By: Ram May-Ron, the FreeMind Group

For decades, the life science industry has relied on substantial support from non-dilutive funding (NDF) sources. These include federal agencies such as the NIH, NSF, BARDA, DoD via the USAMRDC, USSOCOM, CDMRP, DTRA, DARPA and others, state programs (CIRM, CPRIT), and private foundations (Michael J. Fox Foundation, ADDF, JDRF). These NDF sources serve as a critical engine that propels our industry forward, supporting cutting-edge solutions that lead to better, healthier lives for all while dominating the world in innovation.

While NDF represents an important and strategic funding source for life sciences, it operates alongside other vital capital streams—public markets, large pharmaceutical companies, and venture capital firms—each playing crucial roles in the ecosystem. However, NDF fulfills a unique and irreplaceable function.

The Special Role of Non-Dilutive Funding

Unlike other funding mechanisms that typically support proven concepts, NDF enables companies to traverse the infamous “valley of death”—that critical stage where an idea shows tremendous promise but lacks the clinical proof of concept necessary to attract risk-tolerant investors seeking significant returns.

In recent months, a concerning shift has occurred—not in the actual availability of funds, but in the perception among industry decision-makers, particularly following the re-election of President Donald Trump. This sentiment shift threatens to create a self-fulfilling prophecy with serious consequences for innovation.

Reality vs. Perception

While the new administration has implemented certain policy changes and temporarily paused some funding streams during its first months—as is common with any transition of power—the evidence does not support claims of significant cuts to life science funding:

• The federal budget was approved with no reductions to the NIH budget or most other funding agencies
• Grant applications continue to be accepted, reviewed, and awarded
• Looking forward, discussions about the SBIR program (set to expire in September 2025) include recommendations for a three-year extension with potentially increased allocations for small businesses
• Preliminary proposals suggest reducing the university portion of STTRs and potentially introducing a substantial Phase III SBIR (up to $30M)

Budget reductions that have occurred primarily affect intramural research conducted within federal agencies themselves. According to independent data analysis of grant terminations (maintained by researchers from rOpenSci and Harvard T.H. Chan School of Public Health), only 5 out of 754 terminated awards were SBIRs, all focused on DEI/LGBTQ+/family initiatives. Importantly, no company grants targeting major diseases like cancer, Alzheimer’s, or Parkinson’s were terminated.

The Consequences of Misperception

This growing dissonance between facts and sentiment is actively harming companies. Available funding that could advance scientific progress and strategic goals fails to reach companies in need simply because they don’t believe it exists—and consequently don’t apply.

This problem is particularly acute given the current market turbulence, with virtually no IPOs or M&A events in the biotech sector. These exit opportunities typically fuel earlier-stage VC investments, and their absence causes investors to become more conservative, withholding early-stage, high-risk investments.

The result is a perfect storm: on one hand, substantial non-dilutive funding remains available through federal and other sources with reasonable chances of success for qualified applicants. On the other hand, companies “don’t believe” these funds are accessible and therefore don’t submit applications, while simultaneously facing increasing difficulty securing venture capital.

A Call to Action

This is precisely the time to recognize facts and consider ALL available funding sources. Companies must view non-dilutive funding as a STRATEGIC FUNDING PILLAR—not as a replacement for venture capital or other sources, but as a critical component of a diversified funding strategy.

The largest source of funding supporting our industry remains active and accessible. I encourage life science leaders to look beyond perception, examine the evidence, and take action. Remember: like a farmer who never plants seeds despite fertile soil and favorable weather, you cannot harvest what you do not sow. The funding fields are ready—but only those who actively cultivate opportunities will reap the benefits.