2. SBIR/STTR Introductory Workshop Dr. Fritz Grupe Email: fritz@unr.edu, or fhgrupe@gmail.comfritz@unr.edu fhgrupe@gmail.com 775-813-7407 Made Possible Through Funding From

3. Workshop Agenda What are SBIR and STTR? The phases Eligibility Agency differences What do they pay for? University participation Resources you can draw on Summary of characteristics of successful proposals Summary of why you might consider applying

4. Show Me The Money!!!

5. 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 Increase private-sector commercialization innovations derived from federal R&D

6. Small Business Innovation Research (SBIR) Set-aside for small businesses to engage in federal R&D -- with potential for commercialization. (will be increasing to 3.2% over 6 yrs.) Small Business Technology Transfer (STTR) Set-aside to facilitate R&D between small business concerns and U.S. research institutions (increasing to.45% over 5 yrs.) Research Opportunities Reserved for Small Business 2.5% 0.30%

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

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

9. 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

10. 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

11. Questions as to Eligibility? Contact the SBA size specialists Request an eligibility determination http://www.sba.gov/size/indexcontacts.html

12. 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

13. 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, …

14. Not all great ideas are funded.

15. 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

16. SBIR/STTR’s 3-Phases PHASE I Ü Feasibility study Ü $150K+ and 6-month (SBIR) or 12-month (STTR) Award PHASE II Ü Full research/R&D Ü $1M+ and 2-year Award (SBIR/STTR) PHASE III Ü Commercialization stage Ü Use of non-SBIR/STTR funds

17. Variations Fast Track (Phase I and II combined) NSF –Phase IB (1:2 match to $30K) –Phase IIB (NSF will match 1:3 to $500K) Commercialization assistance –Department of Defense –National Institutes of Health –National Science Foundation –Department of Energy Sole source status Up to 25% may be made available to larger companies

18. Phase IPhase IIPhase III Another Look at the Phases Beyond SBIR ??????? Phase IV

19. 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? 1 234 ProposalPhase IPhase II Years Source: PCB, Inc.

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

21. Some Facts to Remember Eligibility is determined at time of award 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

22. 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.

23. 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

24. 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”)

25. 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”

26. 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 ?

27. 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”

28. 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

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

30. 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)

31. 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

32. Relative SBIR Agency Sizes Dept. of Defense National Instit. Health National Sci. Foundation Dept. of Energy NASA All Others Total $1.3 billion $680 million $161 million $154 million $130 million $82 million $2.5 billion

33. 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)

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

35. www.SBIR.gov

36. SBA Technet http://tech-net.sba.gov/tech- net/public/dsp_search.cfm http://tech-net.sba.gov/tech- net/public/dsp_search.cfm http://tech-net.sba.gov/tech- net/public/dsp_search.cfm

37. Other Helpful Sites www.sba.gov/sbir www.zyn.com/sbir www.pbcinc.com http://www.sbtdc.org/pdf/sbir_handbook.pd f (for a helpful manual that summarizes the contents of this workshop)http://www.sbtdc.org/pdf/sbir_handbook.pd f http://www.niaid.nih.gov/ncn/sbir/pres.htm

38. 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*

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

40. 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

41. Proposal Framework Significance Market Commercial Potential (Phase III) Problem Approach Solution Tech.Objectives Work Plan Budget Capability Team Facil- ities Purpose Innovation Legend for Criteria o Scientific/Technical Approach o Ability to Carry out Project o Impact Courtesy Dr. Robert Berger, former Department of Energy SBIR-STTR Program Manager and MS-FAST ConsultantDr. Robert Berger http://books.lulu.com/content/106258

42. Commercialization Planning For most agencies, you determine the customer, define the market For DoD and NASA, perhaps others, the agency is the customer, ultimate user – Usually down to program level – Procurement channels often complex For DoD, “commercialization” means “transition”

43. Intellectual Property To retain rights to IP, the company: – Must report invention to the agency within 2 months –Elect rights within 2 years –File application within 1 year US Gov. may “march in” if contractor fails to report or elect, or if it is not commercialized, or for health/safety reasons Must be substantially manufactured in U.S. (waivers possible) A recent court case (Stanford v. Roche) emphasized the need for all organizations to be clear on employee/consultant contracts (ex. If a university employee is on loan to a company, to whom does an invention belong?)

44. University-Business 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

45. University and Industry: Two Different Cultures Industry researchers are from MARS are from MARS University researchers are from Venus are from Venus

46. Business incubators  Rented office space, flexible leases  Specialized facilities and equipment  Financial assistance http://www.purdueresearchpark.org Support from Universities

47. Support from National Laboratories Top researchers Great, possibly unique equipment Excellent facilities They can provide “the team” Their involvement more than doubles the chances of success Some agencies report that they have difficulty spending their STTR monies.

