Demystifying Government and Stimulus Funding for Your Startup

1. Demystifying Government and Stimulus Funding for Your Startup Presented by: Jill Fishbein: Carr & Ferrell LLP Mark Perutz: DBL Investors September 9, 2009

2. U.S. Small Business Administration (SBA) Regional Programs in California California Enterprise Zones Program City Development Agencies “Green” programs Stimulus Package Funding/Federal Budget Overview Case Studies (redacted) Medical Informatics (redacted) Energy Efficient Product After School Education Center

3. Definition: Must be at least 51% owned and controlled by a woman or women. Must be a US citizen or permanent resident. Certification: (recommended, but not required) 1.) Non-government, non-profit organization certification The National Women’s Business Owners’ Corporation (NWBOC) – Women’s Business Enterprise Certification Program -http://www.nwboc.org/section_apply Women's Business Enterprise National Council -http://www.wbenc.org 2.) Self Certification Women-Owned Businesses

4. Qualifications: “Small business” (independently owned and operated, organized for profit, and not dominant in its field.) Owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of the United States Application: http://www.sba.gov/aboutsba/sbaprograms/8abd/faqs/index.html SBA-designated minority groups: Black Americans Hispanic Americans Native Americans (American Indians, Eskimos, Aleuts, and Native Hawaiians) Asian Pacific Americans Members of other groups designated by the SBA Minority-Owned Businesses

5. Loan Providers: Commercial lenders, not the government, who agree to meet the SBA qualifications as outlined in the 7(a) Guaranty Loan program Partial guaranty by the SBA to the lender: Loan Parameters: 20% owners required to personally guarantee SBA loans SBA size standards, for-profit, able to demonstrate repayment Character considerations Maximum loan amount is $2,000,000 Maximum maturity is generally 7 years Maximum interest rate for fixed rate loans of $50,000 or more is Prime Plus 2.25% if the maturity is less than 7 years, and Prime Plus 2.75% if the maturity is 7 years or more. (Variable rate loans may be pegged to either the lowest prime rate or the SBA optional peg rate.) SBA Section 7(a) Guaranty Loan Program

6. 2009 Section 7(a) Updates: The American Recovery and Reinvestment Act of 2009 set aside $375 million for the SBA to guarantee up to 90% of certain loans and eliminate loan fees. SBA has used over 55% of the funds to date. The August 24, 2009Wall Street Journal “Six Ways to SpeedUp Loan Approval”: Be ready with the past 3 years' tax returns and current financial statements Choose an SBA-preferred lender Find a lender that fits with your business type Apply to a few lenders Offer more than the required 10% down payment to help approval Get help from a business advisor or volunteer professional affiliated with SCORE SBA Section 7(a) Loan Initiatives

7. Benefits: No repayment No interest payments No equity rights Peer review – agency’s technical and scientific experts Validation to other investors Government contract advantage Billions of $ in program Small Business Innovation Research Grants Department of Defense.  September 8 2009. <http://www.acq.osd.mil/osbp/sbir/overview/index.htm>

8. Phase I SBIR: Contract proposal is no more than 25 pages. Address area identified by the Agency Awards are competitive; reviewed by Agency’s technical and scientific experts Phase II SBIR: Awards are based on Phase 1results and technical & scientificmerit of Phase II proposal Consideration of commercialapplication Small Business Innovation Research Grants Department of Defense.  September 8 2009. <http://www.acq.osd.mil/osbp/sbir/overview/index.htm>

9. Designed to join high technology, entrepreneurial start-up businesses with innovative scientific and engineering ideas of universities and other research institutes solve challenging scientific and engineering problems commercialization cooperative R&D projects – small business and research institutions Small Business Technology Transfer Grants Department of Defense.  September 8 2009. <http://www.acq.osd.mil/osbp/sbir/overview/index.htm>

10. California Enterprise Zones Program: Targets economically distressed areas throughout California. 42 designated Enterprise Zones in California (SF, SJ, Oakland, Richmond, Watsonville, Salinas) Enterprise Zone companies are eligible for substantial tax credits and benefits: Hiring Credits - Firms can earn up to $35,000 in state tax credits for each qualified employee hired. (50% of the employee’s 1st year wages, 40% for the 2d year, and 30%, 20% and 10% over the remaining three years) Sales /Use tax credits on purchases of up to $20 million/year of qualified machinery (up to $1.8MM/year); Up-front expensing (accelerated depreciation) of certain property (up to $20,000/year); Unused tax credits can be applied to future tax years, stretching out the benefit of the initial investment; Enterprise Zone companies can earn preference points on state contracts. Regional Programs In California

