Funding Innovation with the Federal SBIR and STTR Programs

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Funding Innovation with the Federal SBIR and
STTR Programs

• CNY Technology Development Organization
• Marcene Sonneborn
• September 13, 2006

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Program sponsored by

• Rensselaer Polytechnic Institute
• Center for Economic Growth (CEG)
• CNY Technology Development Organization

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Statewide Program Objectives

• To stimulate and encourage broader SBIR and STTR
  participation
• To increase the number of awards at all levels
  (Phases I, II and III)
• To outreach to small businesses
• To provide assistance in applying for awards
• To assist with commercialization

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Reasons to Be Interested in SBIR

• Companies must innovate to stay competitive in a
  global economy
• Innovation is high-risk
• RD is expensive
• Commercialization can reap rewards for
  corporations
• New products
• Intellectual assets
• Royalties, new venture partnerships
• New Opportunities!

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Reasons to Be Interested in SBIR

• Non-profit research funds at universities are at
  risk
• Congress demands return on investment for RD
  programs
• The U.S. supports technology development to meet
  national objectives in military, commerce,
  health, education, space, energy, agriculture,
  transportation, the environment and basic science

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Things to Think About

• Commercial application is the focus of SBIR and
  STTR
• Provides good ROI evidence
• Market and customer need is the driving force
• Economic prosperity for the U.S.
• Job creation
• Richer tax payers
• Keep the U.S. globally competitive

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SBIR/STTR

• What are SBIR and STTR, and what do they fund?
• How To Apply
• What Do You Need To Know About Writing the
  Proposal?

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What does SBIR/STTR fund?

• Exploitation of scientific breakthroughs
• Innovation through the use of emerging
  technologies
• Novel application of existing technologies
• New capabilities or major improvements to
  existing technologies

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Selected Topics

• Examples of topics funded by the 11 federal
  agencies that participate in SBIR

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Department of Defense

• Simulation, training
• Faster, lighter, cheaper materials and equipment
• Command, control, communications
• Battlefield warfare Information warfare
• Battlefield survival and medical items
• Chemical, biological, nuclear weaponry and
  defense or detection systems

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Health-Related Topics

• Clinical treatment research
• New therapies
• Pharmaceutical development
• Clinical trials and drug evaluation studies
• Diagnostic and prognostic equipment/ tools
• Prevention techniques, education, training
  materials, etc.

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Examples from National Science Foundation

• Four Broad Areas of Technology
• Advanced Materials and Manufacturing
• Biotechnology
• Electronics
• Information-Based Technologies

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Examples from National Science Foundation -
Biotechnology

• Agriculture and food biotechnology
• Marine biotechnology and aquaculture
• Industrial bioproducts - enzymes, nutraceuticals,
  bioreagents, biopolymers, etc.
• Biosensors, biomaterials, bioprocessing,
  bioconversion
• Biomedical engineering
• Tissue engineering Metabolic engineering
• Biomolecular nanotechnology
• New emerging developments in biotechnology

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Examples from National Science Foundation - IT

• New methods to foster increased interaction among
  people, organizations and communities regardless
  of language and culture
• Techniques to improve communication,
  decision-making and the transfer of new knowledge
• Products to increase personal, professional,
  industrial and commercial productivity
• Universal access to information
• Richer, more effective educational innovations

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NSF Information Technologies

• Applications
• Social, behavioral and economic science
• Education
• Teaching and learning
• Higher education
• Assistive technology - human-computer interfaces
• Mathematics, computers and computation
• Information systems
• Storage, delivery, transmission
• Robotic systems

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Department of Energy

• Drinking water disinfection
• Particulate matter
• Ecosystem protection
• Air pollutants and indoor air
• Waste site risk characterization
• Waste management and site remediation
• Endocrine disruptors

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Department of Transportation

• FAA
• Ultra fire resistant thermoplastics
• National Highway Traffic Safety Administration
  (NHTSA)
• Tire failure warning sensor
• Federal Railroad Administration
• Safety Glazing Design for passenger rail vehicles
• U.S. Coast Guard - e.g., night vision

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NASA

• Aero Propulsion and power, aircraft systems
• Safety, reliability and quality assurance
• Materials and structures
• Teleoperators and robotics
• Information systems and computer sciences
• Instrumentation and sensors
• Space habitability and biology
• Space communications
• Commercial space applications

