Most medtech founders think about grants and equity as two separate fundraising tracks run by two separate people: a grant writer chasing deadlines, and a CEO chasing investors. That framing quietly costs them ownership. Non-dilutive and dilutive capital are not parallel tracks — they are layers in a stack, and the order you lay them down determines how much of the company you still own when you reach Series A.
We wrote recently about which non-dilutive programmes are genuinely open across Europe, the UK and Singapore. This piece is about the harder question: once you've won some, how do you sequence it against equity so the whole stack compounds in your favour?
Start from the number that should scare you
Carta's 2026 data puts median founder ownership at Series A at 37.5% for digital businesses and 30.5% for physical ones — a seven-point penalty for building something you have to manufacture, validate and certify. That gap is the entire reason sequencing matters. A medtech founder is diluted harder and slower than a software founder, so every lever that delays or reduces an equity round is worth more to them than to their SaaS peers.
Non-dilutive funding is the most powerful of those levers — but only if you understand what it actually buys.
The point of a grant is not the cash. It's the valuation postponement. Every month of runway you buy without selling equity is bought at the cheapest price you will ever pay for it — provided you spend that runway generating evidence that raises your next valuation, rather than writing the next application.
The stack, laid down in order
Here is how the layers are meant to sit — each one de-risking the next and pushing the priced round later and higher.
| Layer | Instrument | What it buys |
|---|---|---|
| 1 · Foundation | Grants & non-dilutive (EIC, Eurostars, SBRI, Innovate UK partnerships) | Runway with zero dilution. Funds the evidence — bench, validation, early clinical — that everything above depends on. |
| 2 · Bridge | Convertibles / SAFEs, R&D tax credits, revenue-based finance | Fast, flexible capital that defers the valuation conversation to a later, stronger moment. |
| 3 · Priced | Seed / Series A equity | The big raise — landed once the grant-funded evidence has moved the valuation up and to the right. |
The founders who keep the most equity treat layer 1 as the thing that makes layer 3 bigger. The ones who lose it treat all three as interchangeable buckets of cash and reach for equity first because it's fastest.
The three sequencing mistakes that cost ownership
1. Raising equity to fund work a grant would have paid for
Selling 15% of the company to fund a clinical validation study that a Eurostars grant would have part-funded, or an SBRI contract would have paid for in full, is the most expensive mistake in the stack. Map your next 18 months of evidence-generating work against open non-dilutive calls before you size an equity round. Anything a grant can fund should not be on the equity ask.
2. Letting grant timelines dictate the raise — or ignoring them entirely
Grants move on fixed cut-offs; investors move on momentum. The two calendars have to be planned together. A grant decision landing the month before you open a round is a valuation gift; the same grant landing the month after you close is money left on the table. Sequence the applications so the wins arrive before the raise, as evidence, not after it, as consolation.
3. Signing "grants" that are actually equity in disguise
Not every non-dilutive instrument is non-dilutive. Some carry embedded equity mechanics — paid-up capital conditions, or a right for the funding body to subscribe for shares at a later financing event. A grant with an equity option belongs in a different column of your cap-table model, and needs to be read as carefully as a term sheet. Confirm the mechanics before you sign; a headline "grant" can quietly behave like an early, cheap round for someone else.
Read the fine print on every instrument as if it were a term sheet, because sometimes it is one. The most damaging dilution on a medtech cap table is often the dilution the founder didn't realise they'd agreed to.
Model it as one stack, not two tracks
The practical fix is a single financing model that puts grants, convertibles and equity on the same timeline — with each grant's probability, timing and net dilution (including any embedded equity terms) sitting next to your projected equity rounds. Built that way, the model answers the only question that matters: for each pound or euro of the next 18 months' spend, what is the cheapest layer that can fund it, and when does it land?
Do that, and non-dilutive stops being a side quest run by a grant writer and becomes what it should be — the part of the capital strategy that decides how much of the company you still own at the end.
The one-line version: grants, convertibles and equity are layers, not tracks. Lay the non-dilutive foundation first, spend it on evidence that lifts your valuation, and reach for priced equity last — from a stronger position than you'd otherwise have.
What to do this quarter
01 · Map evidence to non-dilutive first
List your next 18 months of evidence-generating milestones and match each to an open grant call before sizing any equity round. Move fundable work off the equity ask.
02 · Put both calendars on one timeline
Plot grant cut-offs and your intended raise window together, so wins land before the round opens — as valuation evidence, not afterthoughts.
03 · Audit every instrument for hidden equity
Check each "grant" for paid-up capital conditions or share-subscription rights. Model anything with embedded equity as what it is.
04 · Build one financing model
Grants, convertibles and equity in a single sheet with timing, probability and net dilution — so you can see the cheapest layer for each pound of spend.
Sources & further reading
- Carta — Founder Ownership Report 2026.
- Meridian 103.8 — Non-dilutive first: the funding map for medtech across Europe, the UK and Singapore.
- European Innovation Council — EIC Accelerator (blended finance for SMEs).
- Eureka — Eurostars (SME-led, cross-border, incl. Singapore).
This article is general information current as at 2 October 2026, and is not financial, investment, tax or legal advice. Funding programme terms and dilution outcomes vary; model your own cap table and take professional advice before making financing decisions.