11. City Development Agencies Economic Development Agencies (Oakland/OBDC, SF/Mayor’s Office) Small business loans from City or HUD funds for companies located in the city or parts of the city, may have entry-level job creation requirement Redevelopment Agencies (SF, SJ, Oakland, Pittsburg, Union City, etc…) Once redevelopment area is created all increases in property tax (“tax increment”) is set aside for redevelopment: reduced rent, tenant improvements, loans, grants “Green” Programs Recycling Market Redevelopment Zones : low-interest loans to businesses that use materials from the waste stream to manufacture their products and are located in one of 33 zones in CA (Oakland/Berkeley, So. Alameda, Contra Costa, San Jose). California Department of Conservation: $10MM in annual in Market Development and Expansion Grants grants for companies that increase recycling rates. California Energy Commission’s Research Development & Demonstration Division distributes $83.5 million in grants and contracts for energy efficiency/renewable energy/cleantech annually (formerly called PIER program). Regional Programs In California (cont’d)

12. Trillions of dollars to be circulated into the U.S. economy through: government grants spending tax incentives tax rebates social programs Research and development projects and infrastructure projects: $59 billion allocated to health care $43 billion allocated to energy programs $111 billion allocated to infrastructure and science projects American Recovery and Reinvestment Act of 2009

13. Federal Budget Process Overview Source: Wall Street Journal

14. Case Studies

15. Case study 2 MEDICAL INFORMATICS Register for Government Funding

16. The Product Jim and George have designed microchips that can be attached to a variety of tags worn or carried by patients; whether dog tags, medical bracelets, car key fobs, etc. These microchips are designed to hold healthcare data that can be scanned by medical personnel who can then upload and read the patient’s medical history, thereby making medical decisions based on the patient’s actual history. This microchip can be designed to present information in a variety of formats that interface with most hospital records information software and can be attached to a variety of static devices. Target Market Those who benefit most from this innovation are patients and medical treatment personnel at local hospitals and clinics. Additionally, this product will serve the members of our armed services and veterans of all ages because it can be designed to sync perfectly with the Veterans Health Information Systems and Technology Architecture (VistA) for use on dog tags and ID cards. Goals Our goal is to achieve funding for research and product development on device attachment standards and synchronization methods for the variety of information systems and software already in use by the general medical and government services community.

17. Register for Government Funding Step 1: Log On to www.Grants.gov Step 2: Click “Get Registered” Step 3: Register Organization

18. Register for Government Funding Registration Entails: • DUNS Number: via phone or online • CCR: Central Contractor Registration • User Name & Password • AOR Authorization e) Track AOR Status

19. Case study 4 ENERGY EFFICIENT PRODUCTS Sample of a Government Request for Information or Request for Proposal

20. Agency Identifies which Government Agency is Sponsoring Identifies which Subdivision of the Agency is Sponsoring Category & Solicitation ID Specific Scientific Area of Expertise Solicitation Identification Description or Issue to be Resolved Usually a General Overview Due Dates When Request was Initiated and the RFI/RFP Due Date Any Additional Dates Where Relevant Updates Were Made Components of RFI and RFP • Specific Request(s) for Information • Any Special Instructions or Information Needed • Format Guidelines • Guidelines and Format Change from Project to Project and Department to Department • Must Adhere to All Requests • Submission Information • Where to Send or to Whom to Send RFI/RFP

21. DEPARTMENT OF DEFENSE (DEFENSE ADVANCED RESEARCH PROJECTS AGENCY (DARPA)) Novel Energy Storage Systems (NESS) Solicitation Number: DARPA-SN-09-62) The Defense Sciences Office (DSO) of the Defense Advanced Research Projects Agency (DARPA) is seeking ideas that may support a new DARPA program to demonstrate innovative concepts and technologies that dramatically increase the Department of Defense's (DoD's) technology for storage of electrical energy. It has been well documented in briefings from both the Defense Science Board as well as the Department of Energy that there exists a disparity in our country's energy storage capabilities. The disparity occurs on two levels; storage devices that can deliver large amounts of electrical power (namely capacitor technologies) only do so over short periods of time (less than seconds); and storage devices that store larger amounts of electrical energy (namely battery technologies) but in practice do not deliver large amounts of power in short bursts without it negatively effecting their lifetime. Current materials and fabrication techniques have yet to facilitate a solution to this energy storage problem. Components of RFI and RFP