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Department of Commerce

• NOAA
• Atmospheric sciences
• Ocean observation systems and living marine
  resources
• Cartography and photogrammetry
• NIST
• Materials, intelligent control
• Measurement and standards
• Integration of manufacturing applications

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Department of Agriculture

• Forests and related resources
• Air, water, soils
• Plant production and protection
• Animal production and protection
• Food science and nutrition
• Rural and community development
• Production using agricultural materials
• Marketing and trade

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Environmental Protection Agency

• Nanomaterials and clean technology
• Prevention and control of air pollution
• Treatment/Monitoring of drinking water
• Municipal and industrial wastewater treatment
• Hazardous waste management and site remediation
• Recycling of municipal and industrial solid waste
• Monitoring and measurement technologies
• Environmental bioterrorism detection and
  decontamination

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SBIR Web Sites(Cross-Agency)

• http//www.sbirworld.com
• http//www.zyn.com/sbir/

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What is SBIR?

• Federal Legislation
• Federal Incentives
• Phases I, II, and III
• Eligibility

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Three Phases of SBIR

• Phase I Scientific and technical feasibility
  (Six months)
• Phase II Concept refinement, generally leading
  to prototype (Two years)
• Phase III Commercialization (non-SBIR
  funded phase)

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History of SBIR Program

• 1982 - Congress passed the Small Business
  Innovation Development Act
• 1986 - Reauthorization
• 1992 - Congress extended SBIR and created STTR
• 2000 - Renewal until 9/30/08
• 2001 STTR renewal until 9/30/09

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Purposes of SBIR/STTR

• To stimulate technological innovation
• To use small businesses to meet federal research
  and development needs
• To encourage participation by minority and
  disadvantaged persons
• To increase the commercialization of products and
  services from federal RD assistance
• To emphasize private sector commercialization of
  SBIR research

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What is STTR?

• Small Business Technology Transfer Program
• Created in 1992
• Cooperative RD between small business and
  research institutions
• Joint venture introducing entrepreneurial skills
  to high-tech research efforts

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Three Phases of STTR

• Phase I
• Awards up to 100,000 for up to one year (may
  increase)
• Explore scientific, technical, and commercial
  feasibility of an idea or technology
• Phase II
• Awards up to 500,000 for two years (up to
  750,000 as of FY 2004, but may increase)
• RD work performed and commercial potential
  considered
• Phase III
• Non-SBIR/STTR funding to move from lab to market

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SBIR/STTR Differences

• SBIR
• 11 agencies participate
• Two-thirds (minimum) of funds spent inside the
  company
• One-third spent on outside consultants or
  resources
• SBIR is 2.5 of external RD budget
• STTR
• 6 agencies participate
• Company performs at least 40 of work
• Research institution performs at least 30 of
  work
• STTR is 0.3 of external RD budget
• Allocation of Rights agreement required
• Phase I term is up to one year
• Topics may be limited, different cycle than SBIR

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Eligibility for SBIR/STTR

• American-owned,independently operated
• For-Profit business less than 500 employees
• Not dominant in the proposed field of operation
• The Principal Investigator is employed by the
  business over 50 time (SBIR)
• Research space must be available to and under the
  control of the SBIR grantee for the companys
  portion of the proposed project

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STTR Qualifications

• American-owned, independently operated
• For-profit
• Principal researcher need not be employed by
  small business
• Company size limited to 500 employees (no size
  limit for non-profit research institution)
• Research institution must be in U.S.

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SBIR APPLICATION PROCESS

• How Do I Apply?
• Identifying Topics
• Contacting Agencies
• Preparing the Proposal
• Following Up
• Resubmitting

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How Do I Apply?

