Learn the Plays That WIN We Know This Game © The SBIR Coach, Playing the SBIR Game to Win Fred Patterson The SBIR Coach ASBDC Conference Denver, Colorado September 18, 2007

Learn the Plays That WIN We Know This Game © The SBIR Coach, Today’s “Game Plan” Part 1 – Rules of the Game –The R&D Funding Challenge –SBIR Program Overview –Playing the SBIR Game –Overview of Strategies Part 2 – Strategies to Win Awards –The Structure of a Proposal –Understanding the Priorities –Building a Winning Team –Commercialization – the End Game

Learn the Plays That WIN We Know This Game © The SBIR Coach, The R&D Funding Challenge High-Risk Projects are tough to fund Funding sources are demanding –Banks insist on collateral and debt service –Investors want equity, “a voice”, and a schedule of their profitable returns Friends and Family Angels Venture Capitalists.. x

Learn the Plays That WIN We Know This Game © The SBIR Coach, The Holy Grail of R&D Funding Willingness to fund high-risk projects R&D capital without debt to service An Investor who won’t take equity Protection for Intellectual Property Support for Commercialization All of the above from one source We’ve just described the basic characteristics of The SBIR Program!

Learn the Plays That WIN We Know This Game © The SBIR Coach, SBIR Program Overview Mission: Apply entrepreneurial spirit of small business to solve tough problems Matchmaking Federal R&D needs to small business capabilities Required planning for commercialization The SBIR “set-aside” must be spent annually by the largest Federal agencies

Learn the Plays That WIN We Know This Game © The SBIR Coach, Actually, It’s Two Programs SBIR (Small Business Innovation Research) –Applicants are Small Businesses STTR (Small Business Technology Transfer) –Applicants are Small Businesses in partnership with a Research Institution

Learn the Plays That WIN We Know This Game © The SBIR Coach, How Much Money is Available in FY 2007? SBIR – Approx. $2 Billion –2.5% of the R&D budget of the qualifying Federal Agencies. STTR – Approx. $250 Million –0.3% of the R&D Budget of the qualifying Federal Agencies

Learn the Plays That WIN We Know This Game © The SBIR Coach, The SBIR “Pie” DOD HHS NASA DOE NSF TOTAL FY 2007 >$2¼ Billion Labeled Agencies also do STTRs

Learn the Plays That WIN We Know This Game © The SBIR Coach, Agency SBIR Differences Granting Agencies Ü Investigator proposes project approach Ü Less-specified topics Ü Assistance mechanism Ü More flexibility DOD HHS/NIH NASA DOEd EPA DOT DOC DHS Contracting Agencies Ü Agency specifies the project requirements Ü Highly focused topics Ü FAR-driven procurement Ü More fiscal requirements DOEd NSF DOE USDA HHS/NIH

Learn the Plays That WIN We Know This Game © The SBIR Coach, SBIR Program Applicant Eligibility A small business (500 employees) owned by individuals (>50%), US located, and independently operated Organized for making a profit Principal researcher (The PI) must be principally employed by the small business (or the research institution if STTR*) * For most agencies

Learn the Plays That WIN We Know This Game © The SBIR Coach, A Competitive Three-Phase Program Phase I: Feasibility Phase II: Proof-of-Concept Phase III: Commercialization

Learn the Plays That WIN We Know This Game © The SBIR Coach, Phase I Conceptual Design Awards are made averaging $100,000 for 6-12 months to support the conceptual feasibility and design of the solution using the technological approach of the proposer.

Learn the Plays That WIN We Know This Game © The SBIR Coach, Phase II Prototype Development Awards averaging $750,000, for as many as two more years, expand the Phase I design to “proof of concept” and evaluation of commercialization potential.

Learn the Plays That WIN We Know This Game © The SBIR Coach, Phase III Commercialization No SBIR set-aside funds support this phase. During this period the developer moves the innovation from the laboratory into “end use” in the marketplace.

