Innovation Financing Options

Cash flows are the backbone of finance. From a credit perspective, the principle is simple: If there is a predictable, contractual or historically stable cash flow, it can be packaged into a bond to raise money. Over time, this has led to some interesting and innovative bonds. Bowie Bonds, for instance, were asset-backed securities tied to David Bowie’s music catalogue. Investors received the rights to royalties from 25 of Bowie’s albums recorded before 1990. The deal raised $55 million upfront for Bowie, who immediately got liquidity to fund new projects and buy back catalogue rights, while investors gained exposure to a future royalty stream. The rise of digital music reduced royalty income, so the bonds were eventually downgraded. But, they were fully repaid by 2007. This was a precursor to music rights funds like Hipgnosis, founded in 2018, which owns and manages a portfolio of over 45,000 songs, from more than 145 catalogues. Other such interesting transactions include film receivables wherein Studios have issued bonds backed by future box office, video and licensing revenues. In the realm of sports, an interesting transaction was discounting of stadium revenues e.g Yankee Stadium Bonds issued first in 2006 where future ticket sales, concessions and naming rights were securitized to finance construction. In 2009, Illinois State issued lottery revenue-backed bonds to fund a program aimed at revitalizing the state's infrastructure and creating jobs. The bonds were backed by the state's lottery revenues, ensuring a stable and consistent source of repayment. Then there were the Domino’s Pizza Bonds in the 2000s backed by cash flows from franchise fees and royalties, unique because essentially a slice of every pizza sold funded bond coupons! In education, we have seen bonds issued by educational institutions against future fees. Other, more familiar, bonds using the principle of leveraging underlying cash flows are: ·     Asset-Backed Securities against card payments ·     Mortgage-Backed Securities backed by mortgage payments from homeowners ·     Commercial MBS with cash flows from commercial rents, hotel revenues or mall revenues ·     Toll Road Bonds backed by future toll revenues ·     Airport Bonds, funded by passenger fees, landing charges and duty-free concessions ·     Cell Tower Bonds, where companies securitize long-term lease payments from telecom operators ·     Pharmaceutical Royalty Bonds backed by future sales/licensing revenues of blockbuster drugs ·     Sovereign Bonds issued by Mexico,Turkey and Brazil backed by Oil export proceeds, airline ticket sales and even workers’ remittances. Financial markets have shown that any predictable cash flow can be turned into capital. Issuers unlock upfront liquidity, while investors take the bet on how future revenues perform. This is a reminder that capital markets can monetize almost anything and financial engineering can turn culture, consumption and even chance into asset classes!

Are royalty deals the new savior of BioPharma cash burn? Challenging capital markets have made these deals more attractive to all players: What’s striking is that these deals are no longer just the domain of smaller, cash-strapped biotechs; even large, well-capitalized companies are increasingly turning to them. Blackstone Life Sciences has been a pioneer in this space, structuring several creative deals with major companies. One of the most notable was their $2B deal with Alnylam Pharmaceuticals in April 2020, during the depths of the COVID-19 crisis. The deal was structured as follows: - $1 billion in committed payments to acquire 50% of Alnylam Pharmaceuticals’s royalties and commercial milestones for inclisiran, a drug that was still in Phase III trials at the time.  For reference, Alnylam is entitled to royalties up to 20% on sales of inclisiran. - Up to $750 million in a first lien senior secured term loan, led by GSO. - Up to $150 million for the development of Alnylam’s cardiometabolic programs, vutrisiran and ALN-AGT. - $100 million purchase of Alnylam common stock. The context is crucial here: Alnylam’s market cap was around $15B at the time, half of what it is today. Had they raised $1B through new shares, existing equity holders would have faced almost 7% dilution overnight. The royalty deal allowed Alnylam to secure non-dilutive financing at a critical moment. What’s also notable is that Blackstone was willing to value the inclisiran royalty stream so highly despite the drug being only in Phase III, largely due to its unique twice-yearly dosing regimen. Fast forward to today, inclisiran (Leqvio) is generating nearly $200M in quarterly sales and is on track to become a multi-billion dollar product. Another significant deal by Blackstone was with Moderna, involving a $750M investment in a set of flu vaccines across Phase 2 and Phase 3 trials. This deal, while riskier, highlights the growing appeal of royalty financing, even for companies as well-capitalized as Moderna. It’s not just large companies benefiting from these deals. Royalty Pharma’s May 2024 deal with Agios Pharmaceuticals is a perfect example. Royalty Pharma paid $905M in upfront cash for a stake in Agios’s royalty on the drug Vorasidenib, being developed by Servier. Considering Agios’s market cap was under $2B at the time, this deal provided a significant cash infusion, demonstrating how royalty deals can be a game-changer for smaller firms as well. As the capital markets remain tight, royalty deals are evolving from a niche financing tool to a mainstream strategy for companies of all sizes. They offer a way to secure critical funding without giving up equity, providing a lifeline in a turbulent financial landscape. Expect to see more of these deals as companies navigate the current environment.

