Federal Funding Opportunities for Research, Development & Commercialization

1. Federal Funding Opportunities for Research, Development & Commercialization Robert G. KispertDirector of Cluster DevelopmentJohn Adams Innovation Institute

2. The Problem: I have this great idea for an exciting new product. However, the three F’s are still recovering from the dot-bomb, the banks won’t let me use my credit cards for business expenses, and the only VC I know says to come back when I’ve got a working prototype, a management team, and a business plan. ???

3. Who are you? • Start-up? • SBIR/STTR • Established small business w/ research capability? • SBIR/STTR • Broad Agency Announcements (BAA’s) • Other - tbd • Established small business w/o research capability? • STTR • University Faculty? • STTR (with small business) • Broad Agency Announcements (BAA’s) • Guide to Grants and Contracts

4. SBIR = Small Business Innovation Research • The world’s biggest seed capital fund • Invests over $2 billion annually • Best terms in town • Proven track record • Even start-ups should apply

5. Billions served… • Created in 1983 to provide small technology companies access to federal R&D funding • 2 ½% of federal extramural R&D budget • Over 50,000 projects, 12,500 firms • 100’s of MA companies, 1000’s of projects

6. Massachusetts SBIR Recipients

7. SBIR per Capita

8. Phase I-II Conversions

9. Recent Awards - Amherst • 2000-2005 (9 companies) • 36 Phase I Awards - $3.3 million • 15 Phase II Awards – $8.2 million • 2006-2008 (7 companies) • 14 Phase I Awards - $1.3 million • 9 Phase II Awards – $4.6 million

10. A term sheet not even your mother can match! • Federal government will pay you to develop the technology • They may even be your first customer • You own the Intellectual Property • Repayment terms = taxes on future profits • No debt - no equity • You can come back for more – even if you fail

11. An exciting track record! • Over 400 publicly traded companies trace roots through SBIR program • SBIR companies are good M&A targets • 4 MA companies acquired - $2.7B total • Local company developed helicopter maintenance system that saves DoD $1B • Another local SBIR awardee developed the artificial heart

12. A program for start-ups! • Nationally, 1/3 of all awards are made to companies with no prior federal R&D contracts • Administrative burden is manageable • “Prior experience with the government” is not an evaluation criterion (although there is no substitute for “Know thy customer”)

13. SBIR supports: • R&D in support of agency needs or missions • Applied research to establish the technical feasibility of a novel concept • Development leading to prototype fabrication and test

14. SBIR does not support: • Market research/ marketing/ sales • Product development • Clinical Trials • Commercialization of a previously developed product • Setting up a home office, car wash, etc • Reinventing the wheel

15. Dept of Agriculture Dept of Commerce Dept of Defense $$ Dept of Education Dept of Energy Dept of Health & Human Services $$ Dept of Homeland Security Dept of Transportation Environmental Protection Agency National Science Foundation NASA Who funds?

16. Who is eligible? • Small US owned companies (<500 employees) (Must be at least 51% owned by US individuals or subsidiary of an otherwise eligible small business) • Principal Investigator (NIH is different) • Bachelor’s degree with an extensive research reputation • Master’s degree with considerable experience • PhD with business sense

17. What? • Innovation • Phased Development: • Phase I – Proof of Concept • Phase II – Prototype Development • Phase III – Commercialization (w/o SBIR $) • Agencies only fund what meets their objectives/needs

18. How? • Respond to agency solicitations • NIH & DoD – 3+ times a year • NSF & EPA – 1-3 general or special focus solicitations • All others – annual solicitation • Follow the directions! • Requirements for PI (SBIR vs. STTR)

19. How much? • Phase I – typically $50-100k, 6 months • Some DoD programs have options • NIH is funding substantially higher amounts, up to 1 year • Phase II – typically $250-750k, 2 years • Some agencies require/encourage cost sharing • NIH is putting real $$$ on the table • FAST Track – DoD, NIH • Options – additional funding to bridge gaps or accelerate commercialization

