Are you one of America's Most Promising Companies?

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We all think we're special. Small technology businesses especially think so. Companies who win SBIR awards ARE special! Well, anyhow, they've won a limited funding competition. But does that mean they're going to be successful beyond an R&D effort? Not without having a lot of other factors be aligned. What are those factors? What makes one company more "promising" than another? And how does that translate to future fundability?

Forbes is curious to find out. So they've teamed with The Venture Alliance (TVA) to survey lots of small companies, do some assessment, and "identify the most promising of the bunch".

I read about this today in my issue of NetNews, the weekly newsletter of the National Association of Seed and Venture Funds (NASVF). Here's what it says:

TVA has developed a scoring algorithm based on a range of variables that determine a company's potential--and, ultimately, its worth to investors---including financial projections, current capitalization, market opportunity, intellectual property, management experience and others.

TVA crunches that data (which it collects via the survey) and reduces it to a "fundability score." Companies that score high theoretically have a better shot at raising money than those who don't.

TVA will do an analysis and produce a visual "Radar Graph" mapping that looks like this:

Those with top ratings will be considered for a spot on Forbes' upcoming list of America's Most Promising Companies. They will also be offered the opportunity to raise additional capital through TVA.

Here's the link to the survey: http://www.forbes.com/ampcSurvey/questionnaire.html

This is cool stuff! I'm going to combine this with my trademarked Funding Readiness Level (FRL)® index and really be able to provide my SBIR clients with a dose of realism that provides clues to exactly what has to be worked on to improve future "fundability" for commercialization.
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Small Bio speaks out on changing the SBIR eligibility rules

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Watch out BIG BIO, small bio has a bigger voice than you might think! Responding to the call to action from the SBTC, a group of FIFTY small biotech and medical device businesses have signed a letter to Chairman David Wu (House Science & Technology’s Technology & Innovation Subcommittee) saying, in effect, “BIG BIO doesn’t speak for us! Changing the SBIR rules will be harmful to the innovation economy being supported by the majority of small biotech businesses!”

Here’s the body of their letter:

The undersigned leaders of small biotechnology and medical device companies from throughout the U.S. respectfully request your assistance in opposing legislation that would give companies owned by venture capital (VC) firms unlimited access to the SBIR program.

Last year the House of Representatives passed HR 5819 that, if it had become law, would likely have permitted companies with tens of millions in financing to win an unlimited number of SBIR grants of unlimited dollar amounts. NIH grant reviewers in particular typically give significant weight to the preliminary data generated by applicants. Exceptionally well capitalized companies with expansive laboratory infrastructure and scientific personnel necessarily have an advantage in competing for these awards.

If VC owned firms are permitted to win the lion’s share of the mere 2.8% SBIR/ STTR set aside this would effectively shut out most of the small companies for which the SBIR program was originally created. This would have profound consequences to our nation’s economy and health care system. Companies in fields traditionally out of favor with VC firms, including vaccine development, orphan diseases, biodefense, diagnostics, research tools, and most early stage, high risk R&D, but which play a critical role in solving technical challenges facing the US, will be particularly disadvantaged if deep pocketed VC owned companies are permitted to usurp the SBIR program.

To the extent that the law is changed to permit more VC participation in SBIR it is imperative that safeguards be put in place to protect access to the program by firms that lack VC financing. These safeguards should include, at a minimum, the following:

(1) Caps on award size and total dollars awarded to any one firm should be established. Agencies would be permitted to exceed these caps only with funds taken from outside of the SBIR/STTR set aside;

(2) Limits should be placed on the overall percentage of the SBIR pool that may go to VC owned firms for at least the first few years to gauge the impact and any consequences of these changes;

(3) The SBIR/STTR set aside should be increased by at least a few percentage points to compensate for the increased competition in the program.

The above protections would expand access to the SBIR program while protecting small biotech companies that do not have VC investors, which includes the vast majority of emerging biotech firms.

Thank you for your consideration of our views.

Unlike others who have already made up their minds without knowing all the facts, Chairman Wu has been open to hearing both sides of this debate, and we applaud his refreshing willingness to include small businesses in discussions that involve them. Gee, what a concept!

If you agree with these sentiments, please copy the letter onto your own letterhead, add your own words for emphasis, and send it off to your Congressional Representatives and Senators. You’ll find contact information on www.SBIRreauthorization.com. You’ll also find this letter there complete with the fifty original signatories.

The National Small Business Association (NSBA) will hold its annual Washington Presentation, which includes a White House briefing, on June 9th and 10th. This year the focus will be on SBIR Reauthorization and Economic Stimulus procurement opportunities. The SBIR Coach will be there. See details at http://www.nsba.biz/wp. You’re invited to join us.
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Should the NIH be allowed to play by different SBIR rules?