Exactly 1 year after the Draghi report, ASML commits 1,7 billion EUR to Mistral.ai, becoming its largest shareholder. Has Europe finally waken up? The alliance between the continent's two AI champions - the world leader in chip-making machines and the rising LLM star - is great news: a European corporate finally investing massively in a European scaleup from its industry, even if not directly tied to its core business. This follows other positive developments, like the partnership between automaker Renault and exoskeleton scaleup Wandercraft to lighten the workload of workers who handle heavy loads in factories. But this kind of news are still the exception and not the rule: to mainstream this virtuous deals, we need Europe to enact an industrial policy for tech and innovation. This starts with recognising that tech is not only a fully-fledged economic sector, but also a strategic one to be treated with the same consideration of energy, chemicals or steel. A sector, for which the EU should have a truly shared competence to coordinate in practice - and not just in words - the work of Member States. Once we get there, we need to put in place a 5 step action plan: 1️⃣ Introducing a European preference in public procurement to organically support the growth of our startups, scaleups and tech companies. This should not be a blank obligation, but an additional evaluation criteria which weight will depend on the sensitivity of the concerned use case. 2️⃣ Creating real incentives for massive European private capital (savings and corporate investment) to finance innovation. European pension and insurance funds already invest in US innovative companies. Why not do the same in Europe? As for corporates, we need more of them to follow the example of ASML and Renault and look beyond their immediate business for their strategic investments. 3️⃣ Put in place a “28th regime” making it seamless for European companies to expand and operate in the Single Market as their domestic market. 4️⃣ A structural reform of the European budget for innovation (starting with the Competitiveness Fund) to allocate funding based on the innovative potential of projects rather than their geographical distribution. 5️⃣ A competition and merger control framework that promotes the consolidation and emergence of European tech champions. If we manage to do this, we will create jobs, unlock growth and secure our businesses against geopolitical risks. And with that, we will finally regain our leverage in international negotiations—whether in matters of trade or peace—with the world’s other great powers. More on these ideas in our latest report drafted with Marianne Tordeux Bitker and Marie Moussy and nicely laid out by Séverine MERCIER --> link to the full publication in the comments (available in 🇬🇧 and 🇫🇷 ).

I want Britain to be the best place in the world to turn ideas into global companies. That means backing exceptional people with a range of support to start, scale and list their businesses here in the UK.  Firstly, the British Business Bank will invest £5 billion to help UK companies scale, crowding in private capital and supporting firms through high-risk phases like the “Valley of Death” - the critical period when innovative businesses have proven their ideas but are not yet profitable, and often struggle to access the finance they need to grow. This support will help more firms scale, hire and export from the UK.  Secondly, Innovate UK's new £130 million Growth Catalyst will provide grants and hands-on support to science and tech firms, building on a past programme that turned £156m into £1.66bn of follow-on investment, an almost 11x increase.    Thirdly, we are doubling eligibility for key schemes like the Enterprise Management Incentive and raising investment limits under the Enterprise Investment Scheme. This will make it easier for founders to attract and retain talent and for investors to back UK companies.  And when those companies choose to list here, they will benefit from a world-first three-year holiday from stamp duty on share tax.    This week I welcomed Matt Clifford from Entrepreneur First — an organisation that backs exceptional individuals to build companies from the ground up and has helped create businesses with a combined worth of over $13bn. We discussed the vital role entrepreneurs play in our economy, the emerging opportunities in areas such as artificial intelligence, and what more government can do to keep Britain one of the best places in the world to start and scale a business. When we back talent, we back the future - boosting opportunity, supporting jobs and growing our economy.

