How To Elevate $1 Million In SBIR Funding As A Small Enterprise

On the planet of small enterprise and startup funding, enterprise capital is the “soup du jour.” However entrepreneurs can be clever to diversify their funding sources, particularly given the present liquidity tightening that we’re seeing throughout the personal fairness markets.

Sean O’Brien, Managing Companion at Overline, a $40 million seed-stage enterprise fund primarily based in Atlanta, Georgia, has been advising his founders to “tighten their belts, be deliberate about spending and make sure that they’ve adequate runway” as a result of the truth is we’re not seeing that “inexhaustible entry to capital anymore.”

Some companies have discovered much-needed seed capital from an surprising supply – the federal authorities, and extra particularly, the Small Enterprise Administration’s Small Enterprise Innovation Analysis and Small Enterprise Know-how Switch (STTR) packages. These twin-programs present US-based for-profit companies with non-dilutive grants over fastened time durations, in quantities starting from $50,000, to $2 million, for the event of a broad vary of innovative applied sciences.

Now it’s no secret for entrepreneurs that the universe of presidency grants is crammed with dizzying acronyms, daunting technical necessities in addition to prolonged time delays. So I tapped one founder who has managed to interrupt by means of all of those obstacles, to share her recommendations on navigate the SBIR/STTR’s $3.5 billion pool of capital to speed up enterprise progress.

Heart specialist and entrepreneur, Dr. Elizabeth Ofili, has raised roughly $2.2 million in SBIR grant funding from the Nationwide Institutes of Well being (NIH) for her startup Well being 360x, a affected person centered platform for inhabitants well being administration and medical trial variety. And the funding she obtained, enabled her to go after massive industrial contracts, as she just lately inked a partnership with Amgen
AMGN
, to carry-out a 5,000-participant examine targeted on coronary heart illness within the African American neighborhood.

Let’s break down how Dr. Ofili secured the bag.

STEP 1: Understanding The SBIR/ STTR Applications

First, a little bit of historical past. The SBIR program was initially established in 1982 by means of the Small Enterprise Innovation Improvement Act, and was expanded in 1992 with the addition of the STTR program, and has been repeatedly renewed by Congress since that point.

Dr. Ofili explains the excellence between the 2 packages, which largely boils right down to who controls the price range. “The SBIR is designed as a collaboration with a college or analysis establishment, so the establishment is often the sub-contractor and the small enterprise is the prime, whereas within the STTR mannequin, the establishment is the prime and the small enterprise entity is the sub.” In Dr. Ofili’s case, she partnered with Morehouse Faculty of Medication, because the analysis establishment and remained the prime on the contract.

For the rest of this text, I take advantage of “SBIR” interchangeably with SBIR/STTR, for ease of reference.

STEP 2: Deciding Which Company To Apply To

One of many first issues you want to do is determine the companies which can be most related to your corporation. There are 11 federal companies that take part within the SBIR packages, every with its personal grant alternatives, operational priorities and funding budgets.

Division of Protection. The Division of Protection, which incorporates the Navy, Airforce, Military and Protection Logistics, maintains the biggest price range, clocking in at roughly $2.2 billion in funding per 12 months. Nonetheless, this program points solely contracts, not grants, and is a requirement-driven course of led by procurement places of work. To use for DOD contracts, go to the DOD innovation portal and evaluation the solicitation requests – additionally known as Broad Company Bulletins.

Division of Well being and Human Companies. As a health-tech founder, Dr. Ofili’s company of selection is the Division of Well being and Human Companies and extra particularly, the NIH. This company has a hefty $1.3 billion price range, and is in actual fact, the biggest granting establishment collaborating within the SBIR program. With NIH masking 90-95% of the HHS SBIR price range, you typically hear individuals communicate solely concerning the NIH packages. The particular solicitations supplied by the totally different companies underneath the NIH (ie, Nationwide Coronary heart Lung and Blood Institute – NHLBI, or Nationwide Most cancers Institute – NCI) could be accessed on their web site.

