non-dilutive funding for early stage companies · photo credit: graphene frontiers, llc what is the...

Non-Dilutive Funding For

Early Stage Companies

September 28, 2016

Ruth Shuman, National Science Foundation

• Use chat to submit

questions

• Yes, you’ll get the

slides

• We’re recorded, so

come back and listen

again

• Mission: Fuel the success of angel groups and accredited individuals

active in in the early-stage landscape

• World’s largest trade group for angel investors o 220+ angel groups

o 13,000 accredited investors

o Voice of accredited individuals, portals, and family offices

• 50 US states + Canada

• Research/ education partner

ACA MEMBER GROUPS

New Dominion Angels

ACA MEMBER PLATFORMS

ACA PARTNERS

TODAY’S SPEAKER

• Joined the National Science Foundation in August 2009.

• Program Director for the Biological Technologies (BT)

topic area in the SBIR/STTR Program.

• Founder, president, and CEO of a successful venture-

backed life science company, Gentra Systems, Inc.,

• CEO-In-Residence for Life Science with the University of

Minnesota’s Venture Center.

• Former faculty member at North Carolina State University

• Pioneer in the development of gene transfer and genetic

engineering technology.

• Ph.D. from the University of Minnesota in the area of

Genetics and Cell Biology.

Ruth Shuman, Program Director,

National Science Foundation

Small Business Innovation

Research & Small Business

Technology Transfer Programs

at the National Science Foundation

Presenter: Ruth Shuman, Ph.D.

SBIR/STTR Program Director

Photo Credit: Graphene Frontiers, LLC

NSF’s Small

Business

Funding

Programs

Photo Credit: Ginkgo BioWorks

Small Business Innovation Research (SBIR)

and

Small Business Technology Transfer (STTR)

Pre-seed funding for small businesses to catalyze the commercialization of high-risk technological innovations

Typically, first money into the company to fund proof-of-concept

$190 million annual budget in 2016

Fund about 400 companies each year

Grants, not contracts, not loans – equity-free investment for R&D

Funding for Small Businesses

NSF Funding: Bridge to Private

Investment

Academia

Industry

“Valley of Death”

---Phase I--

---Supplements---

---Phase II---

Resourc

es A

vaila

ble

($)

Discovery Development Commercialization

Investors

Aims of the Program

• Provide funding to startups developing high-impact engineering and science-based products and services

• De-risk technology development to encourage private investment

• Strong focus on commercialization

• Provide training in stage-appropriate business areas and mentorship from seasoned Program Directors


WHAT IS THE

NSF

SBIR/STTR

PROGRAM?

• Who We Are

• Why We Fund

• Other Benefits


The NSF is:

• A federal agency that supports fundamental research and education across all fields of science and engineering, currently with a $7 billion budget.

NSF SBIR/STTR is:

• An approximately $190 million program that catalyzes the commercialization of high-risk technological innovations via research and development (R&D) grants to startups and other small businesses.

• The NSF SBIR/STTR program funds roughly 400 companies each year.

Who We Are

• The SBIR program is federally mandated; 11 federal

government agencies participate

• Congress designated 4 major goals for SBIR in the Small

Business Innovation Development Act of 1982:

– Stimulate technological innovation in the

private sector

– Use small business to meet federal R&D needs

– Foster and encourage participation by socially and

economically disadvantaged, and women-owned,

persons in technological innovation

– Increase private-sector commercialization of innovations

derived from federal R&D

Why We Fund

• Funds small businesses to conduct R&D critical to

commercial success

• Supports transformational, game-changing technology

at an early stage

• Makes investments across a broad range of

technologies and applications areas

NSF’s SBIR/STTR Programs

• Strongly encourages commercialization

• Recipients receive training in stage-appropriate

business areas and mentorship from seasoned

Program Directors

• Receiving an SBIR/STTR award signals success to

investors, partners and customers

• Connection to other small companies performing

innovative R&D

NSF SBIR Awards Go Beyond Funding

Photo Credit: National Institute of Allergy and Infectious Diseases, NIH

PROGRAM

STATS

• Grantee Profile

Photo Credit: National Institute of Allergy and Infectious Diseases, NIH

Company Size: ~ 92% of awardees have 10

or fewer employees

History: ~ 87% of awardees had never had a prior

SBIR/STTR Phase II award from any agency

Company Age: ~ 78% of awardee companies were

incorporated within the past 5 years

Start-up Creation: Many Phase I awardees have just

formed their business based on the availability of

SBIR funding

Program Stats

NSF SBIR/STTR Phase I Grantees

Phase I: Average of 338 awards from 2,112 proposals received per year (16% funding rate)

Phase II: Average of 118 Phase II awards from 303 proposals received per year (39% funding rate)

