New Succeeding at Securing Non-dilutive SBIR/STTR Funding for … · 2020. 4. 22. · Succeeding at Securing Non-dilutive SBIR/STTR Funding for University Spinoffs and Advanced Technology
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• ~$3.5 Billion in SBIR/STTR funding in FY 2020• SMALL BUSINESS INNOVATION DEVELOPMENT ACT OF 1982
– P.L. 112-81 (extended program through F. Y. 2017)
• SMALL BUSINESS INNOVATION RESEARCH (SBIR) PROGRAM– Set-aside program for small business concerns to engage in Federal
R&D -- with potential for commercialization. – FY 2020 3.2% SMALL BUSINESS TECHNOLOGY TRANSFER (STTR)
PROGRAM– Set-aside program to facilitate cooperative R&D between small
businesses and research institutions -- with potential for commercialization.
– FY 2020 0.45% of extramural funding
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General Eligibility
• Organized for- profit U.S. business • At least 51% owned by U.S. individuals or small businesses
and independently operated (NIH, CDC, ARPA-E (DoE) are exceptions- can be 51% owned by multiple VC firms)
• Small Business located in the U.S. • P.I.’s primary employment with small business during project
(NIH allows STTR PI to come from University) • 500 or fewer employees (including affiliates)• All SBIR-funded work must be done in the U.S.
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SBIR vs. STTR
• SBIR: Permits allows research partners (non-profit or for profit) – no more than 33% during Phase I – no more than 50% during Phase II
• STTR: Requires non-profit research institution partner (e.g., universities)– A minimum of 40% for small business– A minimum of 30% for research institution– Remained 30% can go to either partner or 3rd parties
Despite misconceptions, there is NO Requirement to do Tech Transfer
under an STTR
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SBIR and STTR by Agency• DoD SBIR/STTR• HHS (NIH, CDC, FDA) SBIR/STTR• NSF SBIR/STTR• NASA SBIR/STTR• DOE SBIR/STTR• DHS SBIR• USDA SBIR• DOC (NIST, NOAA) SBIR• EPA SBIR• DOT SBIR• ED SBIR
Phase I, 451 Phase II, $433M]Physical Sciences [821 Phase I, 341
Phase II, $320M]Creare [674 Phase I, 353 Phase II,
$302M] *(353/644 (55%) N.H. Phase IIs)
Intelligent Automation [624 Phase I, 225 Phase II, $225M]
Radiation Monitoring Devices [495 Phase I, 247 Phase II, $230M]
???
1-1055%11-24
17%
25-9919%
100+9%
45% of Phase IIs go to firms >10 Phase II awards
1-10 11-24 25-99 100+
Physical Optics Corporation Awards by Year
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MATCHING: FINDING A TOPIC
Choosing the right topics will create high probability opportunities
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Every Agency is Unique
• R&D Topic Areas• Dollar Amount of Award (Phase I and II)• Receipt Dates / Number and Timing of Solicitations• Proposal Review Process• Proposal Success Rates• Type of Award (Contract or Grant)
• Call topic author (if appropriate) to learn everything • Does it match the topic?• Is the solution strong? • Is it innovative? (innovation vs. evolution)
• Is the company prepared to invest in this opportunity?
• How much of the work will the company do?
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Selecting Opportunities is Critical
• SBIR/STTR awards aren’t random drawings• Preparing a winning SBIR/STTR proposal is a mountain of
work.• The key is to pick battles that can be won• Choosing the right topic/agency is the most overlooked (and
perhaps most important) ingredient of success
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Technology vs. Capability Approach
$$ Awardproposals
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Topics
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TECH
NO
LOGY
CAPA
BILI
TY
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Head-to-Head (Technology vs. Capability)
“Concentrate your energies, your thoughts and your capital.... The wise man puts all his eggs in one basket and watches the basket.”
