INTRODUCTION TO SBIRSTTR

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INTRODUCTION TO SBIR/STTR

• -Randy Harmon
• -Technology Commercialization Consultant, NJ
  Small Business Development Centers of Rutgers
  Business School
• -SBIR/STTR Training Coordinator for NJ
  Commission on Science and Technology
• -Principal, Foundations Business Development
  Group, LLC

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SMALL BUSINESS INNOVATIONRESEARCH PROGRAM (SBIR)

• Dept. of Agriculture
• Dept. of Commerce
• Dept. of Defense
• Dept. of Education
• Dept. of Energy
• Dept. of Health and Human Services (NIH,CDC, FDA)
• Dept. of Transportation
• Environmental Protection Agency
• Homeland Security
• NASA
• Nat. Science Foundation

• -Largest Federal RD grants program targeted to
  small business-more than 2 billion during FY 06
• -Best source of risk capital
• -Pathway to equity
• -All Federal agencies with large extramural RD
  budgets set aside
• 2.5
• -Authorized through 08

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THREE PHASE PROGRAM

• -Typically annual solicitations in which agencies
  define areas in which they are interested in
  sponsoring research
• -Phase I- up to 100,000, runs 6-9 months
• Demonstrate technical, scientific and
  increasingly commercial merit and feasibility
• -Phase II- up to 750,000, runs 2 years
• Principal RD effort
• Development of a prototype, required for DOD
• MUST HAVE RECEIVED PHASE I TO BE ELIGIBLE
• -Phase III- no new funding
• Commercialization of the technology

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AGENCY DOES EACH THINGS DIFFERENTLY

• -Small Business Administration serves as policy
  and coordinating agency
• -Different dollar limits
• -Different number and scheduling of solicitations

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ELIGIBILITY FOR SBIR PARTICIPATION

• -Must be for profit business operating primarily
  in U.S.
• -Not dominant in field of operation in which it
  is proposing
• -Can be proprietorship, partnership, LLC,
  corporation, joint venture, association, trust or
  cooperative
• -51 owned and controlled by individuals who are
  U.S. citizens or permanent resident aliens, or
  (for SBIR only) another qualifying small business
• -Not more than 500 employees, including
  affiliates
• -All Phase I and Phase II work must be performed
  in U.S.
• -Dont have to have company in place to submit
  successful proposal

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PRINCIPAL INVESTIGATOR INVOLVEMENT

• -As the SMALL BUSINESS Innovation Research
  Program, SBIR is faculty unfriendly
• -Must be primarily employed by the company (gt50
  of time during the contract, but not necessarily
  all on this project)
• -Cannot work full time for another organization
• -Other agency-specific requirements

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APPROXIMATE DISTRIBUTION OF PHASE I AWARDS BY
AGENCY

• FY02 FY03 FY04 FY05
• Agriculture 86 88 90 93
• Commerce 47 45 54 44
• Defense 1800 2113 1800 2360
• Education 60 50 35 17
• Energy 230 220 200 250
• Health Human Services 900 1101 1028
  1078
• Homeland Security 0 0 96 60
• Transportation 13 11 14 11
• EPA 40 56 45 40
• NASA 305 300 310 300
• NSF 217 300 250 250
• 4,503

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SMALL BUSINESS TECHNOLOGY TRANSFER PROGRAM (STTR)

• -Younger, poorer sister of SBIR program
• -GOAL Foster the transfer of new technology from
  a research institution setting to the commercial
  sector
• -5 largest Federal Agencies participate
• Department of Defense
• NASA
• Department of Energy
• National Science Foundation
• Department of Health Human Services
• New for 2006-Department of Homeland Security
• New for 2007-Dept. of Homeland Security expected
  to be out
• -10 of SBIRs funding level
• -3 Phase program structured similar to SBIR
• -More faculty friendly-requires 30-60 of
  contract to go to a collaboration with a
  nonprofit research organization

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SMALL BUSINESS TECHNOLOGY TRANSFER PROGRAM (STTR)

• -Award goes to small business
• Institutional partner is a sub-contractor
• -The vision was that STTR would result in
  increased technology transfer from non-profit and
  academic labs
• -The reality is collaborative and joint
  development of the small businesss technology
• -Federal pendulum may be swinging back

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CLOSEST THING TO ENTREPRENEURS HOLY GRAIL OF
FREE MONEY

• -No loans, no equity
• -Good odds
• 1 in 5-10 Phase I proposals are funded
• 2 in 5 Phase II proposals are funded
• -Presently even better for STTR

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ENTREPRENEURS MAINTAIN OWNERSHIP OF IP

• -Small business can apply for worldwide patent
  rights
• -Federal government receives royalty free license
  for its use
• -Federal government may force you to license to
  others if
• National emergency
• Fail to commercialize in 4 years
• Fail to manufacture in US.
• -Note You can still participate if you already
  have a patent on the basic technology
• Explore feasibility of applying patented/platform
  technology to solve agencys problem
• Platform technology

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DOWNSIDE?

