Introductory information about the federal SBIR/STTR grant program.

1. SBIR/STTR INNOVATION WORKSHOP
DECEMBER 9, 2015
SBIR and STTR 101
Small Business Innovation Research Small Business Technology Transfer
Karmjot Grewal
Program Manager
Office of Community and Economic Development
Email: kgrewal@csufresno.edu

2.  At ~$2.5B, SBIR/STTR is the largest Federal program available to help small
business inventors negotiate the innovation ecosystem:
 >Over $40B and 145,000 awards since 1982
 Averaging 10 patents/day
 For innovation investors, SBIR/STTR is non-diluted funding (no equity taken) used
to reduce risk, accelerate technology, and preserve your IP rights.
 This Fall Regional SBIR/STTR Innovation Summit in Austin is a one-stop entry into
SBIR/STTR for entrepreneurs – a great chance to talk directly with funders.
 SBIR/STTR reauthorization in 2011 focused on commercializing technology: on
delivering product or process to a customer.
Why SBIR/STTR?
2

3. Why SBIR/STTR? (cont.)
 Government’s incentives
 Test drive small business capability
 Proactive risk reduction
 Early/high-risk S&T with SBIR/STTR funding
 Competing approaches open up additional technology alternatives
 Non-competitive follow-on awards
 High level of matching funds
 Small Business’ incentives
 Largest source of early stage R&D funds for small firms
 Company retains data rights for 4 years (5 for DoD)
 Builds credibility of company’s research
 Follow-on awards are non-competitive
3

4. Program Overview
Small Business Innovation Research (SBIR): a set-aside
program created by Congress in 1982 for small business
concerns to engage in Federal R&D -- with potential for
commercialization.
Small Business Technology Transfer (STTR): a set-aside
program created by Congress in 1992 to facilitate
cooperative R&D between small business concerns and U.S.
research institutions -- with potential for commercialization.
3.0%
FY2016
0.45%
FY2016
SBIR and STTR were reauthorized by Congress in P.L. 112-81 for
2011 – 2017, with annual increases in the assessment of Federal
extramural RDT&E funds.
4

5. SBIR & STTR Funding Levels
 Agencies allocate a percentage of their extramural R/R&D budgets for the
SBIR & STTR programs
 SBIR: 3.0% (FY 2016), for agencies with >$100B in extramural R/R&D
 STTR: 0.45% (FY 2016), for agencies with >$1B in extramural R/R&D
 Congress has increased the allocation percentages since the programs were
initiated
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
1980 1990 2000 2010 2020
$B
0.0%
1.0%
2.0%
3.0%
4.0%
1980 1990 2000 2010 2020
SBIR
STTR
ALLOCATION PERCENTAGEAVG AMOUNT AWARDED*
*source: SBIR.gov, 5/15/2014
5

6. Program Goals
SBIR est. 1982
 Stimulate technological innovation
 Use small business to meet Federal R&D needs
 Foster and encourage participation by minorities and
disadvantaged persons in technological innovation
 Increase private-sector commercialization innovations derived
from Federal R&D
STTR est. 1992
 Stimulate and foster scientific and technological innovation
through cooperative research and development carried out
between small business concerns and research institutions
 Foster technology transfer between small business concerns
and research institutions
6

7. SBIR Program Eligibility
 Organized for- profit U.S. business
 500 employees or fewer, including affiliates
 More than 50% directly owned and controlled by one or more individuals who
are citizens or permanent resident aliens of the United States
 PI’s primary employment must be with the small business concern
New eligibility authority available to Agencies from reauthorization:
 More than 50% directly owned and controlled by one or more for-profit
businesses, each being more than 50% owned and controlled by one or more
individuals
 NIH initiative: Be a concern which is more than 50% owned by multiple venture
capital operating companies, hedge funds, private equity firms, or any
combination of these. No single venture capital operating company, hedge
fund, or private equity firm may own more than 50% of the concern.
7

8. STTR Program Eligibility
 Applicant is a small business concern
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 (added by reauthorization statute)
 Intellectual property agreement
Allocation of data rights for four years
Right to carry out follow-on R&D and commercialization via
Phase III contracts and investment
8

