According to a research from Index Ventures about founders’ ownership, founders on average own less than 30% of their business after Series B, while investors own more than 55%.
It is clear that nowadays, startups become overly dependent on venture capital, leading to sometimes significant equity dilution over time. Who wants to hold less than 15% of your company after scaling up.
Yet there’s a powerful alternative: non-dilutive funding. Thanks to grants, tax credits, and other financial mechanisms, you may be able to fuel your growth, while preserving the same ownership over your company.
We’ve put together this guide to help you explore the key non-dilutive funding options available in Belgium and France, based on our experience helping dozens of companies strategically combine and leverage these funding sources.
What is Non-Dilutive Funding in France & Belgium
Non-dilutive funding refers to capital that businesses can obtain without giving up ownership or equity stakes. This type of financing allows founders to retain full control over their company’s direction and profits.
Common types of non-dilutive funding include
Tax Incentives
Governments offer tax credits or deductions to encourage business activities like research and development (R&D).
- For instance, the European Innovation Council (EIC) Accelerator provides grants and investments to startups and SMEs in EU Member States, including France and Belgium, to develop and scale up innovations.
Debt-based financing
Loans or credit lines that must be repaid over time, typically with interest, but without relinquishing equity. Traditional bank loans fall into this category. However, startups may also consider alternative lenders who provide flexible funding arrangements.
- For example, GENFIT, a French biopharmaceutical company, secured an €11 million non-dilutive loan guaranteed by the French government during the COVID-19 pandemic.
Let’s dive deeper into the different non-dilutive funding options your company can benefit from, and their requirements.
Key Non-Dilutive Funding Options in Belgium
Belgium offers several powerful non-dilutive funding options for tech startups. Here’s a comprehensive breakdown:
Detailed Belgian Tax incentives Analysis
Partial Exemption from Payroll Withholding Tax for Researchers
Companies can enjoy an 80% exemption on payroll withholding tax for their researchers, making it a significant cost-saving measure.
This benefit is available to any company with employees working on R&D projects.
To put this into perspective, if you have a researcher earning a €50,000 gross annual salary, your company could save up to €10,000 per year on tax expenses.
Innovation Income Deduction (IP Box)
The Innovation Income Deduction (IP Box) offers vusinesses significant tax advantages.
Companies can deduct up to 85% of their net income from intellectual property, including patents and protected software.
For example, if your company generates €1,000,000 in net patent income, you could deduct €850,000 from your taxable base, resulting in substantial tax savings.
Investment Deduction for R&D
Investment Deduction for R&D allows companies to reduce their tax burden.
Companies investing in R&D equipment and assets can benefit from a 13.5% tax deduction on their investments (2024 rate).
For instance, investing €100,000 in R&D equipment would result in a €13,500 tax deduction, providing significant financial relief for innovative companies.
Belgian Regional Grant Programs
Unlike France, Belgium is divided into 3 different regions (Wallonia, Flanders, Brussels-Capital) that all offer different types of non-dilutive funding solutions to support local businesses.
Innoviris (Brussels Region)
Innoviris offers substantial funding for industrial research and experimental development projects.
To be eligible, companies must be based in Brussels and demonstrate innovative potential in their projects.
The program primarily supports initiatives in digital innovation, GreenTech, and HealthTech sectors.
VLAIO (Flanders Region)
VLAIO, the Flanders Innovation & Entrepreneurship agency, provides substantial support through development and research projects, along with comprehensive innovation assistance.
They offer a program open to companies operating in Flanders that demonstrate their innovative potential. Their offerings include valuable SME-specific growth subsidies and targeted development project funding.
SPW Recherche (Wallonia Region)
SPW Recherche provides research and development project funding to companies based in Wallonia. Their program focuses on industrial research and experimental development projects, making it an excellent option for innovative companies in the region.
Documentation Requirements
Here’s a non-exhaustive list of the main requirements you need to ensure eligibility to non-dilutive funding options in Belgium:
For Tax Incentives
- Detailed description of the qualifying intellectual property (patents, software, etc.)
- Documentation of R&D projects or programs, including objectives and methodologies
- Financial records showing qualifying income from innovation/R&D activities
- For wage withholding tax exemptions, proof of employees’ qualifications (e.g., degrees in relevant fields)
- Registration documents for R&D projects with the Belgian Federal Science Policy Department
For Regional Grants
- Business plan detailing the project’s objectives, timeline, and expected outcomes
- Financial projections and budget breakdown for the project
- Company registration documents from the Banque Carrefour des Entreprises (BCE)
- VAT registration certificate (if applicable)
- Proof of professional qualifications or licenses (for regulated professions)
- Recent financial statements and tax returns
- CVs of key team members
To maximize these benefits, companies should maintain thorough documentation and consider working with specialized consultants who can help navigate the application processes and ensure compliance with all requirements. We can help with that!
Key Non-Dilutive Funding Options in France
Detailed French Tax Incentives Analysis
Research Tax Credit (Crédit d’Impôt Recherche – CIR)
The CIR (Crédit d’Impôt Recherche) stands as a cornerstone tax incentive for companies engaged in R&D activities in France.