• Total elapsed time between decision to pursue
  program and completion of Phase II can approach 5
  years
• -Learning the landscape, networking-get known
• -Identify solicitation/topic
• -Submit Phase I proposal
• -Decision process and notice of award
• -Execute Phase I
• -Submit Phase II proposal
• -Decision process and notice of award
• -Execute Phase II

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PROBLEM OF LAG TIME

• BETWEEN SUBMISSION OF PROPOSAL AND NOTICE OF
  AWARD
• Phase I 4-10 months
• Phase II 4-18 months
• NIH SBIR/STTR PROPOSALS CYCLE I CYCLE II CYCLE
  III
• Submission date 4/1/06 8/1/06
  12/1/06
• Earliest project start date 12/06
  4/07 7/07
• Agencies are introducing Fast-Track programs and
  other mechanisms to close the gap between Phase I
  and II

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PATH TO EQUITY FINANCING

• -SBIR/STTR provide up to 850,000 and more in
  financing over 3 years to develop a technology
  reduce its technical risk.
• -Source of validation to investors.
• -If the company simultaneously works to reduce
  market and business risk it can become a prospect
  for equity financing or for a strategic alliance.

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WHEN SEARCHING FOR TOPICS, STAY FOCUSED ON YOUR
BUSINESS GOALS

• CAUTION-The seductive allure of nearly free money
  is hard to resist
• -Must honestly evaluate each topic you identify
  that you think you may be able to successfully
  compete for on the basis of whether it is
  consistent with your mission and whether it will
  facilitate you reaching your business goals
• -For each topic evaluate
• -probability of success (fit with core
  technical competencies)
• -degree of fit with business goals
• -likelihood of a commercial product
• -resources beyond Phase II required for a
  commercial
• product
• -probable impact/success of product
• -IF NOT A GOOD STRATEGIC FIT, AN SBIR AWARD CAN
  ACTUALLY SLOW YOUR PROGRESS TOWARD YOUR BUSINESS
  GOALS
•  

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WWW.SBIRWORLD.COM(secondary site www.zyn.com)

• -Horizontal menu bar with links
• Conference and Events Center
• SBIR STTR Solicitations
• Federal Agency Links
• -Click elliptical Search button toward top left
  of screen, below horizontal menu bar

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SEARCH

• FORM 1
• SEARCH OPEN SBIR/STTR SOLICITATION TOPICS
•  
• Search For
• Search On x All Words Any Words Phrase
• Select Agency ALL SBIR/STTR Agencies
•  
•  

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SEARCH

• FORM 2
• SEARCH HISTORICAL DATABASE OF CLOSED
  SOLICITATIONS
•  
• Search For
• Search On x All Words Any Words Phrase
• Select Agency ALL SBIR/STTR Agencies
•  

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WHATS HOT IN SBIR/STTR?WHO/WHAT IS AN
INDIVIDUAL?

• -51 of company must be owned by individuals
• -How should a venture capital fund be counted?
• -If not owned by individuals, increasing
  ownership of a small business by some combination
  of VC funds and strategic partners could make
  business ineligible
• -Is it fair for companies to receive SBIR awards
  once eligible for venture capital?
• -Consistent with an emphasis on
  commercialization?
• -Initially leaning toward looking at size of
  investors
• -VC and biotech raucous
• 2008 SBIR REAUTHORIZATION

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UPCOMING NJ TRAINING EVENTS

• ANTICIPATED SPRING SCHEDULE
• -SUBJECT TO 2007 NJCST FUNDING
• -2 HALF-DAY INTRODUCTORY SEMINARS IN APRIL MAY
• -SBIR/STTR PHASE I PROPOSAL DEVELOPMENT
• Thursday June 7, 815 am- 5 pm
• -SBIR/STTR COST PROPOSAL PREPARATION
• Friday June 8, 815 am- 5 pm
• -Phase I attendees receive a complimentary
  proposal critique within a year, if scheduled in
  advance
• www.NJSBDC.com/scitech

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FOUNDATIONS BUSINESS DEVELOPMENT GROUP, LLC

• 908-754-3652
• randygharmon_at_aol.com
• www.FoundationsBusiness.com
• CEO Coach to startup and early stage businesses-
• Assist entrepreneurs in growing their business
  to the point where they have the resources to
  hire their own management team
• Help with
• -Strategic planning
• -Business plans
• -RD grants
• -Equity Financing
• -Technology Commercialization