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It's the issue that just won't go away. Eligibility for SBIR awards for VC controlled companies.

Will somebody please tell me why companies that now have received millions of dollars of outside investment would even care about grabbing a relatively few thousand dollars of grants intended for startups.

Reminds me of the rich bully on the playground stealing lunch money from the weaker and poorer kids.

The Small Business Technology Council (SBTC) sent out an appeal to its membership yesterday. I'm going to provide it verbatim:

Sign on to the NIH Letter Today!

During a recent hearing SBTC Executive Director Jere Glover testified before the Technology and Innovation Subcommittee of the House of Representatives’ Science and Technology Committee. Glover documented the success of the federal Small Business Innovation Research (SBIR) Program, which is due for renewal by Congress.

During the hearing Chairman David Wu (D-Ore.) suggested a compromise that would allow National Institute of Health (NIH) applicants to be exempt from affiliation rules preventing large venture capital (VC) owned companies from participating in the SBIR program, while keeping the restrictions in place for all other agencies. Glover objected to this compromise, pointing out that many small biotech companies oppose VC involvement in the SBIR, including those in the SBTC membership.

In response to this, an SBTC NIH member has drafted a letter to send to Rep. Wu urging him not to allow VC owned companies unrestricted access to the SBIR program. SBTC would like as many biotech and medical device firms as possible to sign on to this letter to show Wu that opposition to VC involvement in this program is not just limited to Department of Defense (DoD) awardees.

If you are a NIH awardee and would like your name on this letter, please send an email to Alec Orban.

Take Action Today!

View the NIH Letter
View Jere Glovers Testimony
Sign on to the NIH Letter

OK, here's your chance to voice your opinion. If you're a "biotech or medical device" company and wish to sign onto the letter, click the links above and do so.

If you have a good reason that you don't want to sign the letter (other than not wanting to stick your neck out), please use the Comments feature on this Blog and tell me your reasoning. I really want to understand the underlying thinking here.

My position on the VC issue is well documented. I am opposed to changing the eligibility rules. However, I'm a realist. If we must compromise on this in order to get SBIR reauthorized, than so be it. But let's do it smart and not fundamentally change the program.

So, convince me it's a good idea to broaden SBIR eligibility. Even selectively.

And please cut the crap about having had eligibility "taken away". We all know that really isn't true.
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SBIR Reauthorization – What are the issues?

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Only three months to go. Time to get serious. The House has begun the process. With any luck our legislators will actually pay attention to the issues, learn the truth, and improve the SBIR Program. We’ve got a tough battle facing us to overcome the lies being told and perception management techniques being used against us.

I actually had an Austin Business Journal reporter call me yesterday and ask me what I thought about the fact that “venture capital participating small businesses would have to leave their drug discovery innovations on the shelf because they couldn’t qualify for SBIR awards any more”.

Oh, Good Grief! She said she got the premise for the story from a Washington DC sister publication. Perception management strikes again. Boy did I give her an earful of the truth. Can’t wait to see what she actually writes in the story she said would be published today.

The VC issue dominates the SBIR reauthorization landscape. It’s important, yes. But it’s not the only issue. In a series of upcoming columns I’m going to highlight each of the issues, and shed some light on what’s important about them. Hopefully it will spur some comments and engage some debate.

Here’s the list of SBIR Reauthorization issues:

1. Eligibility (who may compete for awards)
2. Agency Allocation Base (% of R&D set-aside)
3. Award Caps for Phase I and II
4. Phase I bypassing – should it be permitted?
5. Multiple Phase II awards
6. Phase III funding and required support
7. State (FAST) and Rural Outreach support
8. Funding for SBIR/STTR administration costs
9. Streamlining the process of review and award
10. Special technology priority mandates
11. How long until we reauthorize again?

Some are more contentious than others, but all are important. We’ll discuss them one by one over the next few weeks.

I can see from this Blog’s analytics that we’re being monitored by those in Congress who really want to know what all sides think, so if you have an opinion here’s your chance to be heard. I’ll publish a comment that intelligently approaches an issue, whether or not I agree with it.

Rick Shindell published an issue of his SBIR Insider last evening. Lots of good info about what went on in those House hearings last week, including a video of Jere Glover’s testimony.

And, Rich Hendel sent out Boeing’s NSF SBIR topic interest list a few days ago. I expect to see the DOD 2009.2 interest list any day now. Write me if you’d like a copy of either of these.

Remember to keep up with what’s going on at www.SBIRreauthorization.com

Finally, today’s my lovely wife Kay’s birthday, and I’m taking the rest of the day off to pay some attention to her, including dinner out and some Country/Western dancing this evening at Billy Bob’s. She’s so patient with all of my SBIR travails, I just wanted to recognize her and have y’all join me in wishing her a Happy Birthday!
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