National Science Foundation SBIR/STTR Program F. C. Thomas Allnutt Division of Industrial Partnerships & Innovation Division of Industrial Partnerships & Innovation Vermont June 2008 – Grant Writing

Bridging the “Valley of Death” Research and Education -Univ. -R&D Labs Prototypes Small Business Tech Development Business Development Seed Funding Business Startups; Expansions NSF SBIR

 DODDefense  HHSHealth  NASASpace  DOEEnergy  NSF~$110 Million  DHSHomeland Security  USDAAgriculture  DOCCommerce  EPAEnvironment  DOTTransportation  DoEDEducation Participating Agencies TOTAL ~ $2.3B Est. FY 2008

NSF SBIR/STTR Innovation Model PHASE III Product Development to CommercialMarket PHASE I FeasibilityResearch $100k/6 mos Taxes Federal Investment PHASE II ResearchtowardsPrototype $500k/24 mos MATCH MAKER Phase IIB Third-Party Investment + 1:2 NSF Matching Private Sector or Non-SBIRInvestment Unique to NSF Phase I B Third-Party Investment + 1:2 NSF Matching

Phase I - Solicitation Topics  2 Solicitations released per calendar year, typically: – Sept. for Dec. closing – March for June closing  Each Solicitation will offer 1 or more topics that represent: – Investment/business-focused technologies – Market-driven technologies – Special topics in response to National needs  Keep a watch on the topic offerings of the current solicitation for opportunities most relevant to you

New Developments!  Current solicitation is only SBIR  Three topics: Bio/Chemical Technologies (BC) Software & Systems (SS) Electronics, Components, and Engineering Systems (EL)  June 10 th and Dec 4 th Deadlines  STTR will be a separate solicitation

 NSF is not the Final Customer  NSF is not buying a product, process, software, or intellectual property commercialize  NSF wants to see the grantee successfully commercialize the innovation  Company needs investment dollars beyond NSF SBIR/STTR Doing Business with NSF

Commercialization Analysis Phase II NSF Projects The Data – Success rate ~ 40% for 240 projects (multi-year analysis) – Success criteria – product sales I year after completion and $1 MM sales after 6 years Risks – Market Failures > Technology Failures – 50% more likely to fail based on Market Forces Importance of Partnerships – ~60% of successful projects have a “strategic partnership” – ~30% close university tie – Phase IIB funding: 75% success rate (vs. 31% without)

Key Takeaways  Market risks > Technical risks  Partnerships and External Financing are Critical indicators of success  Partnerships take time

Most Proposals Fail Because  Lack of identified opportunity (science projects)  Lack of perceived technology risk  Lack of clarity (e.g. poor work plan)  Other issues – IP ownership and landscape – No clear technology advantage – Competitive landscape – Path/Time to market – Distraction to the company mission  Didn’t read the directions

Takeaway  Many SBIR/STTR programs out there!  At NSF ~$100M/year granted primarily for seed- stage development in… – Software & Systems (SS) – Biotechnology & Chemical Technologies (BC) – Electronics (EL)  Program to mitigate technical risk and bridge the “Valley of Death”  Investment in Country’s Innovation Capacity

Useful Links: (SBIR Resource/gov run) (SBIR Resource/gov run) (SBIR Gateway) (SBIR Gateway) (NSF SBIR homepage) (NSF SBIR homepage) Contact info: Tom Allnutt phone: Questions??

BC. Bio/Chemical Technologies  A.1 Agricultural Biotechnology: Such applications include but are not limited to pathogen and toxin diagnostics, genetic engineering, methods to reduce the use of fertilizer and/or increase efficiency of plant nutrient assimilation.  A.2 Food Biotechnology: Such applications include but are not limited to real-time methods for detection of pathogens and toxins in the food, novel tracking methods, improved sterilization methods.  A.3 Environmental Biotechnology: Such applications include but are not limited to methods to reduce human ecological and environmental impacts, microbial contamination sensing and control, removal of toxic compounds for human and animal safety, point of use water treatment, midstream wastewater treatment technologies, treatment of runoff, environmental compatibility and sustainability, pathogen and toxin diagnostics, control of exotic diseases, nanobiotechnology solutions, and water treatment.  A.4 Marine and Aquatic Biotechnology: Such applications include but are not limited to improved or novel marine species hatchery technologies, replacement of marine sourced materials in feeds, disease control, diagnostics, vaccines, alternative technologies, sensors and biosensors; marine environment extremophilic enzymes for extreme temperatures.

NSF Merit Review Process  NSF Merit Review – Typically reviewed by panel meetings – Panelists from Academe, Investment Community, Industry – Confidential with signed CDAs by panel  Phase I – all proposals receive a minimum of 3 reviews & both technical and commercial review  Phase II – 3 reviews & both technical and in depth commercial review

SBIR/STTR Reviews  Technical Review – Technical Merit – Broader Impact  Commercial Review – Team – Market Opportunity – Technology, IP, and Competition – Financial Plan

Why does NSF care about commercialization?  What is the NSF Vision?  What is the NSF SBIR/STTR Vision? “…catalyze the strong progress in science and engineering needed to establish world leadership and secure the Nation’s security, prosperity, and well being” To be the pre-eminent federal resource to leverage high technology through small businesses to stimulate our nation’s innovation leadership and contribute to the U.S. economy and society

Commercial Review Guidance Revenue and Finance Plan  Does the company demonstrate adequate knowledge for the level of financial resources it will take to get the innovation to market?  Does there appear to be a plan to bring reasonable resources to bear to get this innovation to market?

Competitive Proposal - Hints  Answer the right question  The right question – Not Can it be done but Should it be done  Communicate with the Program Manager  Prepare an Executive Summary for the Communication – Team – Market Opportunity – Technology – Competition  Listen to the Feedback

Doing Business with NSF (cont.)  Ideas do NOT equal business opportunities  Do your HOMEWORK, describe the opportunity – Remember the time component to value of money  Get some market validation BEFORE you come to NSF SBIR/STTR  Consider proposal as ADVOCATE at the table  Proposal as “selling” document

Intellectual Merit  Does the proposal reflect state-of-the-art in the major research activities proposed?  Is the proposed plan a sound approach for establishing technical and commercial feasibility?  How well qualified is the team (the PI, other key staff, consultants, and subawardees)?  Is there sufficient access to resources (materials, supplies, analytical services, equipment, facilities, etc.)? Technology Review Guidance

Broader Impact  What may be the commercial and societal benefits of the proposed activity?  Does the proposal lead to enabling technologies (instrumentation, software, etc.) for further discoveries?  Does the outcome of the proposed activity lead to a marketable product or process?  Evaluate the competitive advantage of this technology vs. alternate technologies that can meet the same market needs.  How well is the proposed activity positioned to attract funding from non-SBIR sources once the SBIR project ends? Technology Review Guidance

Commercial Review Guidance Company/Team  Based on the information in the proposal, is this is a seed, early stage or expanding company?  How well is the team poised to take this innovation to market?  Have they taken similar products to market previously?  Do they have additional outside advisors, mentors, partners and stakeholders?  Is the corporate structure consistent with the company’s stage and vision?

Product/Technology and Competition Has the company described the features of their product or service that are going to provide a compelling value proposition to the customer? What validation is there from the market about the proposed value proposition? Does the company demonstrate knowledge of the competitive landscape? How is this company going to compete: price, performance or other? Does the company appear to understand issues regarding IP? Is there adequate evidence that the company knows its position in the IP landscape? Does there appear to be a management plan for handling IP issues as they arise? Commercial Review Guidance (continued):