What is Non-dilutive Funding?
Money you get without giving away ownership of your company. No investors on your cap table, no board seats, no term sheets.
This comes from governments, institutions, and programs that support businesses through grants (free money), subsidies (they cover a percentage of your costs), interest subventions (reduced loan interest), and reimbursement schemes (you spend, they pay back a portion).
Governments at every level have earmarked thousands of crores for exactly this. The Union Budget 2025-26 alone allocated ₹10,000 crore as a fresh Fund of Funds for Startups, and the MSME Ministry received ₹23,168 crore. The money is there. Finding and understanding the schemes has always been the hard part, and that’s what AI changes. This guide walks you through exactly how to do it.
What I Did Not Expect
I ran this exercise for Devalok and for one of our clients, and there were a few things that genuinely surprised me.
Your company has multiple identities in the eyes of the government. Depending on how you write your Detailed Project Report (DPR), the same business can qualify as a “tech startup” for one scheme, an “MSME” for another, a “services enterprise” for a third. Same entity, same team, same work. Different framing, different eligibility, different money. And this was very true for Devalok because we do design, strategy, AND we’re building tech products like Karm and Sarathi. That’s three different identities right there.
Schemes can be combined. The government allows you to layer Central schemes on top of State schemes on the same project, each one covering a different part of your cost structure.
And the numbers are not small. On one project we modeled, combining Central and UP state schemes on a ₹50 Lakh to ₹1 Crore investment mapped to ₹1.4 to 1.9 Crore in potential funding. More than the project cost. On a larger ₹10-15 Crore capex project, 35-50% could come back as grants and subsidies.
The Method
This is the exact process I used, and you can do this in a single sitting with any AI. I used Claude but this works with ChatGPT, Gemini, whatever you prefer.
Step 1: Give the AI Full Context About Your Business
Here’s roughly what I asked:
“Claude, What are some government schemes for startups or MSME or anything else that Devalok can get non-dilutive funding from (we are not open for giving away equity). You know all about Devalok - please figure out - do a research (both state and central level, we are incorporated out of Lucknow, Uttar Pradesh as Pvt. Ltd. with GST, UDYAM MSME and IEC)”
If your AI doesn’t already know about your company, give it the details:
- Company type: [Pvt. Ltd. / LLP / Proprietorship / Partnership]
- Incorporation state: [State, Country]
- Registrations you hold: [GST, UDYAM MSME, DPIIT Startup Recognition, IEC, etc.]
- Industry/sector: [What you actually do]
- What you’re trying to fund: [Specific project, expansion, equipment, R&D, etc.]
- Approximate investment range: [How much you need]
“Research both central/federal and state-level schemes. For each scheme, give me: the scheme name, what it provides, the maximum amount, eligibility criteria, and application deadlines.”
The more specific you are about your registrations and what you’re funding, the better the output.
Step 2: Ask Which Ones Can Be Combined
“Which of these schemes can be combined on the same project? Are there any that explicitly conflict? Map out the maximum combined funding if we layer all compatible ones.”
AI can cross-reference eligibility across 8-10 schemes in seconds and tell you which ones work together. A consultant would take days for this, the AI did it in the same conversation.
Step 3: Explore Framing
This surprised me the most.
“Our company does [X]. Could we frame the same project differently for different schemes? For example, could the same project qualify as [industry A] for one scheme and [industry B] for another? What would the DPR framing look like for each?”
A design studio is also a tech company, also an MSME, also potentially a training enterprise. A pet food company is also a food processing unit, also an animal feed manufacturer, also a startup. The label on your DPR determines eligibility, and AI can map all the overlaps for you.
Step 4: Get the Timeline
“Create an action plan. What do we apply for first? Are there urgent deadlines? What documents and registrations do we need before we can apply?”
This matters more than you’d think. During our research, we found one scheme (AHIDF) with a deadline literally days away. Without the AI flagging it, we would have missed it entirely.
Step 5: Take It to Your CA
And this is important: AI does not replace your Chartered Accountant or subsidy consultant. Don’t try to file DPRs based purely on AI output.
What AI does is compress weeks of preliminary research into one session. You walk into your CA’s office (or just WhatsApp them, let’s be real) already knowing which schemes to target, what the numbers look like, which ones combine, and what deadlines are coming up. Your CA’s job becomes preparing and filing applications, not spending the first three meetings explaining what schemes exist.
