Aasma Yasmeen

1. Aasma Yasmeen Roll no: 06-23 BS(IT) 7th semester

2. Government Grants The entrepreneur can sometimes obtain federal grant money to develop and launch an innovative idea. • Small Business Innovation Research (SBIR) • Small Business Technology Transfer (STTR)

3. Small Business Innovation Research (SBIR) • Designed for small business • Created as a part of Small Business Innovation Development Act. • This act provides an opportunity for Small business ,money for research and development. • Offers a uniform method by which each participating agency solicits, evaluates, and selects the research proposals for funding.

4. Federal Agencies participating in small business innovation research program • Department of Defense (DOD) • National Aeronautics and Space Administration (NASA) • Department of Energy (DOE) • Department of Health and Human Services (DHHS) • National Science Foundation (NSF) • U.S Department of Agriculture (USDA) • Department of Transportation (DOT) • Nuclear Regulatory Commission (NRC) • Environmental Protection Agency (NRC) • Department of Education (DOED) • Department of Commerce (DOC)

5. SBIR • Each agency develop topics and publishes solicitations describing the R&D topic it will fund. • Small businesses submit proposals directly to each agency using the required format, which is some what standardized, regardless of the agency. • Each agency, using its established evaluation criteria, evaluate each proposal on a competitive basis and makes awards through a contract, grant or cooperative agreement.

6. SBIR Tree Phases Phase I • Awards up to $100,00 for six months for feasibility-related experimental or theoretical research • Determine the technical feasibility of the research effort • Assess the quality of company’s performance through a relatively small monetary commitment. • Some projects are selected.

7. SBIR Three phases Phase II • Phase II awards up to $750,000 for 24 months for further research and development. • The money is to be used to develop prototype products or services. • A small business receiving a Phase II developed a proposal of sound scientific and technical merit, and obtained a commitment for follow-on private sector financing in phase III for commercialization.

8. SBIR Three phases Phase III • Does not involve any direct funding from the SBIR program. • Funds from the private sector or regular government procurement contracts are needed to commercialize the developed technologies in phase III.

9. Small Business Technology Transfer (STTR) • STTR established by the Small Business Technology Transfer Act of 1992. • The procedure for obtaining an STTR award is the same as for the SBIR award. • Five agencies are participate in the STTR program. These are: • (DOD), (DOE), (DHHS), (NASA), (NSF) • All these, except (DHHS), also participate in the SBIR program.

10. Comparison of SBIR and STTR • In SBIR the principal investigator must be employed by company more than 50% of her or his time during award. • In STTR, for the duration of the project, there is no employment stipulation. • In STTR programs requires research partners at universities or other non profit institutions, with at least 40% of the research conduct by the small business and at least 30% conducted by the partnering non profit institution. • SBIR program has a maximum of 33% in phase I and 50% in phase II in consulting costs.

11. Other Government Grants • There are other grants available to the entrepreneur at the federal, state and local level. • Training grants • Grant incentive programs

12. Private Placement • Another source of funds for the entrepreneur is private investors, also called angels. • Types of investors • Can influence the nature and direction of business • An important point for the entrepreneur to selecting a investor • Some want active involved in the business • Some are more passive • Each investor is primarily interested in recovering his or her investment plus a good rate of return.

13. Private Offerings • A formalized method for obtaining funds from private investors. • Numerous regulations and requirements involved. • Faster and less costly • Sophisticated Investors need access to material information about the company and its management. Who is sophisticated investor? • How many is a limited number? answer: Regulation D

14. Regulation DLaw governing a private offering • Broad provision designed to simplify private offerings • General definitions of what constitutes a private offering • Specific operating rules– Rule 504, 505, 506 • Rules 504, 505, and 506 describe three different types of exempt offerings and set forth guidelines covering the amount of stock that can be sold and the number and type of investors that are allowed under each one.

15. Rule 504 • gives an exemption to private companies that raise no more than $1 million in any 12-month period through the sale of stock. There are no restrictions on the number or types of investors, and the stock may be freely traded. • process is easy enough for a small business owner to complete with the assistance of a knowledgeable accountant and attorney.

16. Rule 505 • enables a small business to sell up to $5 million in stock during a 12-month period to an unlimited number of investors, provided that no more than 35 of them are non-accredited. • According to the SEC rules, individual investors must have either $1 million in assets (other than their home and car) or $200,000 in net annual personal income, while institutions must hold $5 million in assets.

17. Rule 506 • allows a company to sell unlimited securities to an unlimited number of investors, provided that no more than 35 of them are non-accredited. • investors must be sophisticated, or able to evaluate the merits and understand the risks of the transaction. In both of these options, the securities cannot be freely traded.