About 10-15 Phase II companies are acquired each year

About half of all Phase II grantees raise significant third-party funding during the Phase II award as a direct result of their NSF research (~ $60 million cumulative per year)

Program Stats – Past 3 Years

Photo Credit: PhylloTech, LLC

FUNDING

• What We Fund

• Phase I Funding

• Phase II Funding

• Technology Topic Areas

• R&D to overcome significant technical hurdles

– Novel core technology development

– Research to prove feasibility/viability of a new

product, process or service

– High technological risk, early-stage development

– Proprietary technologies

• A significant commercial opportunity

– Game-changing technology in the chosen

market/application space

– Product-market fit validated by customers/partners

What We Fund

• Basic research (i.e., research with the primary goal of knowledge creation)

• Incremental (evolutionary) optimization of existing products and processes or straightforward modifications to broaden the scope of an existing product or process

• Analytical or “market” studies of existing technologies or products/services

What We Do NOT Fund

• Award amount has been increased up to $225,000 for Phase I SBIR; STTR remains at $225,000

• Duration of either the SBIR or STTR award is 6-12 months (at the discretion of the applicant and with NSF approval)

• Phase I grantees are no longer required to have completed the entire work plan prior to submitting the Phase II application

• Initial payment has increased to up to $200,000

Recent Changes to Program

Applications require written proposals responding to

the solicitation (solicitations released 90 days before

the submission deadline)

Submission deadlines typically in June and

December

Next deadline – Mid-December

Submitting a proposal to NSF does not constitute a

public disclosure. All information is treated as

confidential, and proprietary details may be marked.

Proposals are reviewed by technical and commercial

experts; process may last 4-5 months

Awards begin about 6 months from submission

Basic Information

Proposals in all areas of engineering and science and

related education are welcome

• Smart Health (SH) and Biomedical (BM) Technologies

• Biological Technologies (BT)

• Chemical and Environmental Technologies (CT)

• Educational Technologies and Applications (EA)

• Electronic Hardware, Robotics and Wireless Technologies (EW)

• Internet of Things (I)

• Information Technologies (IT)

• Semiconductors (S) and Photonic (PH) Devices and Materials

• Advanced Materials and Instrumentation (MI)

• Advanced Manufacturing and Nanotechnology (MN)

Technology Topic Areas

NSF is not a customer, it is more like an investor

NSF places much less importance on “topical fit”

Funding ONLY may be used for R&D, so successful proposals stress the importance of R&D on commercial viability

Long-term success metrics for the program and its grantees are largely economic: Revenues, job growth, etc.

Communication is encouraged throughout the process – start by sending us your executive summary

Key Takeaways

Merit Review Criteria

• Intellectual Merit - Quality of the research – A sound approach for establishing technical and commercial

feasibility

– Qualified technical team

– Sufficient access to resources

– Significantly advances “state-of-the-art”

• Broader/Commercial Impact – Potential impact in the market and/or on society – Intellectual property/other differentiation

– Commercial and societal benefits

– Marketable product

– Commercialization track record of the team/company

– Business expertise

What will I describe in my proposal?

• The addressable market opportunity: Value proposition, target market, and a description of the customer/user

• Competitive landscape and your (optimal) position in it

• The innovation and the R&D project proposed

• The company/team’s business and commercialization experience

• Vision of the path from proof-of-concept to commercialization

Industrial Innovation & Partnerships – Small Business Partnerships

www.nsf.gov/eng/iip/sbir/

Pre-Deadline Guidance

• At your option, you may communicate with the Program Director to get their feedback

• Typically, wait until a solicitation is released

• Preferred method of communication is e-mail

• Send a 1-2 page summary that discusses:

– Core technology and IP position

– Proposed project and anticipated product or service

– Market opportunity, value proposition, customers, competition

– Company/team (including commercial outcomes of previous SBIR awards, if any)

National Science Foundation’s SBIR and STTR Programs

Industrial Innovation & Partnerships – Small Business Partnerships www.nsf.gov/eng/iip/sbir/

How do they differ?

What’s the difference? SBIR vs. STTR


33

SBIR STTR

Phase I project duration 6-12 months 6-12 months

Phase I max award amount $225,000 $225,000

Phase II project duration 24 months 24 months

Phase II max award amount $750,000 $750,000

Subaward to research institution (RI) Allowed Required

Small business minimum budget percentage in Phase I / Phase II

66 / 50 40 / 40

Research institution minimum budget percentage in Phase I / Phase II

N/A 30 / 30

National Science Foundation’s SBIR/STTR Programs


Who is Eligible to Apply?

