New Help for Transitioning SBIR-Funded Technology to Commercialization (Phase III)

Companies that win SBIR awards, and get funding for demonstrating feasibility (Phase I) and developing the proof-of-concept prototype (Phase II) often find themselves stymied to take the technology further. Funding for commercialization (Phase III) is very hard to arrange and obtain -- it isn't provided via the required agency R&D budget set-aside as is Phase I and II. The "normal" processes for getting such projects funded are just too daunting and competitive for most small businesses to undertake. But there's actually many sources of help, some new, and some not so new.

About seven years ago I received the distinct honor of being invited to join a distinguished national Panel of experts on small business technology development and commercialization. This Panel is convened several times a year by the Washington Office of the National Technology Transfer Center (NTTC) for the purpose of advising businesses (both large and small) and research institutions (both universities and Federal labs) who are conducting research and development funded by the DOD's Missile Defense Agency (MDA). The advice is specifically focused on issues relating to the transitioning of their technology to end use, and, hopefully, eventual insertion into MDA systems.

MDA has sponsored and NTTC has administered this enlightened Technology Applications Review (TAR) program for over twenty years (I'm still one of the newbies). The invited companies present the status of their MDA funded technology development progress, their plans for transitioning it to commercialization, and their assessment of the resources they'll need to accomplish the plans. History shows that the majority of these TAR participants have been SBIR-funded small businesses, usually at the level of Phase II. The Panel provides critical feedback on their plans, and offers suggestions for new strategic business positioning, tactical approaches for implementing the plans, new ideas for applications of the technology, and referrals to individuals to contact for further guidance and help.

Well, the NTTC convened our third TAR meeting of 2008 last week in San Diego. Four very interesting SBIR companies made their presentations, and we on the Panel provided much spirited feedback. The company executives all went away with "to do" lists of actions to be taken, some strategic, some tactical. Two of the companies were actually making a repeat TAR appearance, having been so impressed with the quality of the advice they had received in their prior visit that they were back for another dose of reality. We'll have another session next week in Washington DC with five more SBIR companies making presentations. I can hardly wait!

While the NTTC/MDA sponsored TAR is, in my opinion, the most focused and, arguably, the best support mechanism out there for promoting transitioning of an SBIR company to commercialization success, there are other initiatives for companies who are not MDA funded to take advantage of. The DOD began what's known as the Commercialization Pilot Program (CPP) back in 2006. It's evolving and still pretty "new". It's been implemented by the Army, Navy, and Air Force, to provide direct support to smooth the way for SBIR companies to obtain Phase III funding for commercialization. Support is available via the CPP for a variety of business functions, as well as for removing roadblocks to working with Defense Prime Contractors.

The Army, Navy, Air Force, and the MDA, themselves hold regular events designed to promote commercialization of small business developed technologies, many of which focus on SBIR. Just today I received notice of a conference on transitioning "disruptive" technologies from "non-traditional" sources (e.g., small SBIR companies) to the Army's ARDEC. The event will be held next January. Click HERE for more information. In future Blog posts I'll take a close look at what each of the Federal agencies (all of them - not just DOD) are doing (or, in some cases, not doing) to promote Phase III.

And, finally, the SBIR re-authorization legislation will very likely provide some funding for more Phase III support for all of the agencies, as well as the requirement to actively support the transition of SBIR technology to commercialization. All the more reason for us to get behind the effort to convince our legislators to do this right.
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PS: 11/3/08. I sent out an SBIR Coach's Newsletter issue today that answers the question: What is Phase III? If you're at all confused about that, you'll want to read this. If you'd like a copy, please write to me. To get on the Newsletter mailing list, click the button on the margin at the left (be sure to answer the confirming email you'll get). Every issue has opt-out buttons, and your email address privacy is strictly guaranteed.
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NOAA Announces New "Water and Wind" SBIR Topics with Surprising Subjects

The big dogs in the SBIR Program are the Department of Defense and The National Institutes of Health, together accounting for over $1.5 Billion of the $2.2+ Billion worth of SBIR projects funded each year. The next tier of agencies, NSF, DOE, NASA and Homeland Security, together fund another $450 Million worth of projects. The remaining five participating agencies (Commerce, Education, Transportation, Agriculture, and the EPA) don't have a lot of SBIR money to spend (do the math), and sometimes get lost in the SBIR shuffle. That's unfortunate, as they do fund interesting projects in worthwhile technologies. (To see the SBIR priorities of all of these agencies, go to the SBIR Gateway's Agency Program Links page, and click on the agency you'd like to explore.)