• 1. Identify topics funded by each agency
• that relate to your companys RD interest
• Link from http//www.sbirworld.com/
• Links to SBIR Info Sources
• SBIR Solicitation Schedule
• STTR Solicitation Schedule

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Agencies Offering SBIR and STTR Awards

• Eleven SBIR agencies and five STTR agencies
• Department of Agriculture
• Department of Commerce
• Department of Defense - also STTR
• Department of Education
• Department of Energy - also STTR
• Health and Human Services - also STTR
• National Institutes of Health
• Health Care Financing Administration
• Department of Homeland Security also STTR
• Department of Transportation
• Environmental Protection Agency
• National Aeronautics and Space Administration -
  also STTR
• National Science Foundation - also STTR

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Number of SBIR Awards General Example

• Department of Defense 2,383
• Health and Human Services 1,265
• National Aeronautics and Space Administration
  447
• National Science Foundation 305
• Department of Energy 325
• Department of Agriculture 125
• Department of Commerce 97
• Department of Education 70
• Environmental Protection Agency 55
• Department of Transportation 30

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SBIR Funding Agencies

• For SBIR - 2.5 allocated from agencys
  extramural RD budget
• Over 2.2 Billion in FY 06
• Approximate breakdowns
• DOD 45 of dollars in the SBIR program
• HHS 25
• NASA 13
• DOE 8
• NSF 5
• EPA, USDA, DOC, DOT, DoEd 4
• For STTR, FY06 funding Over 65 million

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How Do I Apply?

• 2. Review Solicitation information
• SBIR/STTR Solicitation Schedules
• Guidelines
• Requirements - technical and personnel
• Award amounts
• Application and submission details
• Forms and budget guidelines
• Research funded in the past
• Sample or model proposals

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How Do I Apply?

• 3. Contact each agency
• Treat each agency as you would treat any customer
  - market to them
• Learn why the agency is funding the topic
• Technical questions before Release Date
• Only administrative questions after release
• DOD has a pre-release period
• HHS and Agriculture not concerned about release
  date restrictions

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Preparing a Phase I Proposal

• Elements of the Application
• Abstract
• Identify the problem and your solution
• Why the problem is important
• Why the solution will work
• Your methodology and qualifications
• Expected results and benefits

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Preparing a Phase I Proposal

• Elements of the Application
• Technical Description and Work Plan
• Background
• Technical approach
• Objectives
• Task descriptions
• Schedule, e.g., Gantt and PERT charts
• Deliverables

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Preparing a Phase I Proposal

• Personnel and Facilities
• Principal Investigator and Key Personnel
• Industry Partners and Recognized Consultants
• Commercial Potential, Anticipated Benefits
• Plans for Phase II
• Budget and Justification
• Commercialization Planning
• Who will benefit, who will buy
• Identify a pathway to commercial use

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Qualifications of Personnel

• Persuade reviewers of PIs qualifications
• Describe contributions of consultants
• Describe what each will do, when, and relation to
  the research goals
• Select the right consultant
• Letter from consultant stating contribution
• Condense biographies to relevant information

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Preparing a Proposal Budget

• Realistic budget based on work plan
• One month of PI time on Phase I, two months on
  Phase II (example)
• Adequate hours of engineering and technical
  personnel
• Travel directly related to the project only
• Justification of direct cost items
• Equipment and facilities included, or
  arrangements described
• Profit rate between 5-8 (usually 7)

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Commercial Applications

• Persuade the reviewer that commercial market
  exists
• Provide detailed supporting statements
• Demonstrate knowledge of the commercial area
• Think creatively about possible applications
• Concisely describe the plan to commercialize
• Describe previous success in converting RD into
  new products
• Focus on large potential markets
• Include government applications

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Description of Commercial Potential

• Significant competitive advantages the new
  technology has over the existing in
• Major competitive products
• Application
• Performance
• Technique
• Efficiency
• Cost
• Your plan to move from research to market

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SBIR as Part of a Business Strategy

• Plan for growth and financing needs
• Develop a roadmap for your company
• SBIR/STTR provides credibility
• Not equity or a loan
• Is timeline realistic for your organization?
• Is timeline realistic for your technology and
  markets?
• Submitting multiple proposals

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SBIR as a Business Strategy

• Academic-Corporate Alliances
• Fit with overall goals and objectives
• Intellectual Property Issues
• Commercialization Opportunities

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Points to Remember

• Tremendous diversity among agencies, programs,
  solicitations, reviewers, and winning proposals
• No guaranteed WIN strategies
• Guidelines and suggestions based on ten agencies
  and regional companies experiences
• The SBIR program is not static
• Look for evolutionary changes

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Sources of Commercialization Assistance

• Local colleges and universities
• Business and Management programs
• Information Studies
• Communications departments
• Regional RTDCs and university programs
• Trade and professional associations
• State and Federal programs and events

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Thank You

• www. tdo.org