Daniel Greenberg discusses how indie game studios can obtain SBIR funding from the US government. The Small Business Innovation Research (SBIR) program provides grants and contracts for small businesses to conduct research and development that has both commercial potential and meets federal research needs. Greenberg details the SBIR application process, including phases of funding (Phase I up to $150k, Phase II up to $1M), how indirect costs can help sustain a studio, and how games can address government research needs and qualify for funding. He encourages indie studios to view SBIR as a way to build a sustainable company through continual funding rather than seeing it as a one-time investment.

1. Finding SBIR Funding
For An Indie Game Studio
Daniel Greenberg
President, MediaRez

2. Freelance Game Design
● Professional game developer since college
● Games sold millions of copies
● Won numerous awards

3. Daniel Greenberg

4. Game Developer to Studio Head
● Transitioned from a freelance game
developer to CEO of a game startup
● Awarded Eight SBIR grants and contracts
● Funded several years of startup
development
● Here’s how:

5. How do I fund my own game?

6. How do I fund my own game?

7. How do I fund my own game studio?

8. How do I fund my own game studio?

9. How do I fund my own game studio?

10. Startup studio funding needs to be
continual, not just one project
● early-stage
● high-risk
● research and development
● small business, maybe a micro-business
(like, one person)

11. The Dilemma of Game Funding
● Savings / Credit Cards
● Fools, Family, and Friends
● Bank Loans
● Publishing Deal
● Angel Investors / Incubators
● Venture Capital
● Crowdfunding

12. The Dilemma of Game Funding
● Savings / Credit Cards
● Friends and Family
● Bank Loans
● Publishing Deal
● Angel Investors / Incubators
● Venture Capital
● Crowdfunding

13. The Dilemma of Game Funding
● Savings / Credit Cards
● Friends and Family
● Bank Loans
● Publishing Deal
● Angel Investors / Incubators
● Venture Capital
● Crowdfunding

14. The Dilemma of Game Funding
● Savings / Credit Cards
● Friends and Family
● Bank Loans
● Publishing Deal
● Angel Investors / Incubators
● Venture Capital
● Crowdfunding

15. Free Funding
● Game industry seed money:
● Unreal Dev Grants $5M, VR makers, Jams
● Nations directly fund games:
● Nordic games, UK fund, US Army $50M
● Foundations
● Robert Wood Johnson games for health
● IGDA Foundation

16. Free Funding
● Game industry seed money:
● Unreal Dev Grants $5M, VR makers, Jams
● Nations directly fund games:
● Nordic games, UK fund, US Army $50M
● Foundations
● Robert Wood Johnson games for health
● IGDA Foundation

17. Are these all the funding sources?

18. Are these all the funding sources?

19. Funding scarce for startup game
studios, because:
● early-stage
● high-risk
● research and development
● small business, maybe a micro-business
(like, one person)

20. Would you like to tap into:
“…the nation's largest source of early
stage / high risk R&D funding for small
business.”
-Small Business Association

21. US Seed Investments FY 2010

22. Who could possibly be so awesome?

23. Who could possibly be so awesome?

24. Purpose of SBIR
“…to provide funding for some of the best
early-stage innovation ideas -- ideas that,
however promising, are still too high risk
for private investors, including venture
capital firms.“
-SBIR founder Roland Tibbetts

25. Why would they fund games?

26. Why would they fund games?
● Stimulate technological innovation;
● Meet federal research and development needs;
● Increase private sector commercialization of
innovations;
● Foster entrepreneurship by socially and
economically disadvantaged persons

27. But why would they fund games?

28. Because games solve problems

29. Govt game funding is growing

30. Dept Ed / Institute of Education Sciences

31. What is this SBIR thing?
● SBIR: Small Business Innovation Research
● STTR: Small Business Technology Transfer
● Administered by US Small Business Association
● NOT an SBA loan
● Grants and Contracts

