Funding Technology Development for Commercialization

1
Funding Technology Development for
Commercialization

• SBIR/STTRSmall Business Innovation Research
  Program
• Clarkson University
• CITEC

2
Reasons to Be Interested in SBIR

• Non-profit research funds at risk
• Congress demands return on investment for RD
  programs
• Commercialization can reap rewards for
  corporations as well as non-profit organizations
• Intellectual assets
• Royalties, new venture partnerships

3
Things to Keep in Mind

• Commercial application is the focus
• 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

4
Government Performance Results Act

• 1993 legislation to improve government
  performance with performance reports due from
  federal agencies on March 31, 2000
• Each agency will have a mission statement, major
  goals, plan for achieving goals, and description
  of key external factors

5
Watch the Trail Blazers for Program and Policy
Changes

• What NSF does first is usually seen 1-2 years
  later in other SBIR agency programs
• Navy (Office of Naval Research) is the innovator
  in the Dept. of Defense

6
NSF response to GPRA

• Enable the U.S. to uphold a position of world
  leadership in all aspects of science, mathematics
  and engineering
• Promote discovery, integration, dissemination and
  employment of new knowledge in service to society
• Achieve excellence in U.S. science, math,
  engineering and technology education at all levels

7
NSF response to GPRA

• Focus on
• Discoveries
• Connect discoveries to society
• Workforce of scientists and engineers
• Math and science national standards
• Information dissemination

8
New Merit Review Criteria

• Research
• Quality
• Study directed toward application
• Research Impact
• Commercialization

9
What NSF Favors

• High-risk, high payback innovations rather than
  evolutionary advances
• Tied to the NSF mission - advancements in
  science, math, engineering
• Commercial potential (consideration given to
  firms past track record)
• Promote partnerships

10
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?

11
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

12
What does SBIR/STTR fund?

• Health-related areas
• Clinical treatment research
• New therapies
• Pharmaceutical development
• Clinical trials and drug evaluation studies
• Diagnostic and prognostic equipment and tools
• Genetics
• Informatics
• Prevention techniques, education, training
  materials,etc.

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What does SBIR/STTR fund?

• Education-related areas
• Math, Science, Engineering
• Interdisciplinary research
• Treatments and Prevention
• Cancer
• Drug and Alcohol
• Mental Health
• Technology to improve teaching and learning
• Adaptive Learning Systems (web-based)

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Examples from NIH - NIA

• Role of nutrition in determining longevity
• Development of non-invasive research and test
  methods
• Social, behavioral, environmental and/or
  technical interventions on the individual for
  health maintenance and disease/disability
  prevention
• Biosensors and prosthetic devices to aid sensory
  and memory dysfunctions

15
Examples from NIH - National Cancer Institute

• Identification of genes associated with the
  process of metastasis
• Combinatorial library approaches for gene
  function analysis
• Development of educational intervention software
  packages for women and minorities exposed to
  occupational carcinogens

16
Examples from National Science Foundation

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

17
Examples from National Science Foundation -
Biotechnology

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

18
Examples from National Science Foundation -
Materials

• Materials for Next Generation Vehicles
• Membrane research, surface engineering
• Catalysis Separation, purification
• Structural materials Nanostructures
• Harsh environment performance
• Technologies that address materials failure and
  degradation
• Electronic application Environmentally conscious
  processes
• Advanced manufacturing processes, equipment

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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 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 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

22
What is SBIR?

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

23
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)

24
History of SBIR Program

• 1982 - Congress passed the Small Business
  Innovation Development Act
• 1986 - Reauthorization
• 1992 - Congress extended SBIR and created STTR
• 2000 - Up for renewal in September

25
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 in technological innovation
• 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
• Explore scientific, technical, commercial
  feasibility of an idea or technology
• Phase II
• Awards up to 500,000 for two years
• RD work performed and commercial potential
  considered
• Phase III
• Non-STTR funding to move from lab to market

28
SBIR/STTR Differences

• SBIR
• 10 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 - FY 99
• STTR
• 5 agencies participate
• Company performs at least 40 of work
• Research institution performs at least 30 of
  work
• STTR is 0.15 of external RD budget - FY 99
• 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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Agency SBIR/STTR Differences

• RD topic areas
• Award size
• Proposal review process
• Proposal success rates
• Type of award (contract or grant)
• Number and timing of solicitations
• Other details
• Profit or fee allowed
• Phase I to Phase II gap funding
• Payment types and schedule, etc.

