Extramural Programs Reserved for Small Business Reserved for Small Business SMALL BUSINESS INNOVATION RESEARCH (SBIR) PROGRAM SMALL BUSINESS TECHNOLOGY TRANSFER (STTR) PROGRAM Updated 03/21/02 (JGLE)

SBIR/STTR -- A Four Course Overview Course 101 SBIR/STTR Basics Course 201 SBIR/STTR History and Law Course 301 Research Institutions and SBIR/STTR Research Institutions and SBIR/STTR Final Exam Top Ten

Course 101 SBIR/STTRBasics General Features and Agency Nuances

SBIR: Set-aside program for small business concerns to engage in federal R&D -- with potential for commercialization. STTR: Set-aside program to facilitate cooperative R&D between small business concerns and U.S. research institutions -- with potential for commercialization. Program Descriptions

SBIR/STTR: 3-Phase Program PHASE I Ü Feasibility study Ü $100K and 6 months (SBIR) or 12 months (STTR) PHASE II Ü Full R/R&D Ü 2-Year Award and $750K (SBIR) or $500K (STTR) PHASE III Ü Commercialization Stage Ü Use of non-SBIR Funds

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

Some important facts to remember Eligibility is determined at time of award No appendices allowed in Phase I The PI is not required to have a Ph.D. The PI is required to have expertise to oversee project scientifically and technically Applications may be submitted to different agencies for similar work Awards may not be accepted from different agencies for duplicative projects

CRITICAL DIFFERENCES SBIR AND STTR PROGRAMS CRITICAL DIFFERENCES Research Partner Research Partner SBIR: Permits (encourages) research institution partners [ ~ 33% Phase I and 50% Phase II R&D] STTR: Requires research institution partners (e.g., universities) [ 40% small business and 30% research institution] AWARD ALWAYS MADE TO SMALL BUSINESS

CRITICAL DIFFERENCES SBIR AND STTR PROGRAMS CRITICAL DIFFERENCES Principal InvestigatorPrincipal Investigator SBIR: Primary (>50%) employment must be with small business concern STTR: Primary employment not stipulated [PI can be from research institution and/or from small business concern]

SBIR PROGRAM Program re-authorized through FY agencies with R&D budgets greater than $100 million participate Amounts to be set-aside of R&D budget: FY : 1.25% FY : 1.5 % FY : 2.0 % FY 1997 and beyond: 2.5 %

DODSBIR/STTR HHSSBIR/STTR NASA SBIR/STTR DOE SBIR/STTR NSF SBIR/STTR USDASBIR DOCSBIR EPASBIR DOTSBIR EDSBIR SBIR/STTR Participating Agencies TOTAL ~ $1.3 B FY 2002

We’re all just a little bit different...

Agency SBIR/STTR Differences R&D Topic Areas Dollar Amount of Award (Phase I and II) Receipt Dates / Number and Timing of Solicitations Proposal Review Process Proposal Success Rates Type of Award (Contract or Grant) Many other details: Profit or fee allowed Phase I to Phase II gap funding Payment types and schedule

Agency SBIR/STTR Differences Granting Agencies Ü Investigator initiates approach Ü Less-specified topics Ü Assistance mechanism Ü More flexibility DOD HHS/NIH* NASADOC EPADOT ED* Contracting Agencies Ü Agency establishes plans, protocols, requirements Ü Highly focused topics Ü Procurement mechanism for DOD and NASA Ü More fiscal requirements HHS/NIH*DOE NSF USDA ED* * Awards Grants and Contracts

SBIR vs STTR UNIQUE FEATURES SBIR STTR Set-Aside of Agency Budget 2.5% 0.15% FY02 SBIR/STTR Budget ~ $1.3 Billion Award Guidelines Phase I $100K/6mos $100K/12 mos. Phase II $750K/2 yrs $500K/ 2 yrs Business Employment of PI >50% n/a SubcontractsPhase I < 33.3% < 60% Phase II < 50% < 60% Research Partner Not Required > 30%

Advice from Awardees Don’t Don’t judge an agency’s interests by name its “name ” agency’s mission & needs Understand agency’s mission & needs agency Program Get to know your agency ProgramManager follow Read solicitation and followinstructions

Advice from Awardees solely Don’t depend solely on SBIR funding alone Don’t go it alone - use support systems outcome Have an outcome get and review Win or lose - get and review evaluations PERSISTENT Be PERSISTENT

Course 201 SBIR/STTR History and Law Legislative Background and Relationship Dynamics

WHY SBIR???? Congress designated 4 major goals Small Business Innovation Development Act of 1982 Stimulate technological innovation Use small business to meet federal R&D needs Foster and encourage participation by minorities and disadvantaged persons in technological innovation Increase private-sector commercialization innovations derived from federal R&D

1992 REAUTHORIZATION Expand and improve SBIR Program Emphasize goal of increasing private sector commercialization Increase small business participation in federal R&D Improve dissemination of information on SBIR Program PURPOSES OF P.L , SIGNED 10/28/92

