The $1B Non-Dilutive Funding Playbook: What Health and Bio Founders Need to Know Now That SBIR Is Back

Before moving into the biotech world, I spent nearly a decade as a bench scientist. At a Series A startup, I found myself wearing every possible hat: pitching investors and collaborating with product and regulatory teams by day, then pivoting to lab experiments and data analysis by night. I quickly realized that crafting a proposal that articulates a clear development roadmap to study section reviewers, while navigating a 177-page guidance manual, was a completely different skill set. Finding the right partner made all the difference for me. This experience, combining a decade of bench science with hands-on startup roles is the foundation on which I now help founders.

Today, having partnered with over 100 companies to secure more than $125M in funding, I aim to support entrepreneurs who feel equally overwhelmed. My message is simple: it is perfectly fine to have knowledge gaps or misconceptions, and seeking help is a sign of strength.

A few misconceptions come up again and again with the founders I meet:

• Non-dilutive funding is too slow: the reality is that raising equity today often takes just as long. Furthermore, initiatives like Wellcome Leap and ARPA-H can make an award within just three months of a full proposal submission.
• VCs don’t like non-dilutive funding: the reality is that VCs love the zero-equity and third-party validation brought upon by non-dilutive funding, as long as the scope is aligned with the product development pathway.
• Fairness and Process: Critics often call the review process random or unfair. While not perfect, it utilizes a transparent, score-based peer review system with published timelines, offering a level of clarity rarely found in equity funding.
• The Future of SBIR: Many worry that research funding cuts mean the SBIR program will disappear. However, the program has historically enjoyed bipartisan support and its budget has consistently increased by roughly 4.9% annually. As expected, the program is currently fully operational.
• Technology Alignment: Some believe the program won’t fund their specific technology. You can easily verify funding trends via USA Spending or the NIH RePORTER. Usually, rejection isn’t about the tech itself, but rather issues with technical rigor, feasibility, or market differentiation.

The Current Funding Landscape

Adopting a diversified approach to fundraising is essential. Early-stage biotech innovators are facing an exceptionally challenging environment. Data from J.P. Morgan’s Q1 2026 biopharma licensing and venture report indicates that first-time biotech financing is heading toward a post-pandemic low, with seed and Series A deals dropping to 50 in the first quarter from 60 the previous year. Venture capitalists are now focusing their resources on projects with proven data, mitigated risks, and immediate milestones. Consequently, even with high-quality science, many startups will struggle to secure their desired funding rounds. Rather than seeking a priced round in such a restrictive market, founders should consider a diversified strategy to gather the necessary data to satisfy VC requirements and re-enter negotiations from a position of strength.

On the non-dilutive funding side, the opportunities are vast: upwards of $50B, with the NIH SBIR/STTR program allotted with $1.5B, ARPA-H with $1.5B, CDMRP with $1.3B, just to name a few.

What’s Different Now That Reauthorization Is Law

Founders who navigated the recent lapse must now operate with heightened discipline and speed, as the backlog of demand has intensified competition for available review slots and awards. With SBIR/STTR success rates in 2025 dropping by 45% compared to 2023 levels, simply reusing previous application materials is insufficient.

To succeed in this post-lapse climate, entrepreneurs should:

• Strengthen Positioning: Rigorously test your value proposition, refresh traction and market statistics, and refine your narrative to ensure it meets the current standard for fundability.
• Strategic Pipeline Planning: Develop a comprehensive 12 to 18 month grants calendar that coordinates multiple mechanisms and ensures internal teams and partners have the capacity to manage concurrent proposals.
• Relational Reset: Re-establish contact with program officers to understand evolving priorities and demonstrate that the hiatus was used to actively de-risk both the commercial and scientific aspects of the venture.

How to Think About the September Cycle

According to independent research from Grant Engine, early submissions result in a 2.4-fold increase in funding success. This trend stems partly from the superior preparation of early-bird teams, but another critical factor is the improved likelihood of being assigned to relevant study sections, the panels of subject-matter experts who review and score your proposal. During the January 2025 cycle, a surge in AI-driven submissions meant that last-minute proposals were often evaluated by academic reviewers lacking expertise in product development and business strategy. This risk is heightened for the September cycle, which handles three cycles worth of proposals. Consequently, Grant Engine targets August 1 for the submission of most proposals to maximize our partners’ chances.

