What is Non-dilutive Financing?
Non-dilutive financing refers to a type of funding that does not result in the issuance of additional equity or ownership dilution for existing shareholders. It allows a company to secure capital without giving up ownership or control.
Here are a few common examples of non-dilutive financing:
- Debt Financing: Taking on debt through loans, lines of credit, or bonds is a common form of non-dilutive financing. The company borrows funds from a lender and agrees to repay the principal amount along with interest over a specified period. Debt financing allows the company to raise capital without issuing additional equity shares.
- Grants and Government Funding: Companies may receive non-dilutive financing through grants, subsidies, or government programs. These sources provide financial support for specific projects, research and development, or other initiatives without requiring equity issuance. Grants are typically provided by government agencies, foundations, or non-profit organizations and do not require repayment.
- Revenue-based Financing: Revenue-based financing, also known as royalty financing, is a non-dilutive financing method where a company receives funding in exchange for a percentage of future revenues. Instead of giving up equity, the company agrees to pay a fixed percentage of its future revenues until a predetermined amount is repaid.
- Asset-based Lending: Asset-based lending involves obtaining financing by using specific company assets as collateral. This could include accounts receivable, inventory, or equipment. The lender provides a loan based on the value of the assets, allowing the company to access capital without diluting ownership.
- Licensing and Partnerships: Non-dilutive financing can be achieved through licensing intellectual property or forming strategic partnerships. Companies can license their technology or intellectual property to other entities in exchange for upfront fees or ongoing royalties. Strategic partnerships may involve financial support, shared resources, or joint ventures without the need for equity issuance.
OTHER TERMS BEGINNING WITH "N"
- National Motor Freight Classification (NMFC)
A tariff that contains descriptions and classifications of both commodities and rules for domestic transportation by motor carriers in the United States.
- Negative Cash Flow
Negative Cash Flow is when cash flow into a business is less than the cash being spent over a specific time period. You will also hear the term Burn Rate being used in startups.
- Net Funds Employed (NFE)
The NFE is the balance of outstanding Advances on a Client’s Accounts at any given time. NFE can also refer to a type of pricing factoring companies occasionally offer to clients, whereby the fee charged is based on NFE. However,…
- Net Orderly Liquidation Value (NOLV)
Net Orderly Liquidation Value (NOLV) is a term used in finance to refer to the estimated value of an asset in a forced sale or liquidation scenario. It is the value that an asset would draw if it were sold.…
- Non-Notification or Blind Notification
Non-Notification or Blind Notification is a type of factoring agreement that reduces direct communication between a factoring company and the factoring company’s client’s customer. The fact that the company is using a factoring company is typically not known to their…
- Non-Recourse Factoring or Without Recourse Factoring
Non-Recourse Factoring or Factoring Without Recourse is an agreement within a factoring contract where the factor's client does not have to pay back the factoring company if an invoice is not specifically paid due to bankruptcy of the client’s customer…
- Notice of Assignment
The Notice of Assignment is a legally binding notice sent to our client’s customers advising them to redirect payments on all client accounts to ECapital. Under the UCC laws, if a customer pays any other party, they have not relieved…