20. SBIR(All agencies) May subcontract up to 30% of Phase 1 effort to others PI must be employee of small business 2 ½% of agency extramural research budget STTR (DoD,NIH,NSF,DoE) Must subcontract 30-60% of Phase 1 effort to research institution PI can be employee of research institution 0.3% of agency extramural research budget SBIR vs STTR

21. Hints & suggestions • Key elements for your proposal • Problem definition (in the customer’s eyes) • Concept definition (build a picture that the reviewer can see – emphasize the novel) • Analyze/rationalize – show how your concept will meet the customer’s requirements • Conduct experiments/build a breadboard as part of Phase I • Prepare your Phase I proposal so you can declare success at the end of the program

22. More hints & suggestions • Meet your technical monitor • Technical monitor vs. contracting officer • He/she has a vested interest in your success • You need to know how your program fits into the context of the agency’s plans • Key to Phase II and Phase III follow-on with the agency

23. SBIR is about commercialization! • Success in SBIR = commercializing the technology • Creating the knowledge that the agency needs to support regulations/operations • Creating and bringing to market products that meet the federal customer’s requirements • Creating and bringing to market products that meet the needs of the commercial marketplace

24. Keys to Commercialization! • You need a strategy • Partner, partner, partner • Start early – like in the Phase I proposal • Learn who all the stakeholders are in your technology – who can make or break you? • Learn all you can about what drives your market(s), how to quantify it • Start figuring out the answer to the question: How will the customer make his/her purchasing decision?

25. BAA’s, etc. • SSC-Natick - https://www3.natick.army.mil/ • Army Medical R&D Command – http://www.usamraa.army.mil/pages/baa_paa/baa_10_1.cfm • DARPA - http://www.darpa.mil/openclosedsolicitations.html • NIH Guide to Grants & Contracts http://grants1.nih.gov/grants/guide/index.html

26. Reauthorization • SBIR sunsets on Oct 30, unless reauthorized or another Continuing Resolution to extend • Strong support for program, but controversy over: • VC ownership • Requirement for Phase 1 • Size of awards • Length of reauthorization • Preferential treatment of disadvantaged populations • Stay tuned!

27. Other Resources • National SBIR Conferences • National SBIR Fall 2009 ConferenceReno, NV, 11/2-5/2009 • NIH SBIR Conference – July 2010 • Other • http://www.zyn.com/sbir/ • http://www.sba.gov/aboutsba/sbaprograms/sbir/index.html • http://www.sba.gov/idc/groups/public/documents/sba_program_office/sbir_psa_08_sbir_sttr.pdf

28. Current Solicitations • NOAA FY-10 SBIR     Opens 10/14/09 Closes 1/14/10 • DOT SBIR     Opens 10/01/09 Closes 11/16/09 • DOE FY-10 SBIR/STTR     Opens 9/24/09 Closes 11/20/09 • NSF FY-10 SBIR     Opens 11/3/09 Closes 12/3/09 • NSF FY-10 STTR     Opens 10/17/09 Closes 11/17/09   

29. Massachusetts Resources

30. Technical Assistance • MTC – Research Opportunity Workshops, Conferences, pre-submittal proposal review • Massachusetts Technology Development Corporation – Phase III Commitments, VC • Massachusetts Small Business Development Center Network & Procurement Technical Assistance Center – business plan assistance, procurement assistance • Get to know the infrastructure – Industry councils, venture forums, technical societies, consultants, attorneys, accountants

31. Precision Manufacturing Regional Alliance Project • Led by the Regional Employment Board of Hamden County • Partners include U Mass Amherst, STCC, HCC, WMEDC, WMNTMA • Objectives • Strengthen partnerships among sector companies and with local organizations to address current industry-wide issues, including workforce development and identification of new market opportunities. • Improve industry capability to engage new markets by enhancing its infrastructure for technology development and integration through Technology Innovation Forums and a pilot Technology Transfer • Directly improve industry capacity for innovation by providing applications engineering support to assist firms in adopting new technologies, improving productivity, and expanding advanced manufacturing process, enabling companies to move up the supply-chain and tailor new manufacturing applications directly to growth markets, including medical devices, laboratory instrumentation, and clean energy. • Assess the feasibility of developing a Center for Advanced Precision Manufacturing Technology that will serve as a sustainable industry “focal point” to provide services and lead growth initiatives