- Andrew Carnegie
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AN INEFFICIENT MARKET:UNDERSTANDING FEDERAL AGENCIES
You can exploit discontinuities in the funding probabilities
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View SBIR/STTR as a marketplaceInvestigator Driven Perspective
• Seems obvious – but it’s not• Lot’s of overlap in projects funded by various agencies• Each agency takes a different perspective
– EX: DoD, NASA are trying to solve problems– EX: NIH, DoE are trying to promote research in general– EX: NSF is trying to promote research AND stimulate successful
commercialization
• This leads to varying levels of acceptance by different agency• Where to apply can be extra challenging when considering
multiple granting agencies
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NSF is the Most Start-up Friendly
Company Size: ~ 92% of awardees have 10 or fewer employees
History: ~ 87% of awardees had never had a prior SBIR/STTR Phase II award from any agency
Company Age: ~ 78% of awardee companies were incorporated within the past 5 years
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CASE STUDIES: NIH vs. NSF
proposalproposal
proposalproposal
proposalproposal
Anti-Microbial Polymer forCatheters
Catheter Ablation Device for Atrial Fibrillation
Reporter molecule for DNA screening
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CASE STUDIES: NIH vs. NSF
proposal
Anti-Microbial Polymer forCatheters
Catheter Ablation Device for Atrial Fibrillation
Reporter Molecule for DNA Screening
Award
Award
Award
proposal
proposal
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Navigating NIH SBIR/STTR Budget Allocations
NCI
NIAID
NHLBI
NIGMSNIDDKNINDS
NIMH
NICHD
NIA
NIDA
NEINCATS
NIEHSNIAMS
NHGRINIAAA
NIDCD
NIDCR
NIBIB
NIMHD
ORIPNINR
NCCIH
NLM
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NIH Phase I SBIR/STTR 2018
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
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80.0%
90.0%
100.0%
NIH 2018 Phase I - SBIR vs. STTR success rates SBIR STTR
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Understanding NIH scoring• Each sub-agency has own funding policy• Some publish paylines (10-90, 10 is best score (most fall
between 15-55)• You can request assignment to a sub-agency (otherwise NIH
will choose)• Choosing the right sub agency can be the difference between
success and failure
NIH STTR Success Rates and Paylinescan fluctuate wildly
15
20
25
30
35
40
2019 2018 2017 2016 2015 2014 2013 2012 2011
NIAID+NIAMS SBIR vs STTR paylines
NIAMS SBIR NIAMS STTR NIAID SBIR NIAID STTR
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Success rate does not equal probability
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0% SBIR STTR
35 2532 28
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Case Study: Navigating NIH
• Developing an intervention targeted at reducing smoking rates
• National Cancer Institute has largest budget within NIH• National Cancer Institute runs most smoking cessation
research• An obvious choice, but…..
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Case Study: Navigating NIH
• The WRONG choice• Proposal was targeted at National Institute on Drug Abuse
(NIDA), and was funded…based on a score that would not have been funded at NCI
• What?! NIDA has 11th largest budget, ~1/5 of NCIs• Need to do homework on NIH agencies
– Understand overlap between agencies– Look at success rates (data available on NIH SBIR homepage)– Look at competitiveness of funded projects– Look at funding commitments
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Looking at success rates…
NIDCR SBIR Phase I 56 17 30.4% $3,432,933
NIDCR SBIR Phase II 7 4 57.1% $1,864,889
NIEHS SBIR Phase I 72 22 30.6% $3,868,457
NIEHS SBIR Phase II 24 12 50.0% $5,972,947
What matters is the future and how the past shapes it!
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Being smarter than the numbers
NIDCR SBIR Phase I 56 17 30.4% $3,432,933
NIDCR SBIR Phase II 7 4 57.1% $1,864,889
NIEHS SBIR Phase I 72 22 30.6% $3,868,457
NIEHS SBIR Phase II 24 12 50.0% $5,972,947
Published Data is Backward looking…project forward!!!