Learn the Plays That WIN We Know This Game © The SBIR Coach, The SBIR Coach’s Baseball Metaphor Phase I –Class A (Bush Leagues) Phase II –Class AAA (Minor Leagues) Phase III –The Major Leagues

Learn the Plays That WIN We Know This Game © The SBIR Coach, Who Owns the Intellectual Property? The Applicant does! Full rights are retained for –Technical Data –Patentable Inventions But you have to take the appropriate measures to protect your IP or the Government can eventually take it over!

Learn the Plays That WIN We Know This Game © The SBIR Coach, SBIR Phase I Dynamics Phase I Topics – “The RFP” Proposal preparation and submission Proposal review and evaluation Phase I project selection

Learn the Plays That WIN We Know This Game © The SBIR Coach, Proposal Topics The Agencies select the technical topics for their annual Solicitation Publish them on their web sites Provide guidelines for proposal content and submission Manage the proposal collection process

Learn the Plays That WIN We Know This Game © The SBIR Coach, Proposal Preparation & Submission Companies match published topics to their technology – can they solve the stated problem? Proposals are written and submitted –20-25 Pages maximum – follow the outline –Submission is electronic via the Web

Learn the Plays That WIN We Know This Game © The SBIR Coach, Proposal Evaluation The Agencies review the proposals Rate and Rank them according to: –Degree of innovation –Technical merit –Credibility of the management team –Future market potential

Learn the Plays That WIN We Know This Game © The SBIR Coach, SBIR Phase I Project Selection Criteria 1.Agency needs (R&D priorities) 2.Proposal reviewers’ opinions 3.Amount of SBIR/STTR money available 4.Deployability and/or Scientific Merit On average 15% of Phase I proposals are funded

Learn the Plays That WIN We Know This Game © The SBIR Coach, Phase II Dynamics Phase II proposals are submitted at the end of the Phase I work –Some agencies invite, others expect Only Phase I winners are eligible Evaluation processes vary On average 40% of Phase II proposals are funded

Learn the Plays That WIN We Know This Game © The SBIR Coach, SBIR/STTR Annual Opportunities AgencySBIRSTTR2007 Due Dates Dept of DefenseXXJan, Apr, Jul, Oct HHS: NIH/FDA/CDCXXMany dates NASAXXSeptember Dept of EnergyXXDecember Nat’l Science FoundationXXJune, December Homeland SecurityXFebruary, August USDAXAugust EPAXMay Dept of EducationXJune Dept of CommerceXJanuary Dept of TransportationXMay

Learn the Plays That WIN We Know This Game © The SBIR Coach, The SBIR Game There are actually 23 SBIR Programs The “Golden Rule” applies “We who have the gold make the rules!” There is no common rule-book Funding decisions are subjective There is no appeal worth trying The payoffs are worth the effort

Learn the Plays That WIN We Know This Game © The SBIR Coach, The Challenge The game is VERY competitive The rules may be hard to interpret Good proposals are hard to write Funding decisions are subjective The money doesn’t flow quickly When you take Government money you are subject to scrutiny and audits

Learn the Plays That WIN We Know This Game © The SBIR Coach, The Good News It’s a relatively fair game Phase I puts you in a “sole-source” position for Phase III IP is yours to keep No strings on the money SBIR funding provides leverage The Government pays on time

Learn the Plays That WIN We Know This Game © The SBIR Coach, The Rule Books Each Agency is unique –Different solicitation schedules –Different solicitation styles –Different funding levels –Different proposal outlines –Different evaluation processes –Different attitudes Find the Rules on their web-sites IF YOU WANT TO PLAY IN THEIR GAME – FOLLOW THEIR RULES!

Learn the Plays That WIN We Know This Game © The SBIR Coach, Information is Key to Playing the Game Keep aware of Agency interests Cultivate your future customers Watch solicitations for topics Know the current “state of the art” Seek collaboration partners Scope out your competition

Learn the Plays That WIN We Know This Game © The SBIR Coach, The SBA SBIR Website ( The SBIR Web Portals Agency List-Servers National SBIR Conferences –Oct 29-Nov 1 in Richardson, TX The SBIR-Alerting Service (lyris.pnl.gov) Google, et.al. Information Sources