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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

33
How Do I Apply?

• 1. Identify topics funded by each agency
• that relate to your companys RD interest
• Link from http//www.cnytdo.org/
• Links to SBIR Info Sources
• SBIR Solicitation Schedule
• STTR Solicitation Schedule
• New York State SBIR/STTR Guidebook

34
Agencies Offering SBIR and STTR Awards

• Ten 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 Transportation
• Environmental Protection Agency
• National Aeronautics and Space Administration -
  also STTR
• National Science Foundation - also STTR

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Number of SBIR Awards - FY 97

• Department of Defense 2,154
• Health and Human Services 1,076
• NASA 529
• Department of Education 421
• National Science Foundation 389
• Department of Energy 286
• Department of Agriculture 102
• Department of Commerce 88
• Environmental Protection Agency 63
• Department of Transportation 48
• Lesser award amounts

36
SBIR Funding Agencies

• For SBIR - 2.5 allocated from agencys
  extramural RD budget
• Over 1.1 Billion in FY99
• DOD 45 of dollars in the SBIR program
• HHS 25
• NASA 13
• DOE 8
• NSF 5
• EPA, USDA, DOC, DOT, DoEd 4
• For STTR, FY99 funding Over 65 million

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How Do I Apply?

• 2. Review Solicitation information
• Presolicitation Announcements
• 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

38
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

39
Preparing to Sell Your Idea

• Homework - Search the Literature
• Your own field of expertise and alternatives
• Key application areas, existing patents
• Potential market opportunities
• Brainstorming/Teamwork

40
Preparing to Sell Your Idea

• Evaluating the Topic Fit
• Identifying the Projects Theme
• Contact SBIR/STTR people in the off season
• Know how your approach is different from
  competing technologies

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Write for Your Reviewer

• Quality appearance of proposal
• Holds interest and is easy to read
• Dont make reviewer dig for information
• Highlight key issues
• Use pictures, tables and figures
• Select topics that are new and innovative, not
  already in the public domain

42
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

43
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

44
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

45
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

46
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 5-10

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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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Quality Proposals

• Sound approach, objectives and research plan
• Describes problem in detail
• Innovative idea and why its innovative
• Anticipates problems and presents response
• Good methodology
• Doesnt assume reviewers are knowledgeable
• Assumptions and statements are supported
• Logical approach, easy to read

50
Why SBIR/STTR Proposals Win and Lose

• Basic Requirements to Win
• Follow guidelines
• Title indicates important problem area
• Initial appearance favorable
• Important problem
• Quality proposal upon careful reading
• Commercial applications
• Related research
• Qualifications of PI, Consultants, Sub-contracts
• Facilities and equipment
• Budget and justification

51
SBIR as Part of a Business Strategy

• Plan for growth and financing needs
• Develop a roadmap for your company
• SBIR/STTR provides credibility
• Is timeline realistic for your organization?
• Is timeline realistic for your technology and
  markets?

52
SBIR as a Business Strategy

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

53
Miscellaneous Issues

• Enhancing Credibility
• Related accomplishments
• Submitting Multiple Proposals
• Disclosures

54
Proposal Review and Selection

• Proposal reviewers are a heterogenous group
• Interests, expertise, objectivity/subjectivity
• Reading habits
• Conscientious reader 30
• Skimmer 30
• Peruser/Readers Digest 30
• Critic 10
• Request a briefing

55
Follow-Up on Rejections

• 110 ratio for awards
• First time proposals seldom win
• DOD - no prior connection made - reject
• Agency required to debrief on rejections
• Automatic versus phone call
• Is the topic is likely to be included in the
  next solicitation?
• Is the reason for rejection within your control
  to change?

