Non-Dilutive Funding in India: Venture Debt, Revenue-Based Financing and Grants
Equity is not the only way to fund growth. Here is how venture debt, revenue-based financing and grants work for Indian startups, and when each one makes sense.
Every equity round costs you ownership. Sometimes that trade is worth it, and sometimes there is a cheaper way to fund the same growth. Non-dilutive capital lets you raise money without shrinking your slice of the company. Here are the three main options for Indian founders, and when each fits.
Venture debt
A loan designed for venture-backed startups, usually taken alongside or just after an equity round to extend runway without more dilution. It carries interest and a repayment schedule, so it suits companies with a clear path to the next round or to cash-flow positive. Indian providers are active in this space.
Revenue-based financing (RBF)
You receive capital and repay it as a fixed percentage of monthly revenue until a capped total is paid back. Repayments flex with your revenue, so a slow month costs you less. It works best for businesses with steady, predictable revenue: D2C brands and subscription products especially.
Grants and government schemes
- •The Startup India Seed Fund Scheme supports early-stage startups through approved incubators.
- •SIDBI and various state schemes fund startups and MSMEs, sometimes via a fund of funds.
- •Sector and deep-tech grants exist for climate, healthtech and research-led startups.
Grants are the cheapest capital there is (no equity, no repayment), but they are competitive and slow, so treat them as a bonus rather than your core plan.
Which should you use?
- 1.Predictable revenue and a near-term equity round: venture debt to bridge.
- 2.Steady monthly revenue, want to avoid pricing the company: revenue-based financing.
- 3.Eligible for a scheme and can wait: grants, alongside other capital.
Whatever you choose, know your real cash position first. Runway tracks your live, GST-aware runway so you can see how much bridge capital you actually need, and surfaces capital partners inside the app.
Frequently asked
What is non-dilutive funding?
Capital you raise without giving up equity. The main forms are venture debt, revenue-based financing (RBF), grants, and government schemes. You repay debt and RBF, but you keep your ownership.
Is venture debt a good idea for startups?
It can be, to extend runway between equity rounds or fund a specific growth push, if you have predictable revenue to service it. It is risky if your revenue is uncertain, because repayments are due regardless.