Company Eligibility Information

• For-profit small business

• Fewer than 500 employees, including affiliates

• Located in the United States

• >50% owned and controlled by US individuals (>50% ownership by venture capitalists, private equity firms, or hedge funds is NOT allowed)

• More information and FAQ:

• http://sbir.gov/faq/eligibility

Industrial Innovation & Partnerships – Small Business Partnerships


http://sbir.gov/faq/eligibility



What we do NOT require

• You do NOT need to have an existing relationship with, or award from, the NSF (or the federal government)

• Your team members do NOT need to have a Ph.D., or be affiliated with a college or university

• You do NOT need to be working on a technology or product that is “of interest” to the government


Principal Investigator (PI) and Company Eligibility Information

• PI must be primary employed by the small business at the time the award is made, and for the duration of the award

– Defined as at least 51% (of a 40-hour work week)

• PI must commit at least – 1 calendar month for 6 months of effort for a Phase I project

– 2 calendar months of effort PER YEAR for a Phase II project

• No more than 1 proposal may be submitted per PI

• No more than 2 proposals per company (per SBIR/STTR cycle)


37

National Science Foundation’s SBIR/STTR Programs


Proposal Submission Nuts and Bolts

Required Registration Info

• FastLane registration for company and PI required (www.fastlane.nsf.gov)

• Dun and Bradstreet Data Universal Numbering System (DUNS) number required - including subawardees (www.dnb.com)

• System for Award Management (SAM) registration required (www.sam.gov)

• Small Business Administration (SBA) Company Registry registration required (http://sbir.gov/registration)


39

http://www.fastlane.nsf.gov/

http://www.dnb.com/

http://www.sam.gov/

http://sbir.gov/registration

http://sbir.gov/registration

Guide to Proposal Submission


40

www.nsf.gov/eng/iip/sbir/documents/Phase_I_Proposal_Preparation_Booklet.pdf

A step-by-step user guide is available for preparing a SBIR or STTR Phase I proposal in

NSF’s FastLane system.

You must register your company and PI in FastLane prior to submitting your proposal. This process can take up to five business days!

Points of Contact Henry Ahn [email protected] Peter Atherton [email protected] Prakash Balan [email protected] Glenn H. Larsen [email protected] Debasis Majumdar [email protected] Rajesh Mehta [email protected] Muralidharan S. Nair [email protected] Benaiah Schrag [email protected] Rick Schwerdtfeger [email protected] Ruth M. Shuman [email protected] Jesus V. Soriano [email protected]

Amanda Morris [email protected]

FastLane Help Desk 1-800-673-6188 Industrial Innovation & Partnerships – Small Business Partnerships


41

SBIR/STTR Program Directors

Proposal Compliance Questions

Help with FastLane

mailto:[email protected]

NSF Webinar Presentation

Additional information for Phase I submitters

can be found on our website:

www.nsf.gov/SBIR

We will host a series of Q&A webinars in 2016.

Please watch for the schedule

and register for a webinar.


42

http://www.nsf.gov/SBIR

Connect with NSF SBIR/STTR

Industrial Innovation & Partnerships – Small Business Partnerships 43

Funding and webinar announcements, news, and success stories

Online: nsf.gov/eng/iip/sbir/ and nsf.gov/eng/iip/sttr/ Quarterly Update Listserv: Send a blank email to INNOVATION-SUBSCRIBE- [email protected] Twitter: @NSFSBIR Channel: NSFInnovationIIP

http://www.nsf.gov/eng/iip/sbir/







http://www.nsf.gov/eng/iip/sttr/







THANK YOU!

We look forward to receiving

your proposal.

Contact Us: [email protected]

www.nsf.gov/SBIR

http://www.nsf.gov/SBIR

THANK YOU!

UPCOMING

WEBINARS

October 12: After the Check: 7 Tactics to

Improve Returns

October 26: Top Ten Things Early Stage

Companies Need to Know about

Cybersecurity

November 2: Exits for Unexitable

Companies

November 16: Valuation – Does it Matter?

Webinar programs archived

at:www.angelcapitalassociation.org/events

/webinars/

Audience

Questions

http://www.angelcapitalassociation.org/events/webinars/




ADDITIONAL RESOURCES

Marianne Hudson Executive Director Angel Capital Association

Christopher Mirabile Managing Director, Launchpad; Board Chair, Angel Capital Association

http://www.angelcapitalassociation.org/news-forbes/

http://www.angelcapitalassociation.org/news-inc/











UPCOMING ACA EVENTS

• October 4, 2016, New England Regional, Boston, MA

• October 13, 2016, SW Regional Meeting, Phoenix AZ

• November 8 – 9, 2016, Angel Insights Exchange, Nashville TN

• http://www.angelcapitalassociation.org/events/

http://www.angelcapitalassociation.org/events/

http://www.angelcapitalassociation.org/events/

non-dilutive funding for early stage companies · photo credit: graphene frontiers, llc what is the...

Documents