32. M2D2 • Objective – help medical device entrepreneurs cross Valley of Death • A partnership of U Mass Lowell, U Mass Medical School, Industry Executives, Suppliers, Investors • Uses funding from SBIR/STTR programs, as well as state resources, to support entrepreneurial and prototype development, leading to private investment

33. An Example from the Current Department of Energy SBIR Solicitation

34. DOE SBIR/STTR Solicitation • Phase 1 - $36 MM > ~ 360 awards @ $100k for 9 months • Phase 1 Success Rate – 280 out of 1494 = 18.7% (MA 48 out of 173 = 27.7%) • Phase II - $750k for 2 years • Phase II Success Rate – 40% • Solicitation Released – September 24, 2009 • Proposals Due – November 20, 2009 • Award Date – June 2010 • Cost sharing – permitted but not required

35. SBIR or STTR? • SBIR – minimum 2/3 of research or analytical work must be performed by small business – PI employed by company • STTR – minimum 40% of research or analytical work must be performed by small business, at least 30% of work performed by single research institution – PI can be employed by either company or research institution

36. STTR - Research Institution • Non-profit research institution • Non-profit university or college • Non-profit medical or surgical college • Contractor-operated FFRDC or Federal Lab • Government owned/operated labs are not eligible (e.g., NETL, Natick)

37. DoE Solicitation (Partial) ENERGY EFFICIENCY AND RENEWABLE ENERGY Hydrogen, Fuel Cells and Infrastructure Technologies Program Advanced Solar Technologies Advanced Thermoelectric Technologies Geothermal Energy Technology Development Production of Biofuels from Cellulosic Biomass Advancements for Subcomponents Critical to Electric Drive Vehicle Power Inverters and Motors Wind Energy Technology Development

38. DoE Detailed Topics Production of Biofuels from Cellulosic Biomass a. Biomass Moisture Management and Drying b. Least-Cost Biomass Format for Efficient Logistics c. Separation Technologies for Biochemical Conversion of Lignocellulosic Feedstocks d. Oil Extraction from Microalgae e. Pyrolytic Conversion of High Moisture Content Biomass to Bio-Oil f. Distributed Sorted Municipal Solid Waste Conversion to Biofuels

39. Example Topic - Context f. Distributed Sorted Municipal Solid Waste Conversion to Biofuels— In 2007, 137.2 million tons of Municipal Solid Waste (MSW) went to landfills in the U.S. Organic materials are the largest component of MSW. In 2007, paper and paperboard accounted for 33 percent, with yard trimmings and food scraps accounting for 25 percent. While significant improvements have been made in the amount of recycling and combustion for heat, significantly more could be done to reduce landfills and municipal solid waste. One such opportunity is to use the organic MSW as a renewable feedstock for thermochemical conversion to a fuel, thereby reducing dependence on foreign oil while positively impacting landfills.

40. Topic -Technical Background Thermochemical conversion processes, which include gasification and pyrolysis, are characterized by higher temperatures and faster conversion rates than typically observed in the biochemical conversion of feedstocks. Although thermochemical conversion is best suited for lower moisture feedstocks, it can readily convert the entire organic portion of various feedstocks to bio-intermediates and carbonaceous solids. Subsequently, the bio-intermediates can be converted to a range of biofuels such as mixed alcohols, Fischer-Tropsch fuels, green diesel, green gasoline, and green jet fuel. Therefore, grant applications are sought to develop a distributed thermochemical technology to convert several different compositions of sorted-MSW.

41. Topic - Requirements Proposed approaches must (1) identify which sorted-MSW materials would be most suitable for conversion; (2) deal with a myriad of impurities in the feedstock, which would require the development of extremely robust gasification and fuel synthesis catalysts (or pyrolysis and upgraded catalysts); (3) test the thermochemical conversion process and fuel synthesis catalysts with various sorted-MSW, in order to represent the variability of sorted-MSW in different regions of the country; and (4) ensure that emissions from the thermal conversion of sorted-MSW will meet all federal and local regulations. In Phase I, a small bench-scale system should be designed and tested with one type of sorted MSW to demonstrate feasibility. In Phase II, a demonstration modular unit should be tested with a markedly different sorted-MSW.