32. Which govt. agencies fund SBIR?

33. Only $2.3 B? Why not go for the
other 96.5% of the R&D budget?

34. Only $2.3 B? Why not go for the
other 96.5% of the R&D budget?
● Because that goes mostly for big
companies and universities
● Funding agencies rarely award that
money to small businesses
● My advice for serious game makers:
start with SBIR

35. Access to financial capital
● Hundreds of active small businesses
● 160,000 awards granted
● $2.5 billion annual set-aside for small business

36. Access to financial capital
● Hundreds of active small businesses
● 160,000 awards granted
● $2.5 billion annual set-aside for small business

37. Grants and Contracts
● OK, maybe they can fund a game, but
how are they sustainable for starting and
running a company?

38. Grants and Contracts
● OK, maybe they can fund a game, but
how are they sustainable for starting and
running a company?
● SBIR/STTR designed to build companies.
Not just products

39. The Magic of Indirect Costs
● Fringe Benefits
● Health insurance, business insurance, courses
● Overhead (NIH cap 40% for first grant)
● Rent, phones, supplies, accountant, etc.
● Fee (up to 7% of total grant)
● $1.5 million Phase II grant = $100,000

40. What SBIR is not:
● A loan
● A dilutive investment
● An end to your IP

41. What SBIR is not:
● A loan – No repayment
● A dilutive investment – No loss of company
● An end to your IP – Keep IP rights

42. Break it down for me

43. Break it down for me
● Uncle Sam pays you to make the game
● You sell the game
● You keep the profits

44. What SBIR is:
● Small Business
● Innovation
● Research

45. What SBIR is:
● Small Business – under 500 employees;
for-profit; over 50% US owned
● Innovation – must be novel
● Research – must add to R&D

46. What’s the SBIR catch?

47. What’s the SBIR catch?
● Real product is the research – not tech
● Must meet federal R&D needs
● Takes a long time – 6-9 mos to decide
● Requires grant writing (or hiring one)
● Award rate is only about 10-20%

48. What’s the SBIR catch?
● Real product is the research – not tech
● Must meet federal R&D needs
● Takes a long time – 6-9 mos to decide
● Requires grant writing (or hiring one)
● Award rate is only about 10-20%
●(Compare to about 1% award rate for VCs)

49. How much $$$ can I get?

50. How much $$$ can I get?
●Phase I (6-12 mos) $150,000
●Phase II (2 years) $1,000,000

51. How much $$$ can I get?
●Phase I (6-12 mos) $150,000
●Phase II (2 years) $1,000,000
●Protip:
●Phase I $225,000
●Phase II $1,500,000

52. What are these Phases?
●Phase I: Feasibility study, proof of
concept, get pilot data
●Phase II: Efficacy study, build prototype

53. What are these Phases?
●Phase I: Feasibility study, proof of
concept, get pilot data
●Phase II: Efficacy study, build prototype
● Protip:
● Helps to have pilot data before Phase I
● Helps to make a prototype during Phase I

54. I’m just a game developer, not a
researcher…

55. I’m just a game developer, not a
researcher…
● That is a feature, not a bug.
● You can hire the researchers you need
● You want funding reviews saying:

56. I’m just a game developer, not a
researcher…
● That is a feature, not a bug.
● You can hire the researchers you need
● You want funding reviews saying:
“The game development experience instills a
high level of confidence they can complete
the work proposed.”

57. I’m an employee. Without
funding, my startup can’t afford
to hire me. Catch-22?

58. I’m an employee. Without
funding, my startup can’t afford
to hire me. Catch-22?
● No! Join your company after SBIR award.
● Just be employed by your own company
over 50% at award time. (< full time)

59. I’m an employee. Without
funding, my startup can’t afford
to hire me. Catch-22?
● No! Join your company after SBIR award.
● Just be employed by your own company
over 50% at award time. (< full time)
● Protip: Ask your boss for 49% employment.