Where Founders Lose Before They Start Writing

To put it briefly, the most significant deficiency I observe occurs before any writing even begins: the strategy. This encompasses identifying the right funding opportunities, understanding the elements of a competitive proposal and team, determining the necessary volume of preliminary data, and establishing the essential professional connections. Most founders underinvest in at least one of these four pillars.

1. Identifying the right funding opportunities

Funder fit matters more than funder prestige. A perfect proposal sent to the wrong mechanism still loses.

• Search the NIH RePORTER and USA Spending databases for keywords tied to your technology, indication, and modality. Look at which institutes and centers funded similar work in the last three years, and note the specific funding mechanisms they used.

• Look beyond NIH. The DoD, ARPA-H, BARDA, NSF, and foundations like Wellcome Leap fund early-stage biotech with very different priorities and timelines. A program that rejects you on scientific grounds may be a strong fit for another funder’s mission.

• Match the opportunity to your actual stage. If you’re still in discovery, applying to a translational mechanism wastes a cycle. Read the funding announcement carefully for stage expectations before you commit resources to writing.

2. Understanding the elements of a competitive proposal and team

Reviewers fund teams as much as they fund science. A brilliant PI with no commercialization experience signals risk in an SBIR context, where the program’s purpose is moving technology to market.

• Build a team that covers science, commercialization, and regulatory strategy. If you don’t have those functions in-house, name credible advisors or consultants and explain their specific role in the project.
• Write quantitative, milestone-driven aims. “Optimize the assay” is not a milestone. “Achieve sensitivity of X and specificity of Y in N samples by month 9” is.
• Address the three most common rejection reasons directly: technical rigor, feasibility, and market differentiation. Don’t make reviewers infer your differentiation from context. State it plainly and back it with evidence.

3. Determining the necessary volume of preliminary data

Founders often either over-invest in preliminary data before applying or submit too little to convince reviewers the project is feasible. Both are expensive mistakes.

• Calibrate to the study section, not to your gut. Different sections have different bars for preliminary data, and the funded proposals in your area will tell you what reviewers expect to see. Pull recent awards from RePORTER and read the abstracts.
• Prioritize data that de-risks your riskiest assumption. If reviewers will doubt one specific claim, that’s where your preliminary data should focus. Generating peripheral data to look thorough rarely changes a score.
• Remember that Phase I exists to establish feasibility. You don’t need to prove the entire program works before applying. You need to show the science is sound, the team can execute, and the milestones are achievable within the budget.

4. Establishing the essential professional connections

The relationships you build before submission shape how your proposal gets read.

• Contact the program officer early. A 20-minute call to confirm fit, ask about priorities, and discuss your specific aims is the single highest-leverage step in the entire process. Program officers want to fund strong work and will tell you when a mechanism isn’t right for you.
• Talk to recent awardees in your space. They can tell you what their reviewers cared about, how they framed their commercialization plan, and what they would do differently. Most are generous with their time if you ask thoughtfully.
• Build a reviewer-aware network. People who have sat on study sections see patterns that aren’t visible from the outside. A single conversation with a former reviewer can reshape how you structure your specific aims.

Three Resources to Start With

When a health or bio founder comes to me for the first time, I point them to three resources.

To begin, I strongly believe that applicants should leverage resources provided by funding agencies to gain a clear understanding of previously funded projects like NIH RePORTER.

In addition, I highly recommend our webinar series. Reviewing past sessions offers valuable behind-the-scenes insights, while participating in upcoming live webinars allows you to engage directly and get your specific questions addressed in real time.

Finally, Grant Engine provides complimentary SME reviews, a service typically offered as paid consulting, to assist the community with strategic roadmapping, competitiveness, and assessing applicant preparedness.

What to Do This Week

For founders who have never applied for SBIR before, here is where to start: First, verify your eligibility for the SBIR/STTR program. Then, research funded technologies by searching for relevant keywords in the funder agencies database (NIH, NSF, CDMRP, ARPA-H, USAspending). Finally, identify the next scope of work that will get you to the next value inflection point and the team to execute it.