2000 REAUTHORIZATION Program Extension until 9/30/2008 Output and Outcome Data (within 180 days) - Public Database: basic award information (searchable, up-to-date, electronic database) - Government Database: program evaluation (Phase II awardees -- e.g., new product sale revenues; other investment funding sources) MAJOR PROVISIONS OF P.L ; Signed 12/21/00

2000 REAUTHORIZATION [continued] National Research Council report (3 years) Policy Directive Modifications (SBA) - Commercialization Plans: Phase II proposals - Agency Reports: Follow-on funding agreements FAST Program (Federal & State Partnership Program) - State-level Entity: One per State - Mentoring Networks: Business advice & Counseling MAJOR PROVISIONS OF P.L ; Signed 12/21/00

2001 STTR REAUTHORIZATION Reauthorized through FY2009 Set-aside increased from 0.15% to 0.30% in FY 2004 Phase II award levels increased from $500,000 to $750,000 in FY 2004 Participating agencies to implement similar outreach efforts as SBIR

SBIR/STTR: Historical Relationships Federal Government Small Businesses

SBIR/STTR: Historical Relationships Small Businesses State Government  Quasi-Government Corporations  Economic Development Entities  Technology Centers Federal Government

SBIR/STTR: Historical Relationships Small Businesses State Government  Quasi-Government Corporations  Economic Development Entities  Technology Centers Federal Government Academia  University Research Parks  Faculty & Graduate Students  Technology Incubators  Research Foundations

Course 301 Research Institutions andSBIR/STTR Universities / Industry Partnerships and Cultural Differences

Research Institution Partnership 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

University and Industry: Two diverse cultures University culture u Research to educate, break ground, provide service (economic development) u Pace is slower u Mission = basic and applied research u Technology transfer activities are companion to applied research mission u Fertile ground for economic development

University and Industry: Two diverse cultures Industry culture u Mission toward research / R&D / commercialization u Quick-paced u Solve problems - develop new products - profit u Maintain control of science to explore full potential of discovery (initially) u Direct and indirect economic impact

CULTURAL DIVERSITY University - Industry Relationships u Universities are establishing creative and entrepreneurial environments for the commercialization of university intellectual property u Universities and Industry learning to work together is KEY! This is now… That was then…

Key Ingredients u Develop common goals between faculty-initiated business and mission of research institution u Create entrepreneurial environment while protecting interests of University u Establish policies to manage, reduce or eliminate conflict of interest (COI) u Retain intellectual talent Entrepreneurial Research Institution

The Ohio State University Purdue University University of Wisconsin - Madison Examples Successful Entrepreneurial Research Institutions

The Ohio State University  Establish entrepreneurial management expertise, realistic business plan, sufficient access to capital v Proper management of COI management plans financial interest disclosure management of gift monies thru impartial University officials limitation of employees’ ownership interest/management roles An Example of a Successful Entrepreneurial Research Institution (cont.)

The Ohio State University Models: Start-ups involving RI employees v Managed Start-Up Model v Faculty-Owned Business Model v Early Stage Development Model v Entrepreneurial Leave Model An Example of a Successful Entrepreneurial Research Institution (cont.)

Purdue University Purdue Research Park Purdue Research Park  3 business incubators  Companies benefit from shared office concept, flexible leases, attractive rental rates, and more...  Gateways Program  Financial assistance An Example of A Successful Entrepreneurial Research Institution

Purdue University  Environment for business to have frequent and mutually beneficial interactions with University  Policies / Procedures to address COI -- not to eliminate, but to minimize and manage An Example of A Successful Entrepreneurial Research Institution

Purdue University -- COI Policies and Procedures  Contact Department Heads/Deans Disclose all potential COIs Obtain permission to engage in outside activities Full Financial Disclosure if subcontracting with RI Appropriate licensing agreements Compensation for phone, computers, etc. An Example of A Successful Entrepreneurial Research Institution

Endocyte, Inc. (Purdue Research Park) l Researcher, Philip Low, discovered way to diagnose, potentially cure, ovarian cancer using vitamin folate l Sell technology or start own company to develop and market treatment???? l Resisted VC offers: wanted control of science Now exploring use of folate in arthritis  ADVICE: Hire experienced CEO to handle all but science  BENEFIT: Purdue retains talent SUCCESS STORY

Final Exam The Top 10 List

Top 10 Reasons to Seek SBIR/STTR Funding Opportunities Over $1.3 Billion available 9.NOT A LOAN 9. NOT A LOAN - no repayment Provides recognition, verification and visibility Potential leveraging tool to attract venture capital/other sources of $$$

Top 10 Reasons to Seek SBIR/STTR Funding Opportunities Fosters partnerships (e.g., large corporations, academia) Creates jobs and generates tax revenues Provides seed money to fund high risk projects

Top 10 Reasons to Seek SBIR/STTR Funding Opportunities Intellectual property rights are normally retained by the small business Small business concerns are recognized as a unique national resource of technological innovation

Top 10 Reasons to Seek SBIR/STTR Funding Opportunities To make economic and societal contributions to America

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