Non-dilutive, when describing funding, means the investor in your project does not get the right to some of your business equity and profits. When the investor does get the right to some equity and profits, it is called “dilutive” because your equity and profit are diluted by their investment). You can set aside some shares to protect them from dilution so that you do not lose ownership of your company.
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.