This powerful program offers a 30% tax credit on R&D expenses up to €100M, with 5% available beyond that threshold.
Available to companies of all sizes and sectors conducting R&D in France, its impact can be substantial – for instance, a company investing €1M in eligible R&D expenses could receive a €300,000 tax credit, providing significant financial relief for their innovation efforts.
Innovation Tax Credit (Crédit d’Impôt Innovation – CII)
The CII (Crédit d’Impôt Innovation) is a tax credit specifically designed to support SMEs in their innovation efforts, offering a 20% tax credit for innovation activities up to €400K per year.
This incentive is available to SMEs engaged in creating new products or improving existing ones, with a tangible impact.
For example, an SME investing €200,000 in eligible innovation activities could receive a €40,000 tax credit.
Patent Box Regime (IP Box)
France’s Patent Box regime provides significant tax advantages for companies with intellectual property income.
Under this system, qualifying IP-related income is taxed at a reduced corporate rate of just 10% instead of the standard 25%. This applies to various forms of intellectual property including patents, software copyrights, and other qualifying IP assets.
To illustrate the impact: a company generating €1M in qualifying IP income would pay only €100,000 in taxes under this regime, compared to €250,000 at the standard rate – representing substantial tax savings for innovative companies.
French Grants & Subsidies
BPI France Innovation and DeepTech Grants
BPI France’s innovation support program includes several grants for startups, with the French Tech Grant being particularly notable.
This equity-free funding provides up to €30,000, covering up to 70% of startup costs. To be eligible, companies must be incorporated within the last year, have fewer than 50 employees, and maintain a balance sheet under €10 million.
This grant serves as a crucial financial boost for early-stage startups, significantly reducing their initial operating costs.
France 2030 Plan
The France 2030 plan is a massive €54 billion investment program supporting startups in strategic sectors, focusing on areas like AI, quantum computing, green energy, and healthcare.
The ambitious initiative aims to foster the creation of at least 100 deeptech industrial sites annually by 2030, making it one of the most significant government-backed innovation programs in Europe.
Regional and Local Support
Various regional innovation grants are available across France, including the French Tech Emergence Grant and the French Tech Seed Fund.
These grants often provide tailored support based on local economic priorities and startup ecosystems, providing crucial early-stage funding and support for startups outside major tech hubs.
Non-Dilutive Funding Options comparison between France and Belgium
| Funding Type | 🇧🇪 Belgium | 🇫🇷 France |
| Payroll Tax Relief | ✅ 80% reduction for researchers | ❌ No equivalent measure |
| R&D Tax Credits | ✅ 13.5% deduction | ✅ 30% tax credit |
| IP Tax Benefits | ✅ 85% tax deduction (IP Box) | ✅ 10% reduced corporate tax |
| Innovation Grants | ✅ Regional programs (Innoviris, VLAIO, SPW) | ✅ BPI France + France 2030 |
| SME-Specific Support | ❌ Limited dedicated SME grants | ✅ CII offers 20% SME tax credit |
| Equipment Tax Benefits | ✅ 13.5% reduction on R&D equipment | ✅ Accelerated depreciation |
When comparing the two countries’ non-dilutive funding options, Belgium offers more advantageous payroll tax incentives and IP tax benefits, while France stands out with higher R&D tax credits and comprehensive SME-focused incentives.
Strategic Approach: How to Maximize Non-Dilutive Funding
Many startups risk excessive dilution by relying too heavily on venture capital, with founders owning less than 30% while investors own more than 55% of their businesses. Non-dilutive funding offers a powerful alternative to fuel growth while maintaining ownership.
Here’s a non-exhaustive checklist to help you optimize your non-dilutive fundings:
- Assess Your Eligibility
- Document all qualifying intellectual property (patents, software)
- Prepare detailed R&D project documentation
- Gather financial records showing qualifying innovation income
- Prepare Essential Documentation
- Business plan with clear objectives and timelines
- Financial projections and detailed budget breakdown
- Company registration documents
- Team CVs and qualifications
- Ethics self-assessment
- Data management plan
- Dissemination plans
- Consider Regional Options
- Explore specific regional programs (Innoviris, VLAIO, SPW Recherche)
- Research country-specific benefits (Belgium vs France)
- Optimize Implementation
- Plan applications well ahead of project initiation
- Consider working with specialized consultants
- Combine multiple funding streams (tax relief, grants, etc.)
Conclusion
Non-dilutive funding presents significant opportunities for startups in both Belgium and France. From Belgium’s 80% payroll tax reduction for researchers to France’s robust CIR offering 30% tax credits on R&D expenses up to €100M, these mechanisms can substantially impact your startup’s financial health.
This made you want to dive more into the subject? Here are the first steps we advise you to do:
- First, conduct a thorough review of your R&D activities to identify which expenses qualify for tax credits.
- Second, research and map out the regional grants that are available in your location.
- And finally, schedule a consultation with experts in non-dilutive financings, making it sure that you’re maximizing all available benefits