22. Posted Date: August 24, 2009 Original Response Date: Sep 09, 2009 4:00 pm Eastern Current Response Date: Sep 09, 2009 4:00 pm Eastern Description: DARPA is interested in detailed submissions that provide new ideas on approaches to materials and fabrication techniques used in energy storage devices. These storage devices must possess potential to radically change the state-of-the-art with respect to responsiveness, specific power, and energy density. Ideas related to advances of traditional technologies such as batteries, capacitors, and mechanical energy storage devices should not be submitted. Requested Information: DARPA appreciates responses from all capable and qualified sources including, but not limited to, universities, university affiliated research centers, and private or public companies. To ensure that all technically relevant aspects of the Request for Information (RFI) are fully addressed, technologies and capabilities should target the following criterion: Novelty: Of particular interest are novel materials and methods for high density energy storage. Intellectual property should be clearly established. Specifically excluded from this RFI are iterative improvements on current energy storage technologies and non-scalable technologies. Any ideas submitted should be revolutionary in approach, and submitters should clearly indicate how their Novel Energy Storage System (NESS) radically shifts the traditional paradigms of energy storage. Capacity: Any NESS concepts submitted must display revolutionary improvements over state-of-the-art devices in both specific power and energy density. Efficiency: Any NESS concepts submitted must also address the underlying science, limitations, and the expected performance. Primary data is strongly encouraged. Resiliency: NESS concepts should have the ability to store energy in extreme environments with low losses and limited effect to operational lifetime. Response time: One of the key objectives of this RFI is to explore storage technologies that can provide power on demand without detriment to operational lifetime or device capacity. Market readiness: A goal of this RFI is to identify scalable NESS concepts for use in electronic systems at all levels from the base to the soldier in the field. If available information describing a pathway to production is relevant then it should be included. A risk analysis specific to the proposed concept including risk factors for both engineering and economical aspects of the technology is also encouraged. Components of RFI and RFP

23. Instructions To Responders:When responding to this RFI, please include examples of current and previous work that have enabled the technology. Experimental demonstration of NESS concepts, models, and/or information about currently licensed products is of particular interest. Acknowledged technological barriers that should be addressed include scientific development and optimization, scale-up and manufacturing, limits on operational conditions, as well as expected device operational lifetime. An analysis of limiting factors such as materials, chemistry, and/or engineering required for the proposed concept should be highlighted. Respondents are encouraged to be as succinct as possible while at the same time providing actionable insight. Format Responses should adhere to the following formatting and outline instructions: Written submission format specifications include 12 point font, single spaced, single-sided, and 8.5 by 11 inches paper, with 1-inch margins. All submissions must be electronic, adhere to the content formatting described below and use one of the following file formats: Adobe PDF or Microsoft Word. Cover Page (1-page) Title Organization Responder’s technical and administrative points of contact (names, addresses, phone and fax numbers, and email addresses) Technical areas (up to 3-pages) A discussion of the capability/challenge addressed (from your perspective) A technical description of the energy storage system including but not limited to its novelty, scalability, and limitations Examples of success Identify current data (if any) Market readiness Components of RFI and RFP

24. Format (Continued) 4.References (1-page) All references to previously published work should be containedwithin this space. Additionally, all interested parties should submit a Microsoft PowerPoint slide presentation, not to exceed 3 slides, addressing the technical aspects of the response. Two slides are to be used for a bulleted summarization of the information presented in the written submission. Figures not included in the written submission may be inserted into the space available on these slides. The third slide is to be a ‘penta-chart’ summarization of the technology (the ‘penta chart’ should follow the format given on WEBSITE). The purpose of this slide is to visually and succinctly indicate the new insights motivating the proposed effort, the main objectives, the underlying technical mechanisms, fundamental assumptions and limitations, key innovations, expected impact, and other unique aspects of the proposal. Components of RFI and RFP Submission: Responses to this RFI should be submitted to DARPA-SN-09-62@darpa.mil. Please refer to the “NESS RFI” in all correspondence. All technical and administrative correspondence and questions regarding this announcement should also be submitted to the same email address. Additional Information: Please see http://www.darpa.mil/dso/solicitations/sn09-62.htm

25. Case study 5 AFTERSCHOOL EDUCATION CENTER California State Grants

26. www.ca.gov/Grants.htmlprovides links by topics and subtopics to various agencies that offer State Grants California State Grants

27. Link to California Department of Education – select “Search CDE Funding” California State Grants

28. Searching CDE Funding California State Grants Search applicable grant

29. Review all eligibility requirements for particular grant. California State Grants Review funding informationand important dates.

30. Application link will connect you to the RFP. California State Grants Request for Proposals

31. RFP describes detailed steps to apply for this grant California State Grants

32. Submission: Intent to submit proposal form California State Grants

33. Submission: Conflict of Interest and Confidentiality Statement California State Grants

34. Submission: Confidentiality and Non Disclosure Agreement California State Grants

35. Submission: Department of Education Computer Security Policy California State Grants

36. Small Business Administration San Francisco District Office 455 Market Street, 6th FloorSan Francisco, CA 94105-2420(415) 744-6820 Thank you!