Incentives Drive Behavior Incentives drive behavior. This simple truth explains so much about why people and organizations act the way they do. When we look at startups vs large corporations, we see this principle in vivid action: A startup founder facing two investment options – one safe, one risky – will often chase the moonshot. Why? Because their incentive structure means they have limited downside (investor money at risk) but unlimited upside potential. The McKinsey survey of 1,500 corporate managers revealed a profound risk aversion: nine out of ten required at least a 60% chance of success before making a $100M investment. A risk-neutral decision maker would accept as low as 25% chance of success. This isn't about personality types – it's about incentives. Consider the powerful example from the Thermo Fisher Scientific case: when they ran an innovation competition, participants competing for a single large prize produced far more innovative solutions than those pursuing smaller prizes. The single-prize participants took bigger risks and thought outside the box. For founders, the VC funding structure creates a powerful asymmetry: with a $25M investment, any outcome below that returns nothing to founders, but outcomes above it deliver exponential rewards. This naturally pushes founders toward higher-risk ventures with potentially substantial returns rather than safer options with modest outcomes. Incentives gone wrong can be disastrous. From Hanoi's rat-tail bounty that created rat farms, to AT&T's lines-of-code pay structure that encouraged bloated inefficient programs, to Countrywide's "High-Speed Swim Lane" program that fueled the 2008 financial crisis with bad loans. Organizations get what they incentivize. Want innovation? Risk-taking? Careful execution? Long-term thinking? The key isn't finding different people – it's aligning incentives with desired outcomes. Ultimately, if you want to understand why people or organizations behave the way they do, start by asking: "What are they incentivized to do?"

Union Budget 2025: A Big Win for Entrepreneurs & Innovators Budgets aren’t just about numbers—they set the tone for where we’re headed. And this year, it’s clear: India is betting big on its businesses, startups and dreamers. The focus? Less complexity, more growth and a stronger push for innovation. What stands out? - Tax Relief & Spending Power: The ₹12 lakh tax exemption under the new regime means more disposable income, stronger consumer demand, and a boost to businesses. For entrepreneurs, this could translate into increased spending on services, products, and investments. - Simplified TDS/TCS = Smoother Operations: Revised TDS limits on rent and TCS thresholds reduce compliance headaches - especially for small businesses juggling tax complexities. Less paperwork, more focus on scaling up. - Startups & MSMEs Get a Stronger Push: With extended tax benefits and larger credit guarantees, this is a win for the startup ecosystem. More funding. More innovation. More job creation. As an entrepreneur, I see this as a golden opportunity to take bolder steps in innovation and expansion. - Infrastructure & Fiscal Stability: A fiscal deficit target of 4.8% and ₹10.18 lakh crore in capital expenditure means India is investing in long-term stability while fueling short-term growth. For businesses, better infrastructure = lower logistics costs = higher efficiency. - Boost for Manufacturing & FDI Growth: Customs duty changes for EV components & flat panels aim to strengthen domestic industries while increased FDI in insurance (100%) opens new doors for investment. This pro-business environment signals global confidence in India’s economic trajectory. What does this mean for entrepreneurs? A simplified tax regime, stronger credit support, and investment in infrastructure create the perfect conditions for businesses to scale, innovate and compete globally. The question now is: How will businesses leverage these reforms to accelerate growth?