And if you’re adept enough, you can use AI to draft first versions of your DPRs too. But get a professional to review before filing. Framing is everything in these applications.
Schemes Worth Knowing (India)
Not exhaustive, but these are real schemes with real money that came up during our research. Your eligibility will depend on your business type, state, and sector. Always verify on the official portals linked below.
Central Government
Startup India Seed Fund (SISFS): Up to ₹20 Lakh equity-free grant for prototype/product development, plus up to ₹50 Lakh convertible debt for commercialization. Need DPIIT recognition, incorporated within 2 years. Administered through approved incubators.
PMFME: 35% credit-linked capital subsidy, capped at ₹10 Lakh per unit. Works through the One District One Product (ODOP) framework. Broader than the name suggests: “animal feed” is on the eligible list.
AHIDF: 3% interest subvention for 8 years on loans covering up to 90% of project cost. “Animal Feed Plant” explicitly listed. Fund size: ₹29,610 Crore. Apply at ahidf.udyamimitra.in.
National Livestock Mission: 50% capital subsidy, direct grant (not credit-linked), up to ₹50 Lakh. Closest thing to someone just handing you money on this list.
PMEGP: 15-35% margin money subsidy for new manufacturing or service units. Up to ₹50 Lakh (manufacturing) or ₹20 Lakh (service). Administered by KVIC.
State Schemes (UP as Example)
Every state has its own versions of these. I’m using UP because that’s where Devalok is incorporated, but the process works for any state. Just swap the state name in your prompt.
UP Food Processing Industry Policy 2023: 35% capital subsidy on plant, machinery, and technical civil work. Up to ₹10 Crore. In FY 2024-25, ₹85 Crore was allocated to 70 units.
UP MSME Promotion Policy 2022: 10-25% capital subsidy on Fixed Capital Investment by region and size. Additional 2% for SC/ST and women entrepreneurs. Stamp duty exemption and interest subsidies on top.
UP Startup Policy 2020: Prototype grant up to ₹5 Lakh, seed capital/marketing up to ₹7.5 Lakh, patent filing reimbursement up to ₹10 Lakh (international). 50% boost for women/transgender co-founders with 26%+ equity.
Maharashtra, Karnataka, Tamil Nadu, Telangana, Gujarat all have robust policies too. Run the same process for your state.
Beyond India
This isn’t just an India thing either, or not even just a national level thing. Every country, state, institution has non-dilutive funding programs. The method is the same, just replace “Central and State” with “Federal and State” or “National and Regional” in your prompts.
United States: SBIR/STTR grants for R&D (note: program authorization lapsed September 2025, check current status), state economic development grants, SBA programs, USDA grants for rural businesses.
European Union: Horizon Europe, European Innovation Council, country-specific programs like Germany’s EXIST, France’s BPI France, UK’s Innovate UK.
Southeast Asia: Singapore’s Enterprise Development Grant, Malaysia’s MTDC, various ASEAN programs.
Institutional: Universities (I’m looking at you ASU haha), accelerators, foundations, industry associations. Most founders never check because they don’t think to look.
The Honest Part
And before you say it; yes I know.
Government processes are slow sometimes. Budget 3-6 months from application to disbursement. Sometimes longer.
The paperwork is real. DPRs, compliance certificates, utilization reports. Not passive income.
How you frame the application matters more than what you’re building sometimes. A good CA who knows DPR writing is worth every rupee.
Not everything is a grant. Some are credit-linked (loan first, subsidy back). Some are interest subventions. Some are reimbursements (spend first, claim later). Understand the mechanism before planning cash flow around it.
AI can get details wrong. Always verify numbers, eligibility, and deadlines against official government portals. AI for discovery, primary sources for confirmation.
But none of that is a reason to skip this. It’s a reason to go in prepared. And if you’ve read this far, you already know how.
The two registrations you should get if you haven’t already: DPIIT Startup Recognition and Udyam MSME Registration. These unlock most of what’s listed above.
And remember, focus on building the business first. The money to support it might already be sitting in a government portal somewhere.
Vijayi Bhava 🧡
Written by Mudit Lal, Founder of Devalok Design and Strategy Studio. We’re a design and strategy studio in Lucknow, India with operations in Phoenix, Arizona. We work with founder-led and growth-stage companies across brand, digital, and strategy.
Questions? hello@devalok.in