A Quick Overview of SBIR/STTR Dr. Fritz Grupe or Made Possible Through Funding From

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Small Business Innovation Research (SBIR) Set-aside for small businesses to engage in federal R&D -- with potential for commercialization. Small Business Technology Transfer (STTR) Set-aside to facilitate cooperative R&D between small business concerns and U.S. research institutions -- with potential for commercialization. Research Opportunities Reserved for Small Business 2.5% 0.30%

Organized for- profit U.S. business At least 51% U.S.- owned by individuals and independently operated Small business located in the U.S. 500 or fewer employees P.I.’s primary employment with small business during project SBIR Program Eligibility

Applicant is a small business Formal cooperative R&D effort Ü Minimum 40% by small business Ü Minimum 30% by U.S. research institution U.S. research institution Ü College or university; other non-profit research organization; Federal R&D center Intellectual property agreement ÜAllocation of rights in IP and rights to carry out follow-on R&D and commercialization STTR Program Eligibility

SBIR/STTR: Critical Differences Research Partner Research Partner SBIR: Permits research institution partners [Outsource ~ 33% Phase I and 50% Phase II R&D] STTR: Requires research institution partners (e.g., universities) [40% small business concerns (for-profit) and 30% U.S. research institution (non-profit)] Award Is Always Made To Small Business

Principal InvestigatorPrincipal Investigator SBIR: Primary (>50%) employment must be with small business STTR: Primary employment not stipulated [PI can be from research institution and/or from small business concern*] *DISCUSS WITH AGENCIES SBIR/STTR: Critical Differences

What is Funded Under SBIR/STTR? Innovation through the use of emerging technologies Novel application of existing technologies – a new area of application New capabilities or major improvements to existing technologies in efficiency, effectiveness, simplicity, …

Not all great ideas are funded.

Advantages of SBIR/STTR Programs A specific “shopping list” for small firms describing what the government agencies need/fund Significant amounts of R&D money reserved for small, innovative firms Funding for early-stage feasibility and prototype studies-- the type of R&D for which private firms and financing groups won’t provide investment A simplified route to obtaining federal R&D funds Does not penalize a firm for being small or isolated Provides valuable credibility to winning companies Efficient use of federal R&D funds

SBIR/STTR’s 3-Phases PHASE I Ü Feasibility study Ü $100K and 6-month (SBIR) or 12-month (STTR) Award PHASE II Ü Full research/R&D Ü $750K and 2-year Award (SBIR/STTR) PHASE III Ü Commercialization stage Ü Use of non-SBIR/STTR funds

Variations Fast Track (Phase I and II combined) Phase II B (NSF will match 1:1)

The SBIR/STTR Timeline The SBIR/STTR Phase I/Phase II completion timeline is from 3 to 5 years (best case). Can your company survive during this time? Will the marketplace for your idea survive this timeline? Who is your competition? How are they funded? Where will they be after 3 to 5 years? ProposalPhase IPhase II Years Source: PCB, Inc.

Phase III Funders Governmental agencies Corporations Venture capitalist firms/individual Angel investors

Performance of Research Activities All R&D must be performed in its entirety in the U.S. –Rare cases to conduct testing of specific patient populations outside of the U.S. –Travel to scientific meetings in foreign countries is allowable –Foreign consultants/collaborators are allowable, but must perform consulting in the U.S.

What Does SBIR Pay For? Direct Costs –Including fringe benefits Indirect Costs Fee/Profit –Up to 7% of the total direct and F&A costs. –Must be requested in the proposal to be eligible. Not all costs are allowable

DODSBIR/STTR HHSSBIR/STTR NASA SBIR/STTR DOE SBIR/STTR NSF SBIR/STTR DHSSBIR (Dropping) USDASBIR DOCSBIR EDSBIR EPASBIR DOTSBIR SBIR / STTR Participating Agencies TOTAL ~ $2.0 + B FY 2004

Don’t Judge an Agency’s Interests by Its “Name ” FACT: Many research areas of interest span across agencies  Maximize opportunities for funding by submitting proposals to as many relevant agencies as possible  Identical research  Complementary research  Avoid inaccurate assumptions about agency research missions (e.g., DOT is interested in “safety” NOT “economy”)

Understand Each Agency’s Culture  What are its distinct missions and needs ?  Is the agency program budget – centralized or de-centralized ?  relationship to “topic authors”

Understand Each Agency’s Culture  What are the lines of communication?  when (when not) to call…  who to call…  why to call…  How does the review and award process operate?  Who are the reviewers – internal, external, or both ?  Who makes the final award selection ?

