of dilutive vs. non-dilutive funding are:
- Dilutive: Angel investors, venture capital, potentially your friends and relatives depending upon what arrangement you make with them.
- Non-Dilutive: SBIR/STTR, loans, winning a contest (in most cases), personally financing it.