Nationwide Science Basis. One other company of observe is the Nationwide Science Basis, affectionately often known as America’s Seed Fund. With a $200 million annual price range, the NSF funds plenty of high-growth tech firms that may ordinarily go for enterprise capital, together with robotics, synthetic intelligence/machine studying, superior manufacturing, augmented and digital actuality, cloud computing, cybersecurity, and blockchain expertise companies. In reality, throughout fiscal years 2016 to 2022, NSF-funded startups noticed round 300 exits and greater than $20 billion in personal investments. There’s a rolling course of to submit a pitch, with the steps outlined on the program web site.

STEP 3: Shifting By The SBIR “Phases”

The SBIR program is damaged down into three distinct phases – Section I, Section II and Section III. In deciding which path is finest for you, be certain to seek the advice of with this system officer or coordinator to your particular company for steerage.

Section I. It is sensible to begin right here if you’re on the idea-stage, and nonetheless determining the feasibility and market potential for your corporation. If chosen, you obtain roughly $50,000 to $250,000 over a set interval – six months to at least one 12 months.

Section II. The purpose right here is to proceed the R&D efforts from Section I. Funding, which ranges from roughly $750,000 to $2 million over a two to 3 year-period, is predicated on the milestones achieved in Section I, in addition to the scientific and technical benefit and industrial potential of the venture proposed in Section II. Dr. Ofili elaborated, “finally the SBIR is designed to maneuver you thru to commercialization,” or in different phrases, develop a product available in the market.

Section III. That is the “unfold your wings and fly” stage of the SBIR course of. Firms which graduate into Section III obtain coaching, assist and introductions to potential traders and prospects, however no funding is allotted right here.

Quick-Monitor. Very just lately, the SBIR got here out with what they name “Quick-Monitor” for extra mature companies. Dr. Ofili defined, “In case your concept is effectively developed and you’ve got already gathered some preliminary traction, you can mix Section I and Section II…and so that’s the path I went down, upon recommendation from this system officer.”

STEP 4: Submitting Your Proposal

The truth is, it will possibly take wherever from six months to a 12 months to organize and submit your SBIR proposal. So don’t hesitate to interact an exterior marketing consultant that can assist you construct every thing out – for instance – KeepYourEquity.co.

The Pitch. For Dr. Ofili, step one was creating a one or two-page Particular Goals doc – a concise pitch, or an govt abstract. She labored with the expertise switch workplace at Morehouse Faculty of Medication, to get coaching and assist from advisors who informed her, “that is what SBIR appears like”. And after submitting the Particular Goals, NIH program officers scheduled a gathering to supply suggestions and join her with further assets to organize the total proposal. Every company can have webinars and designated program officers out there to clarify the subsequent steps within the course of.

The Proposal. The meat of the proposal is what is named the commercialization plan – which isn’t too totally different from what would go in a typical investor pitch deck. You need to describe your staff, product, aggressive panorama, market measurement and go-to-market technique. Dr. Ofili laughed, “I went to plenty of courses to discover ways to write the plan. I had sufficient to get my MBA!”

Letters of Assist. As talked about beforehand, SBIR purposes should be submitted in partnership with a analysis establishment or college. And so, the establishment would wish to supply a letter of assist outlining the totally different assets (services, expertise, human assets) it can carry to the venture. Different letters of assist come out of your collaborators, key staff members and different vital contributors.

STEP 5: Awaiting A Funding Determination

After submission, the SBIR software goes by means of a peer evaluation course of – with specialists of their fields (together with scientists and enterprise individuals), who assess the deserves of your software.

Dr. Ofili defined, “often you submit one thing within the fall. The evaluation takes place someday within the spring, possibly winter, as a result of [with the NIH] it has to go to by means of what is named ‘examine part’ for scientific peer evaluation. After which it goes to the advisory council at NIH that’s in command of that institute to approve, so you might be in all probability taking a look at a interval of about 9 months.”

It goes with out saying, your corporation can not survive whether it is reliant on receiving SBIR funding to proceed working. In reality, Dr. Ofili leveraged different smaller grants to maintain afloat and preserve her enterprise, Well being 360x going. And the truth is, SBIR shouldn’t be for everybody – particularly these with short-term funding wants.

However earlier than you “exit stage left” on this course of, persistence and persistence can repay. $2.2 million in non-dilutive funding (which is what Dr. Ofili was finally awarded) is a game-changing amount of cash for a small enterprise. And, this could possibly be you subsequent!