Dilution isn’t automatically “bad.” Most business owners would happily trade 50% of a $1 million company for 5% of a $1 billion one.

The practical question is: how much ownership will you have to trade away to build a real business in your sector, and how can you make each equity sale as efficient as possible? In New York, a robust ecosystem gives founders access to equity investors, strategic partners, and state-backed programs. This diversity of resources can can help you avoid an endless loop of raising and spending.

This article looks at five categories that usually demand significant outside capital: SaaS, fintech, biotech/health, hardware, and CPG. For each type of business, I’ll highlight non-dilutive or less-dilutive financing paths.

Why dilution differs by sector

Equity dilution varies because business models vary. A few economic drivers matter more than the rest.

Capital intensity: what it costs to reach a credible milestone

Some companies can build an MVP with a few engineers in an apartment. Others need labs, tooling, inventory, clinical work, or regulatory infrastructure. The more cash you need before customers can validate the product, the more often you’ll have to raise outside funding.

Time-to-revenue: how fast customers can start paying

If you can generate meaningful revenue in 6-12 months, you may be able to raise fewer rounds, at higher valuations. If it takes years to get traction with customers, you’ll need to seek out investment more frequently, diluting your ownership each time.

Your company’s risk profile

Technical risk, regulatory uncertainty, slow adoption, or complicated operations can push valuations down or ownership demands up. When investors price in a higher failure rate, founders usually pay for that risk in the form of equity.

Talent strategy: how much equity you must reserve for hiring

Some markets require a larger option pool early — especially where specialized engineering, AI, quantitative finance, or scientific talent is scarce. A bigger equity pool can be the right move, but it still reduces founders’ percentage unless valuations rise fast enough to offset it.

By industry: dilution dynamics and less-dilutive alternatives

1) SaaS and software

These companies are comparatively capital-efficient in their early days. Spending accelerates at go-to-market (sales, marketing, customer success) and during scaling. Dilution happens when founders chase aggressive growth targets that require multiple financings before profitability.

Less-dilutive options to consider:

• Annual prepay / multi-year contracts: Customer cash can partially replace outside capital and strengthen your negotiating position in a SAFE or priced round. Thanks to urban density and academic institutions, New York can be a great place to find customers for paid pilot projects.
• Revenue-based financing: No equity transfer required, and repayment amounts are tied to your actual revenue (not a fixed amount like a loan).
• New York-specific: Grants and programs don’t usually target general SaaS or software companies, but some funding (or tax relief) is available if your software solves a problem related to the energy grid (NYSERDA), or if you can make a 10-year commitment to either creating jobs (Excelsior Jobs Program) or operating near an eligible college campus (START-UP NY).

2) Fintech

Fintechs can be as capital-light as SaaS, but sometimes they need more up-front investment due to compliance, loss reserves, fraud and chargeback exposure, and licensing timelines.

The fintech area is unique in that companies are often originating or servicing financial assets like loans, receivables, card spend, or insurance premiums. This lets some types of companies borrow against their assets, making deals that wouldn’t be available to other kinds of startups.

In fintech, your capital strategy is often part of the product design. The cleaner the underwriting, servicing data, and legal structure of the asset, the better your chances of getting non-equity funding.

Less-dilutive options to consider:

• Warehouse lines / asset-backed credit facilities: Here, a lender advances money against the startup’s eligible receivables or a defined pool of loans. “Eligible” and “defined” are the key words here – the assets will have to meet the lender’s criteria.
• Forward-flow sales / participations: The startup can sell loans or participation interests to a buyer or funding partner.
• Insurtech tools: Reinsurance can reduce risk retained on the balance sheet and lower capital needs.
• New York-specific: Fintech Innovation Labs connects startups with established financial companies willing to sponsor them and help refine product-market fit. Although not a funding opportunity per se, many founders have onboarded their first large customers, or have been introduced to investors, at this accelerator.

3) Biotech, pharmaceuticals, and medical devices

These companies have significant financial challenges due to long timelines, expensive R&D, and the need for regulatory approvals. Fundraising often happens in stages tied to experiment results, clinical trials, and FDA milestones. Each of these steps can trigger another financing, and therefore a new dilution event.

Less-dilutive options to consider:

• Federal government funding: Although many of these programs are currently on hold or making limited grants, science advocates are pushing to restore non-dilutive grants from SBIR/STTR, BARDA DRIVe, and ARPA-H. In many cases, New York State will match these federal grants.
• Strategic partnerships: Corporate collaborators can fund development, but you may have to offer these companies IP rights or other commercial incentives.
• New York-specific: Founders looking for lab space and equipment can take advantage of a wealth of opportunities throughout the state, including at SUNY Downstate, BioLabs NYU Langone, Harlem Biospace, Johnson & Johnson’s JLABS @NYC, and Hudson Valley iCampus. The LifeSci NYC Expansion Fund offers low-interest loans that may be forgiven when you hit certain growth and local hiring milestones.

4) Hardware (devices, robotics, IoT)

Prototyping, specialized components, certification/testing, and early manufacturing make capital needs front-loaded. Even “simple” devices can become expensive once you move from prototype to repeatable production.

Less-dilutive options to consider:

• Government grants: Again, although their status is uncertain right now, SBIR/STTR and matching New York State grants may become available again. To be eligible, your product must align with a public priority like defense, disaster recovery, public health, or infrastructure.
• Equipment financing: If access to equipment is your bottleneck, the US federal government’s Small Business Administration offers loans of up to $5.5 million for “major fixed assets that promote business growth and job creation.”
• New York-specific: Money-saving lab and manufacturing space is offered at Newlab, Yard Labs, Rev Ithaca Startup Works, Rochester’s Nextcorps, and various certified business incubators. FuzeHub makes grants to small and mid-sized manufacturers.

5) Food, beverages, and CPG

Inventory, slotting fees, marketing spend, and delayed payments can push founders toward equity sales earlier than they’d prefer — often at valuations that feel “unfair” in hindsight.

Less-dilutive options to consider:

• Pre-sales and crowdfunding: Platforms and pre-orders let you convert hype into working capital, but you’ll need skilled marketing and excellent fulfillment logistics to earn a meaningful profit.
• SBA-style lending: can provide less-dilutive funding, but make sure your revenue projections are in line with your payment obligations.
• New York-specific: Grow-NY’s food and agriculture startup competition awards $3 million in non-dilutive prize money every year. Food and beverage-related incubators include the Cornell Agriculture and Food Technology Park, Bronx CookSpace, Hot Bread Kitchen Incubates, and TheFutureCo.

What New York founders should do next

If you want “good” dilution — equity sold at the right moment, for the right reason — define your needs carefully and match your financing tools to those needs:

1. What’s your next step? Is it proving your concept, becoming revenue-positive, obtaining a regulatory approval, hiring brilliant employees, or scaling by orders of magnitude?
2. Does dilutive funding get you to that next step faster, cheaper, or better? If not, consider a less-dilutive option.
3. Can you use New York’s ecosystem to meet your goals? Pilot projects, incubator relationships, and state-backed programs can reduce how often you must sell stock.

You don’t need to avoid dilution at all costs. Still, every percentage point of equity you give up should buy something you couldn’t get any other way.

If there’s another non-dilutive resource you’d like to share with New York startups, or if you want to discuss funding for your own company, please feel free to contact me.