Federal Funding Opportunities for

Research, Development & Commercialization

Robert G. KispertDirector of Cluster DevelopmentJohn Adams Innovation Institute

The Problem:

I have this great idea for an exciting new product. However, the three F’s are still recovering from the dot-bomb, the banks won’t let me use my credit cards for business expenses, and the only VC I know says to come back when I’ve got a working prototype, a management team, and a business plan.

??????

Who are you?

• Start-up? SBIR/STTR

• Established small business w/ research capability? SBIR/STTR Broad Agency Announcements (BAA’s) Other - tbd

• Established small business w/o research capability? STTR

• University Faculty? STTR (with small business) Broad Agency Announcements (BAA’s) Guide to Grants and Contracts

SBIR = Small Business Innovation Research

• The world’s biggest seed capital fund

• Invests over $2 billion annually• Best terms in town• Proven track record• Even start-ups should apply

Billions served…

• Created in 1983 to provide small technology companies access to federal R&D funding

• 2 ½% of federal extramural R&D budget

• Over 50,000 projects, 12,500 firms• 100’s of MA companies, 1000’s of

projects

Massachusetts SBIR Recipients

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Central

Pioneer ValleyBerkshire

Southeast

Cape and Islands

Greater Boston

Northeast

SBIR per CapitaRegion Average 1993 1994 1995 1996 1997 1998

Berkshire $0.82 $0.00 $0.51 $0.00 $0.52 $3.89 $0.00

Cape & Islands $10.35 $10.38 $6.80 $12.37 $13.36 $8.11 $11.10

Central $6.82 $1.77 $4.05 $5.43 $5.84 $11.01 $12.80

Greater Boston $37.79 $31.92 $25.22 $39.39 $42.20 $45.86 $42.14

Northeast $28.49 $19.65 $16.54 $29.62 $26.74 $38.95 $39.43

Pioneer Valley $4.63 $4.27 $3.09 $4.27 $8.11 $2.62 $5.43

Southeast $1.00 $3.22 $0.17 $0.07 $0.61 $1.60 $0.30

Statewide $22.53 $18.76 $14.65 $23.08 $24.74 $27.67 $26.31

Phase I-II ConversionsRegion # Phase 1

Awards# Phase 2

AwardsOverall %

Converted

Berkshire 2 1 50%

Cape & Islands 62 21 34%

Central 124 37 30%

Greater Boston 2293 912 40%

Northeast 337 128 38%

Pioneer Valley 72 36 50%

Southeast 17 8 47%

Statewide 2907 1145 39%

Recent Awards - Amherst

• 2000-2005 (9 companies)36 Phase I Awards - $3.3 million15 Phase II Awards – $8.2 million

• 2006-2008 (7 companies)14 Phase I Awards - $1.3 million9 Phase II Awards – $4.6 million

A term sheet not even your mother can match!

• Federal government will pay you to develop the technology

• They may even be your first customer• You own the Intellectual Property• Repayment terms = taxes on future

profits• No debt - no equity• You can come back for more – even if

you fail

An exciting track record!

• Over 400 publicly traded companies trace roots through SBIR program

• SBIR companies are good M&A targets 4 MA companies acquired - $2.7B total

• Local company developed helicopter maintenance system that saves DoD $1B

• Another local SBIR awardee developed the artificial heart

A program for start-ups!

• Nationally, 1/3 of all awards are made to companies with no prior federal R&D contracts

• Administrative burden is manageable• “Prior experience with the

government” is not an evaluation criterion (although there is no substitute for “Know thy customer”)

SBIR supports:

• R&D in support of agency needs or missionsApplied research to establish the

technical feasibility of a novel concept

Development leading to prototype fabrication and test

SBIR does not support:

• Market research/ marketing/ sales• Product development• Clinical Trials• Commercialization of a previously

developed product• Setting up a home office, car wash,

etc• Reinventing the wheel

Who funds?