Expected Phase II applications
NIDCR Last year 7 Next year 17 --funding probabilities will dropNIEHS Last year 24 Next Year 22 -- funding probabilities will be similar
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Looking Forward vs. Backward
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Impact of solicitation schedules
15.3% vs. 12.9% = 18.1 % more likely to be funded
18.0% vs. 12.1% = 48.3 % more likely to be funded
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NOW WRITE: WRITING AN SBIR/STTR PROPOSAL
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Understanding Reviewer’s Points of Entry
GRAPHICS
TITLEABSTRACT
FIRST PAGE
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Research Proposal Writing
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proposalsproposals
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proposalsText
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proposalsIdeas
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Text
Effective Research Proposal Writing
How You Are Taught to Write in School Slow build
Punch first
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How Should I Write a Proposal• A proposal is written in a similar style as a peer-reviewed
journal article…• …BUT is NOT an academic exploration – it needs concrete
goals, objectives, and measures of success• Write concisely• Use visuals to convey big ideas
– Mock-up interfaces to software
• Cite your peers (especially if they might be reviewers)– Show you understand the field
• Avoid sloppy mistakes
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Even smart people are bad with numbers
A telling example of innumeracy levels in society involves a study of clinicians (who represent a sample with education levels representative of reviewers) who were asked to consider the release of a psychiatric patient. When told that that 20 of 100 similar patients could be expected to commit an act of violence if released, 41% refused to discharge the patient. However, when instead told that 20% of similar patients could be expected to commit an act of violence if released, only 21% refused to discharge the patient.
Slovic, P., J. Monahan, and D.G. MacGregor, Violence risk assessment and riskcommunication: the effects of using actual cases, providing instruction, andemploying probability versus frequency formats. Law Hum Behav, 2000. 24(3): p.271-96.
20/100 or 20% or 0.2 or 1/5
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Charts need to tell a story
0%
20%
40%
60%
80%
100%
120%
1 2 3 4 5 6 7 8 9 10 11
Functional Ability
Control Treatment
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Control the narrative
50% reduction in recovery time
0%
20%
40%
60%
80%
100%
120%
1 2 3 4 5 6 7 8 9 10 11
Functional Ability
Control Treatment
0%
20%
40%
60%
80%
100%
120%
1 2 3 4 5 6 7 8 9 10 11
Functional Ability
Control Treatment
20X improvement in functional
recovery
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STRATEGY: Understand the Competition
• Remember: a small business is 500 employees or less– Are a 5 person company and a 500 person company really in the same
league?
• Many seasoned SBIR firms:– Physical Optics Corporation [1,219 Phase I, 451 Phase II, $433M]– Physical Sciences [821 Phase I, 341 Phase II, $320M]– Creare [674 Phase I, 353 Phase II, $302M]– Intelligent Automation [624 Phase I, 225 Phase II, $225M]– Radiation Monitoring Devices [495 Phase I, 247 Phase II, $230M]
• Previous SBIR/STTR awards place a firm at an advantage– Preliminary data, familiarity with program manager
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Partner, Partner, Partner!
• Improve the caliber of personnel with consultants– Universities are great sources of talent
• Improve capabilities with subawards– Large and Small Businesses, Universities
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STRATEGY: Invest in a Proposal
• Winners view proposals as an investment, not a binary event• Less Proposals for More Awards
– This is a quality game not a quantity game
• A proposal is a product that has been invested in – the key is capitalize on that investment
• A rejected proposal may be– Submitted to another agency– Resubmitted to the same agency
Commercialization Plans: Better Technology is not a Commercialization Plan
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Keys to Successful Phase II• Starts with a good Phase I• Have a Phase I designed to change the narrative and produce
interesting data (which may change the order in which you do things
• Everything you do in Phase I is about Winning Phase II!!!– Adjust plans as required– Create data that supports Phase II proposal– Understand tradeoff between submission