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Resubmissions

• Can the proposal can be resubmitted in the next
  round with recommended changes?
• Address the recommendations
• Was your proposal close to the quality of others
  that were awarded?
• Read the abstracts of the projects that were
  selected
• Competitor or collaborator?

57
New SBIR Provisions Being Considered for 2000

• Improvements in the SBIR Program
• Easier to participate
• Reduce administrative burden
• Include grant preparation expenses (?)
• Reduce the funding gap
• Lower threshold for agency participation

58
Questions Being Asked About SBIR

• Should technical excellence continue as the
  primary criteria?
• Ability to skip Phase I?
• Change the percentage from 2.5?
• Permanent versus sunset/reauthorization?
• Agencies to syndicate a project?

59
Questions Being Asked About SBIR

• Foreign participation?
• Dropping the size eligibility from 500 to 100?
• Patent royalties when the federal government is
  the only customer?
• Extend SBIR Phase I to one year (like STTR)?

60
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

61
Business Development Issues

• Business Plan Development
• Protecting Intellectual Property
• Accounting Systems and Audits
• Record keeping and cost allocation
• Direct and indirect costs

62
Business Development Issues

• Contracts versus Grants
• Marketing Research
• Commercial Partnerships

63
Indicators of Success

• Product company versus RD or service company
• Private sector versus military customer
• Completion of prototype
• Use of university personnel or facilities
• Protection of intellectual property
• Progress on a marketing or business plan
• Follow-on funding commitments or no outside
  funding needed

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General Suggestions

• Recognize non-research problems
• Recognize regulatory problems
• Thoroughly describe use of new or non-standard
  approaches
• Describe how data will be organized, recorded and
  analyzed
• SBIR/STTR research must be challenging
• Use of software requires mention of how, why and
  what it will do
• Balanced proposal - idea, research, execution
• Limit the perceived risk

65
Major Commercialization Problems

• Marketing
• Intellectual Property Protection
• Strategic Planning
• Lack of Business Development Skills
• Financial Resources
• Ideas for Potential Applications
• Transition from RD Focus to Product Focus

66
Sources of Commercialization Assistance

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

67
Other Programs to Consider

• Energy Related Inventions Program
• New York State Energy Research and Development
  Authority
• Advanced Technology Program

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Energy Related Inventions Program

• ERIP [phone]
• Since 1974, awarded over 41M to over 600
  recommendations
• Evaluated by NIST, supported by DOE
• Encourages invention and innovation in energy
• Evaluates promising energy inventions
• Provides development assistance
• Grant size varies, up to 100,000
• Year-round acceptance of proposals

69
New York State Energy Research and Development
Authority

• NYSERDA 518-862-1090
• 5 areas of interest
• Industry, buildings, energy resources,
  transportation, environment
• Grant size varies, up to 500,000
• Minimum 50-50 match required
• New initiatives announced
• Green building design
• Alternative-fuel vehicle strategies

70
Advanced Technology Program

• ATP 518-862-1090
• Goal to benefit the U.S. economy by cost-sharing
  research with industry to foster new, innovative
  technologies
• Risky, challenging technologies with the
  potential for a big pay-off
• Minimum 50-50 match required
• Single companies - direct costs only(2M up to 3
  years)
• Joint venture partners encouraged
• General competitions and focused programs

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ATP General Technologies

• Agriculture
• Biotechnology
• Microelectronics and electronics manufacturing
• Machine tools
• Advanced automotive manufacturing
• Advanced materials
• Information and communication technology
• Chemical processing and other areas

72
NIST ATP Programhttp//www.atp.nist.gov

• Projects evaluated for
• scientific and technological merit, and
• potential for broad-based economic benefits, with
  both parts weighted equally
• For-profit U.S. Company
• Universities can participate on subcontract
• University cannot retain the title to patents
• Can negotiate royalties

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Other Web Pages of Interest

• Small Business Administration
• http//www.sbaonline.sba.gov/sbir/
• National Technology Transfer Center
• http//www.nttc.edu/solicitations/html
• National SBIR Conference Center
• http//www.zyn.com/sbir/

74
Questions?

• http//www.cnytdo.org