Global Grants for Indian Climate Startups- India’s climate solutions are rooted in local realities — but their impact goes far beyond. From watertech innovation in Karnataka, to bioplastics and recycling in Maharashtra, to sustainable fabrics in Gujarat. From agri-waste transformation in Punjab and Haryana, to offshore wind tech rising off Tamil Nadu’s coast, to climate-resilient innovations in Odisha and West Bengal, and air filtration breakthroughs in Uttar Pradesh — I’ve had the privilege of meeting the founders building them — makers, engineers, scientists, and storytellers who are quietly reshaping the future. Through Bharat Climate Startups, I’ve been traveling across India to learn from these ground-up solutions — and I’m constantly reminded that while the problems may be global, so are the solutions. If you're building something in this space, here are 5 international grants and programs that Indian startups can apply to 👇 🔹 1. GSMA Foundation Innovation Fund for Climate Resilience & Adaptation 💰 Up to £100,000 (~₹1 crore) in equity-free funding 📌 For digital climate solutions improving resilience in underserved communities 🌱 Open to startups in South Asia, Africa, and Indo-Pacific 🔹 2. The Earthshot Prize Prize 💰 £1 million (₹10+ crore) per winner 📌 For scalable solutions tackling nature loss, water, air quality, waste, or climate 🌱 Indian startups are eligible — and have been finalists! 🔹 3. Echoing Green Fellowship 💰 Seed funding + 2 years of support 📌 For early-stage climate and social entrepreneurs 🌱 Open to Indian founders with bold ideas and deep impact 🔹 4. ACT For Environment – by ACT Grants (India) 💰 ₹20–50 lakh in catalytic seed grants 📌 For climate innovations in green mobility, clean energy, agriculture, circularity, and carbon removal 🌱 One of the boldest Indian philanthropic funds backing frontier environmental solutions 🔹 5. Global Innovation Lab for Climate Finance (by CPI) The Global Innovation Lab for Climate Finance 💰 Seed + pilot support + investor connections 📌 For ideas that unlock private finance for climate solutions 🌱 Several India-based innovations have already been selected 🔹 6. Imagine H2O Accelerator Program 💰 Non-dilutive funding + mentorship + access to a global investor network 📌 For startups working on water conservation, wastewater treatment, and climate resilience 🌱 Open to startups worldwide, including India 📩 Know someone working on a globally relevant climate solution? Or building one yourself? Message me if you want help navigating these grant calls — or just want to swap notes. Here's to building a vibrant support ecosystem for climate innovators! 💚 The world is watching — and India’s innovators are ready. 🌏 #ClimateAction #ImpactFunding #BharatClimateStartups #ClimateFinance

As Harvard faces deep research funding cuts, a private equity firm has stepped in with a $39M commitment to support a Harvard research lab. Could this signal a new future for how academic science is funded? The investment comes from Turkish firm İş Private Equity, which typically backs high-growth small and medium-sized enterprises (SMEs). The funding recipient is the lab of Professor Gökhan Hotamışlıgil at the Harvard T.H. Chan School of Public Health, whose research aims to develop therapies for obesity and other metabolic diseases. Broader context Private equity (PE) rarely funds basic university research directly, as it doesn’t align with traditional return-focused models. But that’s changing. New structures are emerging where PE capital supports translational or applied academic science: ▫️ New startup - İş Private Equity launched Enlila, a new biotech company created to fund Hotamışlıgil’s lab over the next 10 years. Enlila will also invest in translating the lab’s discoveries into therapeutic products. ▫️ Joint ventures - Since 2017, Deerfield Management has created university partnerships to advance early-stage therapeutics, providing capital and helping universities evaluate projects toward Investigational New Drug (IND) readiness. Recent examples include: - Hyde Park Discovery with University of Chicago ($130M, 2025) - VeritaScience with Washington University in St. Louis ($130M, 2024) ▫️ Royalty monetization - In 2023, Purdue Research Foundation received over $100M from Blue Owl Capital by selling a portion of its royalty interest in Pluvicto, a prostate cancer therapy. Yale University executed a similar deal for the drug Yervoy, turning future royalties into immediate research capital. Takeaway As the research funding landscape evolves, the capital stack for science is becoming increasingly complex. I think we’ll likely see more private equity, venture capital, and philanthropy stepping in to support bold, high-risk science in new and unexpected ways. Curious to hear your thoughts: Should private equity be stepping into early-stage science? Which research areas could benefit most from this approach?