• Dept of Agriculture• Dept of Commerce• Dept of Defense $$• Dept of Education• Dept of Energy• Dept of Health &

Human Services $$

• Dept of Homeland Security

• Dept of Transportation

• Environmental Protection Agency

• National Science Foundation

• NASA

Who is eligible?

• Small US owned companies (<500 employees) (Must be at least 51% owned by US individuals or subsidiary of an otherwise eligible small business)

• Principal Investigator (NIH is different) Bachelor’s degree with an extensive research

reputation Master’s degree with considerable

experience PhD with business sense

What?

• Innovation• Phased Development:

Phase I – Proof of ConceptPhase II – Prototype DevelopmentPhase III – Commercialization (w/o

SBIR $)

• Agencies only fund what meets their objectives/needs

How?

• Respond to agency solicitations NIH & DoD – 3+ times a yearNSF & EPA – 1-3 general or special

focus solicitations All others – annual solicitation

• Follow the directions!Requirements for PI (SBIR vs. STTR)

How much?

• Phase I – typically $50-100k, 6 months Some DoD programs have options NIH is funding substantially higher

amounts, up to 1 year• Phase II – typically $250-750k, 2 years

Some agencies require/encourage cost sharing

NIH is putting real $$$ on the table• FAST Track – DoD, NIH• Options – additional funding to bridge

gaps or accelerate commercialization

SBIR vs STTR

• SBIR(All agencies) May subcontract up

to 30% of Phase 1 effort to others

PI must be employee of small business

2 ½% of agency extramural research budget

• STTR (DoD,NIH,NSF,DoE) Must subcontract 30-

60% of Phase 1 effort to research institution

PI can be employee of research institution

0.3% of agency extramural research budget

Hints & suggestions

• Key elements for your proposal Problem definition (in the customer’s eyes) Concept definition (build a picture that the

reviewer can see – emphasize the novel) Analyze/rationalize – show how your concept

will meet the customer’s requirements

• Conduct experiments/build a breadboard as part of Phase I

• Prepare your Phase I proposal so you can declare success at the end of the program

More hints & suggestions

• Meet your technical monitorTechnical monitor vs. contracting officerHe/she has a vested interest in your

successYou need to know how your program fits

into the context of the agency’s plansKey to Phase II and Phase III follow-on

with the agency

SBIR is about commercialization!

• Success in SBIR = commercializing the technology Creating the knowledge that the agency

needs to support regulations/operations Creating and bringing to market products

that meet the federal customer’s requirements

Creating and bringing to market products that meet the needs of the commercial marketplace

Keys to Commercialization!

• You need a strategy• Partner, partner, partner

Start early – like in the Phase I proposal Learn who all the stakeholders are in your

technology – who can make or break you?

• Learn all you can about what drives your market(s), how to quantify it

• Start figuring out the answer to the question: How will the customer make his/her purchasing decision?

BAA’s, etc.

• SSC-Natick - https://www3.natick.army.mil/

• Army Medical R&D Command – http://www.usamraa.army.mil/pages/baa_paa/baa_10_1.cfm

• DARPA - http://www.darpa.mil/openclosedsolicitations.html

• NIH Guide to Grants & Contracts http://grants1.nih.gov/grants/guide/index.html

Reauthorization

• SBIR sunsets on Oct 30, unless reauthorized or another Continuing Resolution to extend

• Strong support for program, but controversy over: VC ownership Requirement for Phase 1 Size of awards Length of reauthorization Preferential treatment of disadvantaged

populations• Stay tuned!

