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What we’re going to review?• About the SBIR Program• Basics of the Program

• History, Structure, Eligibility, Analytics

• Strategy for Applying• Selecting the right agency• How to position your idea/proposal

• Getting the most from this presentation• Problems/How to Navigate

• Questions

What are the SBIR and STTR Programs?Approximately $2 Billion in Federal Funding that:

Supports Small Businesses Stimulates Technology Innovation Commercializes Products

Small Business R&D,0.06% of the Federal Budget

The Federal Budget Galaxy

88%, SBIR

12%, STTR

Small Business R&D,0.06% of the Federal Budget

What are the SBIR and STTR Programs?

SBIR Program(Small Business Innovative Research)

• Stimulate technological innovation through Federal Research and Development (R&D)

• Foster job creation and participation in innovation and entrepreneurship through small businesses in the US.

• Increase private sector commercialization of innovations derived from federal R&D.

STTR Program(Small Business Technology Transfer)

• Stimulate technological innovation through Federal Research and Development (R&D)

• Foster technology transfer through cooperative R&D between small businesses and research institutions.

• Increase private sector commercialization of innovations derived from federal R&D.

How are the SBIR and STTR Programs Funded?

SBIR Program(Any Agency with R&D Budget > $100 Million)

• Required to allocate 3.0% of their R&D Budget to these Programs

STTR Program(Any Agency with R&D Budget > $1 Billion)

• Required to allocate .45% of their R&D Budget to these Programs

Goal of the SBIR/STTR Programs(Not an alternative to funding basic research)

Valley of Death

Idea

Product

Goal of Traditional Seed FinancingIsn’t that the same image? What’s the difference between the two?

Valley of Death

Idea

Product

VC and Traditional Funding

DebtFinancing

Traditional Funding Dollars

Payback

Diluted Equity

EquityFinancing

SBIR/STTR Funding

Federal Agencies

SBIR/STTR Award Dollars

Payback

Diluted Equity

Federal Budget

History of the SBIR Program

Modern Day SBIR Program- Authorized as part of NDAA in

2016- Separate Legislation for SBIR/STTR- Funding directly proportional to

agencies existing extramural research budget (ie. Money spent on R&D outside of Gov facilities)

SBIR/STTR Structure – Levels of Authority Congress

Small Business Administration (SBA)

Federal Agencies

Legislation Establishing and Re-Authorizing the Program

• R&D Budgets for Participants• Funding Levels• Program Intent and Goals• EligibilityTranslates law into Policy Directives

• Clarifies eligibility rules• Establishes general policies• Oversees compliance

Customize the programs to fit their mission• Technological Innovation Requirements• Award Mechanisms and Size of Awards• Duration of Projects

What type of awards are the SBIR and STTR?

Grants

• Assistance

• Scope is well-defined, no formal deliverables

• Progress/Final Reports

• Broad Topics

• Agency contact is unlimited

• No Phase III opportunities

Contracts

• Procurement

• Well-defined, legally binding statement of work, obligations, responsibilities

• Specific deliverables defined

• Topic-specific response

• Agency contact limited

• Phase III opportunities

Granting vs. Contracts AgenciesNational Science Foundation

(NSF)

Granting Agency

2 Award Cycles Annually

External Peer Review Evaluation of Proposals

Broad Topic Areas

Applicant Specific Deliverables

NSF will NEVER be a customer

Department of Defense(DoD)

Contracting Agency

3 Award Cycles Annually

Internal Evaluation Process of Proposals

Specific, Detailed Topics

DoD – Defined Deliverables

DoD is a Prospective Customer

Three Phased ProgramPhase I Phase II Phase III

Feasibility Development Commercialization

Program

Budget

Duration

Program

Budget

Duration

Program

Budget

Duration

SBIR/STTR SBIR/STTR Non-SBIR/STTR

$150,000*

6 Months

$1,000,000*

2 Years

???

???

* Agencies have authority to exceed budget by 50%

Product Lifecycle Structure and Reducing Risk

Risk

Product LifecyclePhase I Phase II Phase III

IdeaProof of Concept

Prototype

Product

Customers

Prelim Data

Feasibility

Product Development

Commercialization

Alternative and Supplemental Programs

Phase I Phase II Phase III

Phase IB ProgramProvides additional

Phase I dollars

Fast Track ProgramApply for Phase I & II

Simultaneously

Phase IIB ProgramProvides additional

Phase II dollars

Direct to Phase IIBypass Phase I

Commercialization Readiness Programs

Continued funding to build business and marketing strategy

* Agency Specific, not all have these programs

Am I eligible for this money?• For-Profit?• < 500 Employees• Not Majority Owned by VC, PE, or

Large Company > 500 employess• U.S. Owned (>50%) • U.S. Located• Plan to work R&D in the U.S.