What happens when a country stops importing innovation — and starts producing it at scale? In a bold move and strategic this week, HH Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum launched the UAE Future 50 a federal initiative selecting 50 high-potential Emirati companies positioned to drive the next decade of national economic growth and sectoral innovation. The initiative, led by the Ministry Of Economy, UAE in partnership with the Government Development and the Future Office, is part of the national Riyada entrepreneurship strategy, designed to make startups a core pillar of the UAE’s long-term economic model. But this isn’t just a symbolic recognition. It’s a multi-layered economic framework. Here’s the structural signal this move is sending: GDP Diversification Is Now the Core Operating Model • In 2023, non-oil sectors contributed 74.6% of GDP, totaling AED 320B. • By 2031, the UAE targets AED 4T GDP with 90% from non-oil sectors. • Startups are expected to deliver AED 700B+ of that value, with Future 50 as key accelerators. Capital Allocation Is Strategically Anchored • UAE startups raised $1.3B in VC in 2024 — top in MENA. • Emirati founders led 38% of Series A & B rounds, up from 22% in 2021. • Sovereign entities like Mubadala, ADQ, DFF, and Ghadan Ventures are actively co-investing to de-risk early-stage innovation. Innovation Zones Are Fully Operationalized • 70% of Future 50 operate under ADGM, DIFC, Masdar, Hub71 & etc. • These zones offer 100% ownership, 0% tax, and strong IP protection. • UAE ranks 1st in MENA and 37th globally in the 2024 Global Innovation Index aiming for top 25 by 2026. Human Capital Is a National Advantage • 65% of Future 50 founders are under 35; most graduated from UAE-based institutions. • Since 2021, 165,000+ Golden Visas issued including 12,000+ to founders and STEM talent. • Entrepreneurship is now embedded in UAE’s education system through the AI Strategy and Riyada. Market Access Is Already Secured • The UAE signed 13 CEPAs covering $12T+ in global GDP. • Future 50 companies will be supported by the “Go Global” platform for expansion, export, and licensing in those markets. Impact Targets Are Defined and Tracked (by 2031): 1. AED 18B GDP contribution 2. 12,000+ skilled jobs created 3. 1,000+ patents filed 4. Presence in 45+ international markets 5. At least 10 scaleups reaching Series C or exit This is not startup promotion. This is sovereign startup policy. The UAE isn’t just supporting founders it’s embedding entrepreneurship at the center of national strategy. This is how the UAE scales its future not by adopting global models, but by building its own. Startups are no longer experiments. They are instruments of national ambition. The question is no longer who will invest. The question is: who will be left behind if they don’t?

₹77,080 Crores allocated by the Government of India for startups and manufacturing in 2025. Yet most founders are still chasing VC money. I work with startups daily, and it surprises me how many don't even know these schemes exist. Here's what's available right now The Big Picture: → Deep Tech & Startup Fund: ₹30,000 Cr → MSME Budget Outlay: ₹23,168 Cr → Startup India Fund of Funds: ₹10,000 Cr → PLI Electronics & IT: ₹9,000 Cr → PLI Auto Components: ₹2,819 Cr → PLI Textiles: ₹1,148 Cr → Startup India Seed Fund: ₹945 Cr This is just the major allocations - there's more buried in smaller schemes. Let me break down what you can actually access based on your stage [1] For Early Stage Startups: 👉🏼 Startup India Seed Fund: Up to ₹50L per startup 👉🏼 SAMRIDH Scheme: Up to ₹40L grants 👉🏼 Atal Innovation Mission: Up to ₹15L for prototypes Most founders think these are too small. But remember, this is non-dilutive capital that can get you to revenue stage. [2] For Revenue Stage Companies: 👉🏼 CGTMSE: Up to ₹2 Cr collateral-free loans 👉🏼 Stand-Up India: ₹10L to ₹1 Cr for SC/ST/Women entrepreneurs 👉🏼 Multiplier Grants: Up to ₹10 Cr for R&D projects This is where it gets interesting. Revenue-stage companies have the best shot at accessing larger amounts. [3] For Manufacturing: 👉🏼 PLI schemes across 14+ sectors 👉🏼 Significant incentives for domestic production 👉🏼 Focus on electronics, auto, textiles If you're in manufacturing, you're literally sitting on a goldmine of incentives. The challenge? Most founders don't know how to navigate the application process. Here's where to start: - Startup India Portal [https://lnkd.in/gBdAH52D] - myScheme Portal [myscheme.gov.in] - SIDBI Portal [sidbi.in] - AIM Portal [aim.gov.in] - MeitY Startup Hub [msh.meity.gov.in] What you actually need: ✓ DPIIT registration for startups ✓ Proper documentation ✓ Clear business plan ✓ Compliance records ✓ Incubator partnerships (for some schemes) I've seen founders spend months preparing pitch decks for VCs, but won't spend a week getting their documentation ready for government schemes. The reality is Government funding is often cheaper, comes with less dilution, and has better terms than VC money. But it requires patience and proper documentation. #startupfunding #manufacturing #debtfunding