A case in point is the National Oceanic and Atmospheric Administration (NOAA), a branch of the Department of Commerce. NOAA announced their new SBIR Topics today, with a Jan 14, 2009, proposal due date. NOAA's SBIR budget is very small -- they anticipate awarding only ten Phase I grants of $95K each in this round -- but the projects are fascinating. Their four Topic Areas are Ecosystems, Climate, Weather and Water, and Commerce and Transportation. Don't think you can predict what they're looking for, as the variety of technologies being sought is quite broad. To see the Topics and Sub-Topics, surf to NOAA's SBIR web-page and click on the download link for the 2009 NOAA SBIR Solicitation.

Having just ducked the worst of Hurricane Ike, and watched while my favorite vacation places were destroyed, I was especially taken by NOAA's Topic 8.1.9SG: "NOAA is looking for proposals to develop new building methods and materials that can be utilized in both the retrofitting and new construction of structures in coastal areas to reduce the wind and water damage sustained during severe weather events."

There's something for everyone here, with other technologies involving biology, meteorology, chemistry, electronics, sensors, physics, and mathematics. Even SCUBA technology is involved!

NOAA doesn't get the attention that the big dogs get, so the number of SBIR proposals they receive is a lot smaller. Competition is about on par, however, with approximately 10% of the applications getting funded. But, they tend to get overlooked by the companies who are experts in technologies that aren't obviously NOAA-centric. So, overcome your skepticism, take a good look, and call the SBIR Coach if you'd like some help in improving the odds.

SBIR and other technology funding in the current crisis.

The current economic crisis certainly caught most of us by surprise. Crooks manipulating the credit markets suddenly found themselves without the reserves to cover their subprime loan losses, and their house of cards began to collapse. We trusted the watchdogs to keep us safe, but the crooks were tossing them goodies, and they didn't bark the alarm. The result is a plummeting of the stock market and a virtual freezing of the credit market. The losses are staggering.

Will this crisis affect our ability to get money for our businesses? Sure, at least for a while. Family and friends funding will be harder to tie down as people, even those who love you, feel the need to be more cautious with their financial reserves. Bootstrapping will be more difficult as your customers stretch their accounts payable timelines out to well beyond 30 days. Lines of credit may be withdrawn, and surely difficult to get expanded, as banks find their money sources restricted. Equity investors will tighten up on their governance and look for risk reduction wherever they can find it. New Angel or VC investment will be even harder to secure, and valuations are certain to be even further reduced. It will be tougher to find sources of debt or equity money for a while. Tighten your belts, it's going to get rough.

So what about Grant funding? Will SBIR be affected? Probably not in the availability of funds, but it will most certainly get more competitive. The SBIR budget is a fixed percentage (2.5%) of the largest Agency R&D budgets, and if those budgets are reduced, the SBIR pot will be proportionately smaller. My sense says that we'll see even more applications and it will become even harder to win funding. That's what happened following 9-11 when the economy dipped. As belts get tightened, smart people get "downsized". Many of them have entrepreneurial spirits and small businesses get born. SBIR is a way many of them actually get started.

Entrepreneurial spirit is innovative in nature. Unfortunately, Wall Street's penchant for "financial innovation" is taking the hit with a big share of the blame for this crisis, and whenever innovation is attacked, SBIR ducks for cover. SBIR is up for reauthorization, now with a deadline in March, 2009, for Congressional action to improve and expand it, or at least, continue it. There's always the danger that it could be eliminated, and that would be a crushing blow to American innovation and entrepreneurship.

We'll need to be involved as a small business community to educate and inform our legislators in the new Congress of the value of SBIR, to ensure that the program continues to foster the creation of innovative technology.

The SBIR Coach will be involved. Hopefully you will too. Stay tuned....