Is your entity eligible for this money?• Individual Proprietor• Partnership• Limited Liability Corporation (LLCs)• Corporations (C, S)• Joint Venture• Association• Trust• Cooperative

Agency Analytics (11 Participating)

SBIR Total STTR Total

DOA 22,541,521 22,541,521 1% 100%DOC 10,041,617 10,041,617 1% 100%DOD 675,796,000 91,758,768 767,554,768 40% 88%ED 11,991,440 11,991,440 1% 100%DOE 206,950,457 27,862,995 234,813,452 12% 88%DHHS 454,709,162 63,741,190 518,450,352 27% 88%DHS 28,721,993 28,721,993 2% 100%DOT 11,294,370 11,294,370 1% 100%EPA 4,488,479 4,488,479 0% 100%NASA 147,419,493 21,814,164 169,233,657 9% 87%NSF 108,485,789 19,104,502 127,590,291 7% 85%Total 1,682,440,320 224,506,616 1,906,946,936 100%

SBIR % of Total Spent

Amount of Awards 2015Agency % of Total Spent

Grand TotalAgency

DOA1%

DOC1%

DOD40%

ED1%

DOE12%

DHHS27%

DHS2%

DOT1%

EPA0%

NASA9%

NSF7%

* 5 Agencies make up 95.3% of the awarded dollars

InterKn ESCAPE Plan to Applying

Eligibility Suitability Capability Applicability Packability Excitability

Eligibility For-Profit A majority (>50%) of the firm’s equity (ie. Stock, including options)

must be owned and controlled by:1. One or more individuals who are US Citizens or, permanent resident aliens2. Other for-profit small business concerns (13 C.F.R. §121.105)3. A combination of (1) and (2) above4. Multiple venture capital operating companies, hedge funds, private equity

firms, or any combination of these, so long as no one such firm owns or controls more than 50% of the equity

Less than 500 employees for applicant and affiliate companies including:1. Full-time, part-time and other basis2. Temp Leased Employees from Agency3. Based on average for each pay period in previous 12 months

SuitabilityDo you meet the objectives and means of the Agency?

For Research and Development What is the intended product or service? What has been done?

Is it a Technological Innovation How is your proposed solution different from what is

currently available? Is this revolutionary or evolutionary?

Have a credible commercialization strategy Have you identified the market and competitors? Do you have the resources currently or identified to

achieve a product? How do you generate revenue?

CapabilityPrincipal Investigator (PI) or Project

Director (PD)

• Qualified• Employed (W-2) >50% by the small

business at the time of award and for duration of the project

• Legal right to work in U.S.• Devote Majority of time to the

project• STTR Requires ‘official relationship’

and at least 10% LOE (except NSF)

Facility

• U.S. Owned and Located• Dedicated space suitable to

perform the work level of effort

Applicability• What Agency/Agencies fund your Innovation?• What is the Agency’s technologies of interest?• Do they have open solicitations? Match your

capabilities?• What is the timing of their solicitation match our

forecast?• Do they have budget for follow on work?• Do I fully understand their solicitation process?• What are their evaluation criteria?• What are the success rates?

Packability

Principal Investigator

Other Employees

Advisors/Letts of Support

ConsultantSubcontractors

Packability - The TeamConsultants / Subcontractors

* The employment of faculty and students by the small business may also occur.

Letters of Support

• Most agencies allow up to three letters of support.

• Crucial to supporting commercialization strategy and market validity

• What is the biggest factor found between SBIR proposal and award?

Company RI SubKSBIR ≥ 67% - ≤ 33%STTR ≥ 40% ≥ 30% ≤ 30%

Company RI SubKSBIR ≥ 50% - ≤ 50%STTR ≥ 40% ≥ 30% ≤ 30%

Phase I

Phase II

Excitability• Have you submitted pre proposal

feedback or LOI?• Does the Program Manager, Director,

TPOC consider you proposal agency priority? Even applicable or fundable?

• Have they seen your Company/PI before?• Did you speak with them at a conference,

road tour or through a webinar?

STTR InsightPotential Advantages

• Company lack credible PI• No qualified researcher employed• Cannot leave university (tenured)

• Access to Facility or Tools• Lab space/Equipment• Institutional Review Boards (IRB)• Animal Welfare Committees

• Higher % of Subcontract $$$s

• Company and partner must sign intellectual property (IP) agreement

• “Budget and Certification of Research Institution” form required

• Virtual Companies do not qualify• Cognizant of conflict of interest and

future issues down the road with licensing

Collaboration for Non-Profit

ESCAPE plan … Now what… Compliance

Fraud, Waste, and AbuseFraud includes any false representation about a material fact or any intentional deception designed to deprive the United States unlawfully of something of value or to secure from the United States a benefit, privilege, allowance, or consideration to which an individual or business is not entitled.Waste includes extravagant, careless or needless expenditure of Government funds, or the consumption of Government property, that results from deficient practices, systems, controls, or decisions.Abuse includes any intentional or improper use of Government resources, such as misuse of rank, position, or authority or resources.

Know the rules!!

So why SBIR/STTR?Positives

+ Fund “High-Risk” Broad Projects+ Non-Dilutive Funding+ Company Retains IP and Data+ Increased Visibility+ Multiple Awards+ Open Competition+ ~$2 Billion Dollars

Negatives

- National Competition- Limited funding per project- Focus is on R&D- Long proposal timelines- Proposal/Grant Writing Experience- No National Recognition- No guarantee of success

Problems with SBIR/STTR• Lack of consistent information,

disparate, conflicting• Helping with the “Now what” after• Cumbersome and convoluted process• Not well publicized• Support for small business is lacking

In closing…. Be Strategic

Agency

Project

Company

About InterKnMichael Pansky OUR MISSION

To accelerate innovation by delivering non-traditional funding

opportunities to innovative companies and research

institutions

THE PROBLEM

No single tool or service provides a holistic view of what

is important to companies seeking SBIR financing all the way to growth stage funding

Find funding for freeMichael PanskyAt InterKn, we believe finding funding should be easy. That’s why our funding search is simple, intuitive, and most importantly, free. Search a capability, find opportunities, and get funded. Try it yourself at https://www.interkn.com