Posted by Adam
Equity is the most expensive money a founder will ever raise. You give it up once, and you keep giving it up — every future round, every exit, measured against the point you sold early when you had the least leverage.
So before you size a raise around the full cost of your build, it’s worth asking a different question: how much of this can I fund without giving up equity? For a lot of Canadian software companies, the answer is more than they assume.
Non-dilutive, in plain terms
Non-dilutive funding is money you don’t trade ownership for. In Canada, two programs do most of the heavy lifting for companies building technology:
- SR&ED supports the R&D work itself, delivered through the tax system after the fact. Much of what a software team already does (resolving genuine technical uncertainty) can qualify.
- IRAP supports innovation projects through advisory services and funding contributions, assessed before the work happens.
They operate on different timelines. One is claimed after the work has been done, the other approved up front. Which is exactly why planning them together, across a single development cycle, tends to unlock more than discovering the second one late.
Why timing changes the number
The amount you can fund this way isn’t fixed. It’s decided by choices made while the work is being scoped, not at year end. Structure a project without the programs in mind and you leave money on the table: the eligible work isn’t recognised as it happens, the evidence a claim needs never gets captured, and the IRAP framing that would have strengthened an application was never built in.
Plan for them from the start and the same build attracts materially more support. That’s the whole reason we bring funding into the conversation when we’re scoping a project, not after it ships.
What this does for a raise
Two things. Both useful.
First, it shrinks how much equity you need to sell. Every dollar of the build covered by non-dilutive funding is a dollar you’re not pricing into a round at your earliest, weakest valuation.
Second, it’s a signal. A founder who has secured non-dilutive funding has shown they can attract capital on the strength of the work, run a process, and manage money carefully. Which, of course, is exactly the read an investor is making.
A credible non-dilutive line in the deck changes the conversation.
The honest caveat
Non-dilutive isn’t free, and it isn’t always right. IRAP contributions are often tied to hiring, and a contribution that commits you to headcount you didn’t need is expensive money wearing a cheap label. Sometimes the honest answer is that a program isn’t worth pursuing this year. We’d rather tell you that than book the work.
But for most software companies planning a real build, the question isn’t whether some of it can be funded without equity — it’s how much, and whether they’ll plan early enough to capture it. That’s the side of the table we sit on.
This is general information about Canadian funding programs, not tax, accounting, or legal advice. Program eligibility and terms change — confirm the specifics with the Canada Revenue Agency, the National Research Council, and your own advisors.