Understand Each Agency’s Culture  What are the t ypes of awards (contract or grant) ?  Are there “funding gap” programs ?  Does the agency offer a “technical assistance” program ?  How can the agency support a firm’s “commercialization” program ?  as a Phase III “customer”  by providing external “contacts”

Contracting vs. Granting Agencies Contracting Agencies –Agency establishes plans, protocols and requirements –Highly focused topics –More fiscal requirements Granting Agencies –Investigator initiates an idea –Less well-specified topics –More flexibility DOD HHS/NIH NASA ED EPA DOT DOC HHS/NIH NSF ED USDA DOE

Grants vs. Contracts  Grants – You are selling your idea against other ideas  Contracts – You are selling your solution to their idea

Agency SBIR Differences Number and Timing of Solicitations R&D Topic Areas -- (Broad vs. Focused) Dollar Amount of Award (Phase I and II) Proposal Preparation Instructions Financial details (e.g., Indirect Cost Rates, Gap Funding) Receipt Dates Proposal Review Process Proposal Success Rates Type of Award (Contract or Grant)

Approximate Number of Awards Department of Agriculture90 Department of Commerce50 Department of Defense1800 Department of Education35 Department of Energy200 Department of Health & HS1030 Dept. of Homeland Security (04)100 Department of Transportation20 Environment Prot. Agency45 NASA310 National Science Foundation250 Nuclear Reg. Commission0

SBIR Success Ratios Phase I –Historically, 1 out of 10 proposals are funded –Recently, 1 out of 7 proposals were funded –Last year, it was back to 1 out of 10 proposals funded Phase II –Between 1 out of 2 to 1 out of 3 –Some Phase IIs become contracts (Phase III)

For more information….. l Contact individual agency websites l Cross-agency website: è Conferences / workshops è Topic search engine for all agencies è Partnering Opportunities è State Newsletters

Other Helpful Sites –(for a helpful manual that summarizes the contents of this workshop)

Who Participates in SBIR? Firms are typically small and new to the program. About 1/3 are first-time Phase I awardees. Small hi-tech firms from across the country. *FY01 Phase I DOD Award Winners Firm Size Distribution*

Faculty Opportunities Own small firms (assign someone else PI) Principal investigator (with official permission from university) Senior personnel on SBIR/STTR Consultants on SBIR/STTR Subcontracts on SBIR/STTR University facilities provide analytical and other service support

Contact Department Heads/Deans/Office of Research Disclose all potential conflicts of interest Obtain permission to engage in outside activities Full financial disclosure if subcontracting with the research institute (RI) Appropriate licensing agreements Compensation for phone, computers, etc. Avoiding Conflict of Interest

Getting Help With STTR 1. Federal Laboratory Consortium See Technology Locator 2. University technology transfer officer (if there is one) 3. Techmatch x.aspx

Current Issues Reauthorization Majority venture capital group ownership and control Raising award amounts Changing the set aside % and linkage from extramural to the full R&D budget Lowering the $100m participation threshold to include smaller agencies Providing agencies with administrative funds out of the SBIR pool Increasing the percentage (ratio of work) allowed to subcontractors/universities

Commercialization assistance programs out of the SBIR pool (awardee's $$$) Federal and State Technology Partnership (FAST) outreach to new entities Rural Outreach Program (ROP) SBIR Mentor/Protégé program STEM (Science, Technology, Engineering and Mathematics) incentives Energy Focus Area (similar in construction to the manufacturing clause)

Some Problems and Issues Intellectual property Time and effort to write, wait for, account for a grant Distractions Do you have enough horses to do the job? –Partners? –Equipment Funding gaps Funding is specific

SBIR National Conferences April , 2010 Hartford, Connecticut

Is it a Good Idea?

Top 6 Reasons to Seek SBIR / STTR Funding Opportunities Over $2.3 Billion available 2.NOT A LOAN 2. NOT A LOAN - no repayment Provides recognition, verification and visibility Fosters partnerships (e.g., large corporations, academia)

Top 6 Reasons to Seek SBIR / STTR Funding Opportunities Intellectual property rights are normally retained by the business Provides seed money to fund high risk projects

Congratulations! The check is “in the mail…” (almost) Award Process