Other Resources

• National SBIR Conferences National SBIR Fall 2009 Conference

Reno, NV, 11/2-5/2009 NIH SBIR Conference – July 2010

• Other http://www.zyn.com/sbir/ http://www.sba.gov/aboutsba/

sbaprograms/sbir/index.html http://www.sba.gov/idc/groups/public/

documents/sba_program_office/sbir_psa_08_sbir_sttr.pdf

Current Solicitations

• NOAA FY-10 SBIR      Opens 10/14/09 Closes 1/14/10

• DOT SBIR      Opens 10/01/09 Closes 11/16/09

• DOE FY-10 SBIR/STTR      Opens 9/24/09 Closes 11/20/09

• NSF FY-10 SBIR      Opens 11/3/09 Closes 12/3/09

• NSF FY-10 STTR      Opens 10/17/09 Closes 11/17/09   

Massachusetts Resources

Technology Company

Business Strategy

Technology

Ma

rket

Fina

nce

Business Plans (SBDC's)

Product Development -Federal Government

(MTC)

Venture Capital (MTDC)

Facilities/Capital Equipment (Mass

Development)

Incubators/Accelerators (CVIP, Mass Life Sciences

Center)

Technology Transfer (U Mass, Private

Universities)

Technology Collaborations (Universities, Teaching Hospitals, Fed Labs)

Business Networking (Industry Associations)

Regulatory Approvals (State, Federal Agencies)

Strategic Alliances

Market Assessments

Renewable Energy Trust

SBIR/STTR

Technology Innovation Program

Massachusetts Technology Transfer

Center

Massachusetts Life Sciences Center

BAA’s

Academic Research Centers

Business Consultants

Business ForumsMentoring Networks

Technical Assistance

• MTC – Research Opportunity Workshops, Conferences, pre-submittal proposal review

• Massachusetts Technology Development Corporation – Phase III Commitments, VC

• Massachusetts Small Business Development Center Network & Procurement Technical Assistance Center – business plan assistance, procurement assistance

• Get to know the infrastructure – Industry councils, venture forums, technical societies, consultants, attorneys, accountants

Precision Manufacturing Regional Alliance Project

• Led by the Regional Employment Board of Hamden County• Partners include U Mass Amherst, STCC, HCC, WMEDC,

WMNTMA• Objectives

Strengthen partnerships among sector companies and with local organizations to address current industry-wide issues, including workforce development and identification of new market opportunities.

Improve industry capability to engage new markets by enhancing its infrastructure for technology development and integration through Technology Innovation Forums and a pilot Technology Transfer

Directly improve industry capacity for innovation by providing applications engineering support to assist firms in adopting new technologies, improving productivity, and expanding advanced manufacturing process, enabling companies to move up the supply-chain and tailor new manufacturing applications directly to growth markets, including medical devices, laboratory instrumentation, and clean energy.

Assess the feasibility of developing a Center for Advanced Precision Manufacturing Technology that will serve as a sustainable industry “focal point” to provide services and lead growth initiatives

M2D2

• Objective – help medical device entrepreneurs cross Valley of Death

• A partnership of U Mass Lowell, U Mass Medical School, Industry Executives, Suppliers, Investors

• Uses funding from SBIR/STTR programs, as well as state resources, to support entrepreneurial and prototype development, leading to private investment

An Example from the Current Department of Energy

SBIR Solicitation

DOE SBIR/STTR Solicitation

• Phase 1 - $36 MM > ~ 360 awards @ $100k for 9 months Phase 1 Success Rate – 280 out of 1494 =

18.7% (MA 48 out of 173 = 27.7%)• Phase II - $750k for 2 years

Phase II Success Rate – 40%• Solicitation Released – September 24,

2009• Proposals Due – November 20, 2009• Award Date – June 2010• Cost sharing – permitted but not required

SBIR or STTR?

• SBIR – minimum 2/3 of research or analytical work must be performed by small business – PI employed by company

• STTR – minimum 40% of research or analytical work must be performed by small business, at least 30% of work performed by single research institution – PI can be employed by either company or research institution

STTR - Research Institution

• Non-profit research institution• Non-profit university or college• Non-profit medical or surgical

college• Contractor-operated FFRDC or

Federal Lab• Government owned/operated labs

are not eligible (e.g., NETL, Natick)

DoE Solicitation (Partial)ENERGY EFFICIENCY AND RENEWABLE ENERGYHydrogen, Fuel Cells and Infrastructure Technologies ProgramAdvanced Solar TechnologiesAdvanced Thermoelectric TechnologiesGeothermal Energy Technology Development Production of Biofuels from Cellulosic BiomassAdvancements for Subcomponents Critical to Electric Drive Vehicle Power Inverters and MotorsWind Energy Technology Development