Learn the Plays That WIN We Know This Game © The SBIR Coach, SBIR Web Portals SBIR announcements and news items Links to all Agency websites Solicitation schedules Search Engines for all Agencies –Open and closed topics –Grant and contract awards SBIR conf/workshop schedules State newsletter links Lots of other stuff

Learn the Plays That WIN We Know This Game © The SBIR Coach, SBIR Gateway (

Learn the Plays That WIN We Know This Game © The SBIR Coach, SBIR World (

Learn the Plays That WIN We Know This Game © The SBIR Coach, Strategies to Win SBIR Awards Customers Technology Team Commercialization Innovation

Learn the Plays That WIN We Know This Game © The SBIR Coach, Customer Strategies Know your customer Understand what he needs Give him what he wants Stay on his “radar screen” “Pre-Solicitation Marketing”

Learn the Plays That WIN We Know This Game © The SBIR Coach, Technology Strategies Have a strong technology base Get an independent assessment Guard your Intellectual Property Use your IP as a leveraging tool Propose technology that your customers really want “Field-of-Dreams” was a movie!

Learn the Plays That WIN We Know This Game © The SBIR Coach, Team Strategies Strong credentials that will impress your customer –Technical and Scientific –Business and Managerial Full roster of appropriate players A track record of success Your customer is also your investor

Learn the Plays That WIN We Know This Game © The SBIR Coach, Commercialization Strategies Yes, you need a business plan! The Agencies are measured on how much commercialization money derives from SBIR funding They will pay a lot of attention to this, so you had better too! Commercialization means “End Use”

Learn the Plays That WIN We Know This Game © The SBIR Coach, Innovation Strategies Innovation is a combination of cleverness and originality Know what your customer knows Make sure that you’re “up first” Tell your story with clarity and conviction Innovation may NOT be the most important factor

Learn the Plays That WIN We Know This Game © The SBIR Coach, Playing the SBIR Game to Win (Part 1) Fred Patterson The SBIR Coach

Learn the Plays That WIN We Know This Game © The SBIR Coach, Game Plan for Part 2 Strategies to Win Awards The Structure of a Proposal Understanding the Priorities Building a Winning Team Commercialization – the End Game

Learn the Plays That WIN We Know This Game © The SBIR Coach, SBIR Proposal Framework Significance Problem Solution Approach Market Commercial Potential (Phase III) Tech. Objectives Work Plan Budget Resources Team Facilities & Equip. Purpose Innovation The Project Capability Courtesy of Robert E Berger, PhD

Learn the Plays That WIN We Know This Game © The SBIR Coach, Reviewers’ Evaluation Criteria Innovation The Project’s Technical Merit Your Capabilities Commercialization Potential

Learn the Plays That WIN We Know This Game © The SBIR Coach, Innovation Significance Problem Solution Approach Market Commercial Potential (Phase III) Tech. Objectives Work Plan Budget Resources Team Facilities & Equip. Purpose Innovation The Project Capability

Learn the Plays That WIN We Know This Game © The SBIR Coach, Technical Merit Significance Problem Solution Approach Market Commercial Potential (Phase III) Tech. Objectives Work Plan Budget Resources Team Facilities & Equip. Purpose Innovation The Project Capability

Learn the Plays That WIN We Know This Game © The SBIR Coach, Capabilities Significance Problem Solution Approach Market Commercial Potential (Phase III) Tech. Objectives Work Plan Budget Resources Team Facilities & Equip. Purpose Innovation The Project Capability

Learn the Plays That WIN We Know This Game © The SBIR Coach, Commercialization Significance Problem Solution Approach Market Commercial Potential (Phase III) Tech. Objectives Work Plan Budget Resources Team Facilities & Equip. Purpose Innovation The Project Capability

Learn the Plays That WIN We Know This Game © The SBIR Coach, Understanding Priorities 1.Agency needs –Know their priorities –Ask them questions 2.Reviewers’ evaluations 3.Funding limitations

Learn the Plays That WIN We Know This Game © The SBIR Coach, Agency Needs Significance Problem Solution Approach Market Commercial Potential (Phase III) Tech. Objectives Work Plan Budget Resources Team Facilities & Equip. Purpose Innovation The Project Capability

Learn the Plays That WIN We Know This Game © The SBIR Coach, Agency Information

Learn the Plays That WIN We Know This Game © The SBIR Coach, Building a Winning Team The PI is the key player Lone Wolves are suspicious Outside counsel shows maturity Do you have commitments?

