~Funding Innovation with the Federal SBIR and STTR Programs~

1. ~Funding Innovation with the Federal SBIR and STTR Programs~ CNY Technology Development Organization Marcene Sonneborn September 13, 2006

2. Program sponsored by Rensselaer Polytechnic Institute ~ Center for Economic Growth (CEG) ~ CNY Technology Development Organization

3. 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

4. Reasons to Be Interested in SBIR • Companies must innovate to stay competitive in a global economy • Innovation is high-risk • R&D is expensive • Commercialization can reap rewards for corporations • New products • Intellectual assets • Royalties, new venture partnerships • New Opportunities!

5. Reasons to Be Interested in SBIR • Non-profit research funds at universities are at risk • Congress demands return on investment for R&D 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

6. 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

7. 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?

8. 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

9. Selected Topics Examples of topics funded by the 11 federal agencies that participate in SBIR

10. 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

11. 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.

12. Examples from National Science Foundation • Four Broad Areas of Technology: • Advanced Materials and Manufacturing • Biotechnology • Electronics • Information-Based Technologies

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. SBIR Web Sites(Cross-Agency) http://www.sbirworld.com http://www.zyn.com/sbir/

20. What is SBIR? • Federal Legislation • Federal Incentives • Phases I, II, and III • Eligibility

21. 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)

22. 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

23. 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 R&D assistance • To emphasize private sector commercialization of SBIR research

24. What is STTR? • Small Business Technology Transfer Program • Created in 1992 • Cooperative R&D between small business and research institutions • Joint venture introducing entrepreneurial skills to high-tech research efforts

25. 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 R&D 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 R&D budget – • Allocation of Rights agreement required • Phase I term is up to one year • Topics may be limited, different cycle than SBIR

26. 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 company’s portion of the proposed project

27. 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.

28. SBIR APPLICATION PROCESS • How Do I Apply? • Identifying Topics • Contacting Agencies • Preparing the Proposal • Following Up • Resubmitting

29. How Do I Apply? 1. Identify topics funded by each agency that relate to your company’s R&D interest: • Link from http://www.sbirworld.com/ • Links to SBIR Info Sources • SBIR Solicitation Schedule • STTR Solicitation Schedule

30. 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

31. 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

32. SBIR Funding Agencies • For SBIR - 2.5% allocated from agency’s extramural R&D 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

33. 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

34. 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

35. 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

36. 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

37. 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

38. Qualifications of Personnel • Persuade reviewers of PI’s 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

39. 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%)

40. 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 R&D into new products • Focus on large potential markets • Include government applications

41. 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

42. 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

43. SBIR as a Business Strategy • Academic-Corporate Alliances • Fit with overall goals and objectives • Intellectual Property Issues • Commercialization Opportunities

44. 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

45. 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

46. Thank You www. tdo.org