DoE Detailed Topics

Production of Biofuels from Cellulosic Biomass a. Biomass Moisture Management and Dryingb. Least-Cost Biomass Format for Efficient Logisticsc. Separation Technologies for Biochemical Conversion of Lignocellulosic Feedstocks d. Oil Extraction from Microalgaee. Pyrolytic Conversion of High Moisture Content Biomass to Bio-Oilf. Distributed Sorted Municipal Solid Waste Conversion to Biofuels

Example Topic - Context

f. Distributed Sorted Municipal Solid Waste Conversion to Biofuels— In 2007, 137.2 milliontons of Municipal Solid Waste (MSW) went to landfills in the U.S. Organic materials are the largest component of MSW. In 2007, paper and paperboard accounted for 33 percent, with yard trimmings and food scraps accounting for 25 percent. While significant improvements have been made in the amount of recycling and combustion for heat, significantly more could be done to reduce landfills and municipal solid waste. One such opportunity is to use the organic MSW as a renewable feedstock for thermochemical conversion to a fuel, thereby reducing dependenceon foreign oil while positively impacting landfills.

Topic -Technical Background

Thermochemical conversion processes, which include gasification and pyrolysis, are characterized by higher temperatures and faster conversion rates than typically observed in the biochemical conversion of feedstocks. Although thermochemical conversion is best suited for lower moisture feedstocks, it can readily convert the entire organic portion of various feedstocks to bio-intermediates and carbonaceous solids. Subsequently, the bio-intermediates can be converted to a range of biofuels such as mixed alcohols, Fischer-Tropsch fuels, green diesel, green gasoline, and green jet fuel. Therefore, grant applications are sought to develop a distributed thermochemical technology to convert several different compositions of sorted-MSW.

Topic - Requirements

Proposed approaches must (1) identify which sorted-MSW materials would be most suitable for conversion; (2) deal with a myriad of impurities in the feedstock, which would require the development of extremely robust gasification and fuel synthesis catalysts (or pyrolysis and upgraded catalysts); (3) test the thermochemical conversion process and fuel synthesis catalysts with various sorted-MSW, in order to represent the variability of sorted-MSW in different regions of the country; and (4) ensure that emissions from the thermal conversion of sorted-MSW will meet all federal and local regulations. In Phase I, a small bench-scale system should be designed and tested with one type of sorted MSW to demonstrate feasibility. In Phase II, a demonstration modular unit should be tested with a markedly different sorted-MSW.

References

Subtopic f. Distributed Sorted Municipal Solid Waste Conversion to Biofuels1. US EPA 2008 “Municipal Solid Waste Generation, Recycling, and Disposal in the United States: Facts and Figures for 2007.” (Full text available at:http://www.epa.gov/waste/nonhaz/municipal/msw99.htm)2. California Integrated Waste Management Board “Conversion Technologies -Thermochemical Conversion Processes.” (Full text available at : http://www.ciwmb.ca.gov)3. Los Angeles County “Conversion Technology Demonstration Project – Overview: Conversion Technology Environmental Fact Sheet.” (Full text available at: http://www.socalconversion.org/pdfs/Conversion_Technology_Environmental_Factsheet.pdf)4. Boerrigter, H. and H. den Uil. “Green Diesel from Biomass via Fischer-Tropsch Synthesis: New Insights in Gas Cleaning and Process Design.” Pyrolysis and Gasification of Biomass and Waste, Expert Meeting, Strasbourg, France, 2002. (Full text available at:http://www.senternovem.nl/mmfiles/28277_tcm24-124223.pdf)

What questions would you ask yourself and your colleagues if you were considering developing this product and entering this market?

What resources/partners would you need if you wanted to be successful in developing/commercializing this technology and addressing the market opportunity?

