SBIR Road Tour
Is Grant Funding Really Available to Entrepreneurs?
In July, I attended a workshop with representatives from government agencies that implement SBIR grants for businesses at the research stage. SBIR stands for Small Business Innovation Research, and the program is often called America’s Seed Fund. iRobot is an example of a company that started with SBIR funding from the Department of Defense to research building robots for the military before launching the robotic vacuum seen in many living rooms today! There is a major gap in capital available at the research stage, which is the reason the government operates the SBIR program.
In the morning, each agency gave a description of the type of research they are looking for and advice for submitting research grant applications. Presenters stated that up to 20% of phase one applications for $225,000 grants are funded. I was shocked to hear this! Those odds are better than a job application! After receiving a phase one grant; up to half of phase two applications are funded with an additional $600,000 to $1.5 million for commercialization. After hearing some statistics about just how possible it is to receive an SBIR grant I immediately made a few notes to follow up with early stage companies we have talked to recently.
The afternoon was divided into three breakout sessions. My time was spent in the sessions titled SBIR and Intellectual Property, Licensing and Tech Transfer from the University of Minnesota, and Licensing for Fun (For Profit). I selected these sessions due to the high-quality presenters, and to take a deeper dive into intellectual property. It was very interesting to hear the university tech licensing office perspective which can be summarized as: get the technology out of the university and into use. A few times throughout the day a strategy of licensing technology from a university, building the technology out with SBIR grant funding, and then turning it into a real business when its truly ready for capital from investors.
I left the event with a much more positive outlook on grant funding. The meeting was also great for networking. I met founders of three companies that were trying to solve a problem related to agriculture, and I was able to connect with some of the presenters. Going forward I plan to direct companies that are not ready for private capital to the SBIR program when it may fit, and look forward to seeing companies coming out of the program ready to build a business.
Written by Spencer Stensrude, Investment Analyst