60. I’m a virtual company. They’ll just
toss my application, right?

61. I’m a virtual company. They’ll just
toss my application, right?
● No! You can apply as a one person company

62. I’m a virtual company. They’ll just
toss my application, right?
● No! You can apply as a one person company
● Describe how you will hire employees or
subcontract to partners by the award date –
by offering them grant money.

63. I’m a virtual company. They’ll just
toss my application, right?
● No! You can apply as a one person company
● Describe how you will hire employees or
subcontract to partners by the award date –
by offering them grant money.
● Protip: Ask for contingent letters of support

64. How do I find researchers?

65. How do I find researchers?
● Call around
● Make a deal with researcher or a University
research department.
● You supply innovation, they supply research

66. How do I find researchers?
● Call around
● Make a deal with researcher or a University
research department.
● You supply innovation, they supply research
● Protip: Many researchers want to take part
in innovative projects they can’t do by
themselves.

67. Hiring a Researcher:
● SBIR – “primarily employed” by you
● or up to 1/3 of the grant to contractors

68. Hiring a Researcher:
● SBIR – “primarily employed” by you
● or up to 1/3 of the grant to contractors
● STTR – you can contract for a PI who is
not your employee, but you must give
the non-profit research institution partner
at least 30% of the work/grant money
(but no more than 60%). #complicated

69. Limitations of STTR
● Formal Cooperative R&D Effort
• Minimum 40% by small business
• Minimum 30% by U.S. research institution
● U.S. Research Institution
• College or university; other non-profit research
● organization; Federal R&D center
● Intellectual Property Agreement
• Allocation of rights in IP and rights to carry out
● follow-on R&D and commercialization

70. Principal investigator:
● The PI is usually the technical lead on the
project.
● You can be PI or you can have a
researcher be a co-investigator.
● You manage the project, they manage
the research

71. A ton of registrations required
 DUNS Number
 System for Award Management
Notarized letter
 SBA.gov Company Registry
 Payment Management System (HHS)
 Grants.gov & eRA Commons (HHS)
 FastLane (NSF)
 DOD Submission Website (DOD)
Protip: Start registering EARLY!

72. Upside of SBIR:

73. Upside of SBIR:
● Gets easier on future grants (learning
curve flattens; first one is the hardest)
● Helpful to smooth out cash flow
● Good for a stream of grants & products
● Really can build a company
● Protip: VCs give more and dilute less for
products already built

74. Downside of SBIR:
● Time - patience required (and rewarded!)
● Commitment – no shortcuts
● Speed of government
● Slow research cycles vs fast game cycles
● Govt. audits – get specialized accountant

75. Meeting govt needs sounds boring

76. Meeting govt needs sounds boring
● SBIR might not be the program for you

77. Meeting govt needs sounds boring
● SBIR might not be the program for you
● Except…

78. Meeting govt needs sounds boring
● SBIR might not be the program for you
● Except…
● Some SBIR companies are making games
that look and feel indistinguishable from
entertainment games

79. Funding Opportunities
● sbir.gov
● projectreporter.nih.gov
● acq.osd.mil/osbp/sbir
● ies.ed.gov/sbir
● ED Games Expo – Kennedy Center

80. “Serious” Games
● Games can make people better and make
the world a better place.
● Games ALREADY perform massive pro-
social functions.
● I wanted to prove it.

81. RecoveryWarrior TM
● Four relapse prevention games
● Randomized Clinical Trial with GWU
● Jump 37% abstinent to 72% abstinent
● …four weeks after last dose of gameplay
● Gameplay also improved treatment
adherence
Made possible in part by HHSN271201400060C

82. Why are you giving away funding
secrets to potential competitors?

83. Why are you giving away funding
secrets to potential competitors?
● We need better serious games
● That is the way of game developers- the
best spirit of developers and the IGDA
● Also- I don’t think of it as cutting a small
pie even smaller…

84. Make the pie bigger for everyone.

85. More SBIR info: www.sbir.gov
Contact:
● Daniel Greenberg, MediaRez