What questions would you ask the company if you were a potential investor in a company pursuing this market opportunity?

Proposala. Cover page – Provide company and project information including company nameand address, principal investigator, project title, topic number and subtopic letter.b. Proprietary Data Legend – If applicable. See Part VIII, Sections D and F.c. Identification and Significance of the Problem or Opportunity, and TechnicalApproach – Define the specific technical problem or opportunity addressed by yourapplication. Provide enough background information so that the importance of theproblem/opportunity is clear. Indicate the overall technical approach to theproblem/opportunity and the part that the proposed research plays in providing neededresults.d. Anticipated Public Benefits – Discuss the technical, economic, social, and otherbenefits to the public as a whole anticipated if the project is successful and is carried overinto Phases II and III. Identify specific groups in the commercial sector as well as theFederal Government that would benefit from the projected results. Describe the resultantproduct or process, the likelihood that it could lead to a marketable product, and thesignificance of the market.e. Technical Objectives – State the specific technical objectives of the Phase I effort,including the questions it will try to answer to determine the feasibility of the proposedapproach.

Proposal - cont

f. Phase I Work Plan – Provide an explicit, detailed description of the Phase I research approach and work to be performed. Indicate what will be done, by whom (small business, subcontractors, research institution, or consultants), where it will be done, and how the work will be carried out. If the applicant is making a commercial or in-kind contribution to the project, please describe in detail here. The Phase I effort shouldattempt to determine the technical feasibility of the proposed concept which, if successful, would provide a firm basis for the Phase II grant application. Relate the work plan to the objectives of the proposed project. Discuss the methods planned to achieve each objective or task explicitly and in detail. This section should be a substantial portion of the total grant application.

Proposal - Cont

g. Phase I Performance Schedule – Briefly describe the important milestones and the estimated percentage of time for completing each task described in the work plan.h. Related Research or R&D – Demonstrate knowledge of key recent work conducted by others in the specific area of the proposed project. If not already addressed, describe significant research that is directly related to the grant application, including any conducted by the Principal Investigator or by the applicant organization. Describe how itrelates to the proposed effort and any planned coordination with outside sources. Applicants should be or become familiar with the references provided following each topic description.i. Principal Investigator and other Key Personnel – The Principal Investigator (PI) must be knowledgeable in all technical aspects of the grant application and be capable of leading the research effort and meet the requirements described in Part III, D. Describe the effort to

be performed by the PI during the project.

Additional Reqmts

• Facilities & Equipment (Available & to be acquired/leased)

• Consultants and Subcontractors (need Letter of Commitment from Research Institution for STTR)

• Bios• Budget

Commercialization Plan

• Company background – including commercialization history

• Market assessment – size, sales & market share first 5 years

• Intellectual property – plan to protect IP

Who evaluates?

• Initial screen – DoE Grants & Contracts

• Technical Evaluation – Independent scientific and engineering experts (DoE & DoE Lab personnel, external experts)

• Final selection – DoE SBIR Program Manager

Evaluation Criteria

a. Strength of the Scientific/Technical Approach as evidenced by (1) the innovativeness of the idea and the approach, (2) the significance of the scientific or technical challenge, and (3) the thoroughness of the presentation.

b. Ability to Carry out the Project in a Cost Effective Manner as evidenced by (1) the qualifications of the PI, other key staff, subcontractors and consultants, if any, and the level of adequacy of equipment and facilities; (2) the soundness and level of adequacy of the work plan to show progress toward proving the feasibility of the concept; and (3) the degree to which the DOE investment in the project would be justified by the level of proposed research effort.

c. Impact as evidenced by (1) the significance of the technical and/or economic benefits of the proposed work, if successful, (2) the likelihood that the proposed work could lead to a marketable product or process, and (3) the likelihood that the project could attract further development funding after the SBIR or STTR project ends.

Contact Information

Robert G. KispertDirector of Cluster Development

MTC’s John Adams Innovation Institute75 North Drive

Westborough, MA 01581508-870-0312

kispert@masstech.org