Ruth Shuman, Ph.D. Program Director Industrial Innovation and Partnerships

1. Webinar PresentationTexas SBIR/STTR Summit and ConferenceThe National Science Foundation’sSmall Business Programs Ruth Shuman, Ph.D. Program Director Industrial Innovation and Partnerships National Science Foundation June 12, 2013

2. The SBIR and STTR Programs Small Business Innovation Development Act of 1982 Small Business Innovation Research (SBIR): Requirement to set aside 2.5% (now, 2.7%) for all agencies with > $100M of external R&D funding Small Business Technology Transfer (STTR): Requirement to set aside 0.3% (now, 0.4%) for all agencies with > $1B of external R&D funding Industrial Innovation & Partnerships – Small Business Partnerships

3. The SBIR/STTR Program Goals • Intended to stimulate technological innovation in the private sector • Primary goals: • Strengthen the role of small business in meeting Federal research and development needs • Increase the commercial application of federally-supported research results • Encourage participation by socially and economically disadvantaged, and women-owned, small businesses Industrial Innovation & Partnerships – Small Business Partnerships

4. SBIR/STTR Program Fundamentals • Provides early-stage funding for R&D on high-risk technologies with high potential for economic/societal benefits • Targets early-stage development of technology on a commercial path • Seeks to fund transformational, game-changing technology • Looks for significant market opportunity • Awards based on both technical and commercial merit • Values academic collaboration/translation • Strong focus on commercialization • Encourages ties to private sector

5. NSF Program Focus • Broad, market-driven technology topics: You identify the problem/opportunity, propose the technological solution, and devise your business strategy • NSF is an investor, not the “final customer” (NSF is not buying your technology/product/service) • NSF wants to see you commercialize your research successfully • NSF provides incentives to encourage you to find additional investment Industrial Innovation & Partnerships – Small Business Partnerships

6. NSF Research Funding Innovation Cycle PFI : BIC / AIR I-Corps STTR GOALI I/UCRC STC SBIR ERC Industry Investors Valley of Death Foundations Small Business University Discovery Development Commercialization Original Chart by Angus Kingon

7. Reasons to Seek SBIR/STTR Funding • Provides “pre-seed” funding to demonstrate proof-of-concept • Non-dilutive investment; not a loan/equity-free • Provides validation, recognition, visibility • May be leveraged to attract investment/partnerships • Allows small business to retain IP • Values/encourages/facilitates partnerships, which enable success Industrial Innovation & Partnerships – Small Business Partnerships

8. SBIR Award Information • Type of Award – 6 month, fixed-price grant • Award Amount: • Phase I not to exceed $150,000 • Phase II not to exceed $750,000 • Estimated Number of Awards – 200 Awards (pending availability of funds) • No obligation to make a specific number of awards • Anticipated Phase I Funding Amount - $30,000,000 (pending availability of funds) Industrial Innovation & Partnerships

9. STTR Award Information • Type of Award – 12 month, fixed-price grant • Award Amount: • Phase I not to exceed $225,000 • Phase II not to exceed $750,000 • Estimated Number of Awards – 50 Awards (pending availability of funds) • No obligation to make a specific number of awards • Anticipated Phase I Funding Amount - $11,250,000 (pending availability of funds) Industrial Innovation & Partnerships

10. Eligibility Information • Organization Requirements: • Proposals only may be submitted by companies that qualify as a small business • For profit business • Fewer than 500 employees • Located in the US • 51% owned and controlled by US individuals • No more than 2 proposals total per company during the SBIR/STTR cycle ending June 13, 2013 Industrial Innovation & Partnerships – Small Business Partnerships

11. Eligibility Information • Principal Investigator (PI) Limit: • Primary employment of the PI must be with the small business at the time the award is made • Defined as 51% (of a 40 hour work week) or greater • The PI must commit at least 1 calendar month to the SBIR Phase I project; 2 calendar months to the STTR Phase I project • No more than 1 proposal per PI or Co-PI Industrial Innovation & Partnerships – Small Business Partnerships

12. SBIR Consultant/Subaward Information • Small Business must perform at least 2/3 of the research, as determined by the budget • Consultants and/or subawardees may perform up to 1/3 of the research, as determined by the budget Industrial Innovation & Partnerships – Small Business Partnerships

13. STTR Consultant/Subaward Information • Collaboration with a research institution isrequired • A minimum of 40% of the research must be performed by the company, as measured by the budget • A minimum of 30% of the research must be performed by the collaborating research institution, as measured by the budget Industrial Innovation & Partnerships

14. Other ImportantRequirements • The submission of the same project to both the SBIR and STTR programs is strongly discouraged. • For STTR proposals, it is highly desirable that the core innovation be linked to fundamental research previously funded by NSF. Industrial Innovation & Partnerships – Small Business Partnerships

15. Prior to Submission • Communicate with the Program Director • Preferred method – e-mail • Send 1-2 page summary that discusses: • Company/team (including experience with previous SBIR awards) • Market Opportunity • Technology/innovation • Competition • Collaborators Industrial Innovation & Partnerships – Small Business Partnerships