48. Getting Help With STTR 1. Federal Laboratory Consortium http://www.federallabs.org/ See Technology Locator 2. University technology transfer officer (if there is one) 3. Techmatch http://www.dodtechmatch.com/DOD/inde x.aspx

49. NV Tech Transfer People Richard Bjur, UNR/DRI, Special Asst To VP Graduate School Ms 0321, Reno, Nevada 89557, (775) 784-4116, bjur@unr.edubjur@unr.edu Elda Luna Sidhu, Assist. General Counsel UNLV, 4505 Maryland Parkway, Box 451085, Las Vegas, Nevada 89154-1085, Ph: (702) 895-5185, elda.sidhu@unlv.eduelda.sidhu@unlv.edu

50. 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

51. NSBDC’s SBIR Assistance: Enhancing communication with agencies – Possible future agency representatives in the state – There are some local contacts Agency Searches Guidance and assistance Reactions to proposals Location of potential partners Location of local proposal writers Suggestion of alternative funding sources such as EPSCOR, MAP, etc.

52. http://nsbdc.org/how-we-can- help/technology_innovation/

53. 1.Funding, Marketing, Patenting, Etc 2.Sample Proposals 3.Links To Search Engines 4.Past Award Winners 5.Nevada University Research Centers

54. SBIR National Conferences November 2012 Portland, OR

55. 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

56. Levels of Review Administrative - Does the proposal meet formating and other technical requirements (10- 15% are rejected) Manager – Is it a reasonable submission, responsive, etc. Panel/merit review – How does it compare to the other proposals Agency selection – How many from each area will be funded?

57. DOD FORMAT (1) Identification and Significance of the Problem or Opportunity (2) Phase I Technical Objectives (3) Phase I Work Plan (4) Related Work (5) Relationship with Future Research or Research and Development  State the anticipated results of the proposed approach if the project is successful  Discuss the significance of the Phase I effort in providing a foundation for Phase II research (6) Commercialization Strategy (7) Key Personnel (8) Facilities/Equipment (9) Subcontractors/Consultants

58. Common Problems with Applications l Not innovative or significant l Inadequate test of feasibility l Diffuse, superficial, or unfocused research plan –Lack of sufficient experimental detail l Questionable reasoning in experimental approach l Lack of innovation l Unconvincing case for commercial potential or societal impact

59. l Lack of experience with essential methodologies l Unrealistically large amount of work proposed l Over budget, over page limit, incorrect format l P.I. credentials weak, weak team l Milestones not detailed

60. From Here Keep up on solicitations for new topics Keep your innovation current Keep looking for people and companies to help Decide whether you have to rely on SBIR for funding

61. Get Help From Others Incubator/Accelerator Executives Centers of Innovation National Laboratories Small Business Development Centers Non-competitive Small Business Innovation Research Program Awardees

62. Top Reasons to Seek Funding $2.5 Billion Available Not a loan or an investment – no repayment Provides recognition and validation Fosters partnerships Seed money funds risky projects IP stays with the company Offers an advantaged sole source position

63. The Challenge ( From the SBIR Coach, Fred Patterson ) The game is very competitive The rules are hard to interpret Good proposals are hard to write Proposals are somewhat objective Agency priorities trump your ideas The money doesn’t flow quickly Subject to scrutiny, audits, etc.

64. Otto Rohwedder’s Path to Commercialization Milestones: 1912 Otto Rohwedder toys with the idea of producing a machine to slice bread 1916 Rohwedder begins to design a machine to slice bread 1917 fire destroys his factory, prototype machine and the blueprints 1926 Toastmaster begins selling pop-up toasters 1927 Rohwedder finally saves enough money to begin again to build a bread slicer 1928 Rohwedder files patent application for a single step bread slicing machine 1928 forms a company Mac-Roh Sales & Manufacturing to build and sell the bread slicer machine 1928 first mechanical pre-sliced bread goes on sale to the public in Chillicothe, Missouri 1929 St. Louis, Missouri baker, Gustav Papendick, adds improvements to Rohwedder's machine. 1930 Wonder Bread begins selling pre-sliced bread, most bakeries follow suit 1932 toaster sales skyrocketed, thanks to the standardized size of sliced bread 1933 American bakeries were turning out more sliced than unsliced bread 1933 Rohwedder sells patent rights to and goes to work for Micro- Westco, Inc. 1934 Patent 1,970,379 issued August 14, 1934 for Slicing Machine assigned to Papendick, Inc. sliced bread, bread slicer, bread slicing and wrapping machine, toaster, Otto Rohwedder, Gustav Papendick, M. Frank Bench, wonder bread, invention, history, inventor of, history of, who invented, invention of, fascinating facts.

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