42. References Subtopic f. Distributed Sorted Municipal Solid Waste Conversion to Biofuels 1. US EPA 2008 “Municipal Solid Waste Generation, Recycling, and Disposal in the United States: Facts and Figures for 2007.” (Full text available at: http://www.epa.gov/waste/nonhaz/municipal/msw99.htm) 2. California Integrated Waste Management Board “Conversion Technologies - Thermochemical Conversion Processes.” (Full text available at : http://www.ciwmb.ca.gov) 3. Los Angeles County “Conversion Technology Demonstration Project – Overview: Conversion Technology Environmental Fact Sheet.” (Full text available at: http://www.socalconversion.org/pdfs/Conversion_Technology_Environmental_Factsheet.pdf) 4. Boerrigter, H. and H. den Uil. “Green Diesel from Biomass via Fischer-Tropsch Synthesis: New Insights in Gas Cleaning and Process Design.” Pyrolysis and Gasification of Biomass and Waste, Expert Meeting, Strasbourg, France, 2002. (Full text available at: http://www.senternovem.nl/mmfiles/28277_tcm24-124223.pdf)

43. What questions would you ask yourself and your colleagues if you were considering developing this product and entering this market?

44. What resources/partners would you need if you wanted to be successful in developing/commercializing this technology and addressing the market opportunity?

45. What questions would you ask the company if you were a potential investor in a company pursuing this market opportunity?

46. Proposal a. Cover page – Provide company and project information including company name and address, principal investigator, project title, topic number and subtopic letter. b. Proprietary Data Legend – If applicable. See Part VIII, Sections D and F. c. Identification and Significance of the Problem or Opportunity, and Technical Approach – Define the specific technical problem or opportunity addressed by your application. Provide enough background information so that the importance of the problem/opportunity is clear. Indicate the overall technical approach to the problem/opportunity and the part that the proposed research plays in providing needed results. d. Anticipated Public Benefits – Discuss the technical, economic, social, and other benefits to the public as a whole anticipated if the project is successful and is carried over into Phases II and III. Identify specific groups in the commercial sector as well as the Federal Government that would benefit from the projected results. Describe the resultant product or process, the likelihood that it could lead to a marketable product, and the significance of the market. e. Technical Objectives – State the specific technical objectives of the Phase I effort, including the questions it will try to answer to determine the feasibility of the proposed approach.

47. Proposal - cont f. Phase I Work Plan – Provide an explicit, detailed description of the Phase I research approach and work to be performed. Indicate what will be done, by whom (small business, subcontractors, research institution, or consultants), where it will be done, and how the work will be carried out. If the applicant is making a commercial or in-kind contribution to the project, please describe in detail here. The Phase I effort should attempt to determine the technical feasibility of the proposed concept which, if successful, would provide a firm basis for the Phase II grant application. Relate the work plan to the objectives of the proposed project. Discuss the methods planned to achieve each objective or task explicitly and in detail. This section should be a substantial portion of the total grant application.

48. Proposal - Cont g. Phase I Performance Schedule – Briefly describe the important milestones and the estimated percentage of time for completing each task described in the work plan. h. Related Research or R&D – Demonstrate knowledge of key recent work conducted by others in the specific area of the proposed project. If not already addressed, describe significant research that is directly related to the grant application, including any conducted by the Principal Investigator or by the applicant organization. Describe how it relates to the proposed effort and any planned coordination with outside sources. Applicants should be or become familiar with the references provided following each topic description. i. Principal Investigator and other Key Personnel – The Principal Investigator (PI) must be knowledgeable in all technical aspects of the grant application and be capable of leading the research effort and meet the requirements described in Part III, D. Describe the effort to be performed by the PI during the project.

49. Additional Reqmts • Facilities & Equipment (Available & to be acquired/leased) • Consultants and Subcontractors (need Letter of Commitment from Research Institution for STTR) • Bios • Budget

50. Commercialization Plan • Company background – including commercialization history • Market assessment – size, sales & market share first 5 years • Intellectual property – plan to protect IP