16. Proposal Guidelines • Phase I • Feasibility and proof-of-concept research focus • Must receive a Phase I award to be eligible to submit a Phase II proposal • Phase II • Prototype development and testing research focus NSF funding may be used for R&D only! Industrial Innovation & Partnerships – Small Business Partnerships

17. Funding Criteria • We fund high-risk, high-paybackinnovations • With strong potential for commercialization • That demonstrate strategic partnerships with research collaborators, customers, industry partners, and equity investors • We do NOT fund • Basic research • Evolutionary optimization of existing products and processes or modifications to broaden the scope of an existing product, process or application • Analytical or “market” studies of technologies Industrial Innovation & Partnerships – Small Business Partnerships

18. 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 Impact – Potential impact on society • Commercial and societal benefits • Marketable product • Commercialization track record • Business expertise • Competitive advantage Industrial Innovation & Partnerships – Small Business Partnerships

19. Commercial Potential • Scope and Nature of the Business Opportunity: • The addressable target market opportunity • Is this an enabling technology • The company/team • Business and commercialization experience • The product features and benefits compared to the competition • Intellectual Property (IP) position • Financing and revenue model • Positioned to attract additional investment Industrial Innovation & Partnerships – Small Business Partnerships

20. SBIR Topics • Four broad topic areas: • Biological and Chemical Technologies (BC) • Education Applications (EA) • Electronics, Information and Communication Technologies (EI) • Nanotechnology, Advanced Materials, Manufacturing (NM) Industrial Innovation & Partnerships – Small Business Partnerships

21. STTR Topic • Fall topic(s) to be announced Industrial Innovation & Partnerships – Small Business Partnerships

22. BC Subtopic Description • Biological and Chemical Technologies (BC): • Biological Technologies • Biomedical Technologies • Environmental Technologies • Chemical Technologies Industrial Innovation & Partnerships – Small Business Partnerships

23. EA Subtopic Description • Education Applications (EA): • Pre-College Education • College and Post-College Education • STEM Educational Gaming • Entrepreneurial Education • Tools for Learning and Assessment Industrial Innovation & Partnerships – Small Business Partnerships

24. EI Subtopic Description • Electronics, Information and Communication Technologies (EI): • Services: Security & privacy; search & mining; digital arts; financial • Applications: Mobile; collective intelligence; design/test; virtualization • Systems: HCI; robotics; wireless; instruments; energy management • Components: MEMS; sensors; optoelectronics; RF; packaging • Devices: Optoelectronics; IC design; other novel devices Industrial Innovation & Partnerships – Small Business Partnerships

25. NM Subtopic Description • Nanotechnology, Advanced Materials, and Manufacturing (NM): • Nanomaterials, Nanomanufacturing, Nanodevices, and Nanoinstrumentation • Electronic, Optical, and Magnetic Materials • Materials for Energy Generation and Storage • Structural Materials, Coatings, and High-Temperature Materials • Sustainable Materials and Smart Materials • Manufacturing Equipment and Processes Industrial Innovation & Partnerships – Small Business Partnerships

26. Logistics • SBIR solicitation released twice per year (Sept. and March) • STTR solicitation once or twice per year • Proposal deadlines are ~ 3 months after solicitation release • All proposals are externally-reviewed by domain experts • Reviewers: Academics, investors, industry, entrepreneurs • Decision made 4-5 months after proposal receipt • Cash in the bank 7months after proposal receipt • Post-award, immersion in the NSF’s assistance programs Industrial Innovation & Partnerships – Small Business Partnerships

27. Guide to Proposal Submission Please use the step-by-step user guide for entering a SBIR or STTR Phase I proposal in NSF’s FastLane system. http://www.nsf.gov/eng/iip/sbir/FastLane_Step_by_Step_Guide_Phase_I_updated_October_2011.pdf • You must register your company and PI in FastLane prior to submitting your proposal, a process that could take 3-5 days; • You are required to provide a Dun and Bradstreet Data Universal Numbering System (DUNS) number; • You also are required to register with the System for Award Management database, SAM (www.sam.gov); • And, you are required to register in the SBA Company Registry. Industrial Innovation & Partnerships – Small Business Partnerships

28. Awardee Demographics Company data from FY 2012 Phase I awardees: • 86% of Phase I awardees have 10 or fewer employees • 90% of Phase I awardee companies were incorporated since 2007 • 73% of Phase I awardees have never received a Phase II award from any agency University ties and lineage of Phase II projects (National Academies Study, 2007): • 37% involve faculty members • 27% involve graduate students • 25% rent/use university facilities • 17% issue a subcontract to a university Industrial Innovation & Partnerships – Small Business Partnerships

29. Program Statistics – Past 3 Years • Phase I: On average, 2,112 proposals received with 338 awards made(16% funding rate) • Phase II: On average, 303 proposals received with 118 awards made(39% funding rate) • Leverage: For FY2012, the Phase IIB awards (48) were based on $94 million in third-party investment (the vast majority private funds) • 10-15 acquisitions of Phase II grantees each year Industrial Innovation & Partnerships – Small Business Partnerships

30. Questions? National Science Foundation http://www.nsf.gov/div/index.jsp?org=IIP Thank You! Industrial Innovation & Partnerships – Small Business Partnerships