Learn the Plays That WIN We Know This Game © The SBIR Coach, Capabilities Significance Problem Solution Approach Market Commercial Potential (Phase III) Tech. Objectives Work Plan Budget Resources Team Facilities & Equip. Purpose Innovation The Project Capability

Learn the Plays That WIN We Know This Game © The SBIR Coach, Involvement of Others Consultants Universities Research Facilities Suppliers Subcontractors

Learn the Plays That WIN We Know This Game © The SBIR Coach, How Much of the Work Can Be Outsourced from Your Company? SBIR –Phase I – 33% –Phase II – 50% STTR –Phase I – 74% –Phase II – 80%

Learn the Plays That WIN We Know This Game © The SBIR Coach, Special SBIR Team Considerations The PI’s Commitment –Employment status –Level of Involvement Other Employee considerations –W2 vs 1099 employees Consultants

Learn the Plays That WIN We Know This Game © The SBIR Coach, Special STTR Team Considerations The CRADA –Cooperative Research and Development Agreement –Prepared by Office of Sponsored Projects IP Sharing Agreement –Division of new intellectual property –Prepared by Office of Technology Transfer

Learn the Plays That WIN We Know This Game © The SBIR Coach, Commercialization Issues You can’t make money from Phases I and II What kind of company do you want to be? Phase III isn’t funded by mandated small business set-asides

Learn the Plays That WIN We Know This Game © The SBIR Coach, Phase III Benefits When the Government is Your Customer No limitation on funding Data Rights are preserved Sole Source is justified

Learn the Plays That WIN We Know This Game © The SBIR Coach, Commercialization Questions to Answer How will you make money from this technology development? What will it take to get you there? How will you make the product? Who will be your customers? How will you sell to them? How will you finance commercialization?

Learn the Plays That WIN We Know This Game © The SBIR Coach, Why is it so difficult to get to Phase III? Making and selling it is very different from inventing and designing it! Bootstrapping commercialization is virtually impossible. The company must undergo a culture shift to survive as anything but a “lifestyle” company.

Learn the Plays That WIN We Know This Game © The SBIR Coach, Culture Shift? The Hallmark of Success changes from “Technical Excellence” to “Making the Numbers” The focus of “Operations” changes The Founder may not be comfortable in the new role as “Dealmaker”

Learn the Plays That WIN We Know This Game © The SBIR Coach, Seeking Outside Funding

Learn the Plays That WIN We Know This Game © The SBIR Coach, Agency Interest in Your Commercialization Their selection quality is ultimately measured on how well you do! Most offer special commercialization assistance programs They expect you to report your commercialization successes

Learn the Plays That WIN We Know This Game © The SBIR Coach, Commercialization Assistance Programs DOD –Commercialization Pilot Program (CPP) NIH –Commercialization Assistance Program (CAP) NSF –The SBIR MatchMaker Program NASA –Innovative Partnership Program DOE –Several Commercialization Support Programs

Learn the Plays That WIN We Know This Game © The SBIR Coach, DOE Commercialization Support Programs Commercialization Opportunity Forum –Focus: Business Plan development Trailblazer TM –Early in Phase I to support transition to Phase II Virtual Deal Simulator TM –Early in Phase II to map out a sequence of tasks that can lead to Phase III Technology Niche Analysis TM –Mid-Phase II to identify Phase III partners

Learn the Plays That WIN We Know This Game © The SBIR Coach, In Conclusion The SBIR Program is a fantastic opportunity for small business R&D There are lots of potential SBIR projects in almost every technology arena The SBIR game is complex and highly competitive There are strategies to getting that competitive advantage needed to win You can play this game to WIN!

Learn the Plays That WIN We Know This Game © The SBIR Coach, Playing the SBIR Game to Win Fred Patterson The SBIR Coach