9. PHASE II Full Research, R&D to Prototype
 Award Guideline: $1M (SBIR)/$1M (STTR) … varies by Agency … can
rise to $1.5M, or more with waiver
 Duration: 2 years
PHASE III Commercialization
 Subsequent investment to achieve commercialization, or sale
 Use of non-SBIR/STTR Funds
PHASE I Feasibility Study
 Award Guideline: $150K … varies by Agency … can rise to $225K
 Duration: 6 months (SBIR)/12 months (STTR)
SBIR/STTR: 3-Phase Competitive Program
9

10. PHASE II Full Research, R&D to Prototype
 SBIR: 33% of Awards | 74% of Funds | Average Size $919,943
 STTR: 30% of Awards | 67% of Funds | Average Size $862,820
PHASE III Commercialization
 Use of non-SBIR/STTR Funds
PHASE I Feasibility Study
 SBIR: 67% of Awards | 26% of Funds | Average Size $158,304
 STTR: 70% of Awards | 33% of Funds | Average Size $189,530
SBIR/STTR: Phases by the Numbers (FY2014)
10

11. What Are My Funding Options?
11
Discovery
Proof-of
Concept
Product
Design
Product
Development
Manufacturing/
Delivery
Idea Pre-seed
Funding
Seed
Funding
Expansion/Mezzanine
Operating Cap.
Friends and Family
Angels
Seed Funds
Venture Funds
Founder
Institutional Equity
Loans / BondsAngel Groups
Start-up
Funding
SBIR
Phase I Phase II Phase III

12. SBIR and STTR Awards
 Critical Early Stage R/R&D funding
 The SBIR & STTR programs provide funding for high risk,
innovative projects
 SBIR & STTR awards provide credibility when seeking funding
or partners
 SBIR/STTR awards are executed as grants or contracts
 No repayment
 No dilution of company equity
 No cost sharing is required for Phases I and II. Cost sharing
may not be used as an evaluation criteria.
12

13. What Does a SBIR/STTR Firm or Entrepreneur Look Like?
13
 Doesn’t have to have yet formed the company
 Company must be for profit, US owned and operated, and
under 500 people
 Typically they are primarily a R&D organization both in
what they do and their staff. Average firm size is 9. As
they get larger (over 30) you see balance or product
development and sales in addition to R&D
 Focus is on performing R&D – Not for purchasing
equipment, commercializing a technology that has
already been developed, or one that has very low risk and
only needs capital

14. Intellectual Property
 Patent rights
 Small business concerns
normally retain the principal
worldwide patent rights to any
invention developed with
Government support
 Government Use
 The Federal Government
receives a royalty-free license
for Federal Government use
14
http://www.uspto.gov/

15. Data Protection
 Protection Period
 Data generated from your R/R&D is
protected from public disclosure for a
minimum of 4 years (civilian agencies) or
5 years (DOD) after the conclusion of your
award (Phase I, Phase II, or federally
funded Phase III)
 Government Use
 The Government retains a royalty-free
license for Government use of any
technical data delivered under an SBIR
award, whether patented or not
15

16. 16
BUDGETS

17. SBIR/STTR Budgets by
Agency, FY 2015
DOD
NIH*
DOE
NSF NASA All
Others
~$2.5B in FY15
across all agencies
Agencies with SBIR & STTR Programs Budget
Department of Defense (DOD) $ 1.070 B
Department of Health and Human Services
(HHS): National Institutes of Health (NIH)*
$797.0 M
Department of Energy (DOE), including Advanced
Research Projects Agency (ARPA-E)
$206.1 M
National Science Foundation (NSF) $180.1 M
National Aeronautics and Space Administration
(NASA)
$ 176.0 M
Agencies with SBIR Programs Budget
U.S. Department of Agriculture (USDA) $20.3 M
Department of Homeland Security (DHS):
Science and Technology Directorate (S&T) and
Domestic Nuclear Detection Office (DNDO)
$17.7 M
Department of Education (ED)* $8.4 M
Department of Transportation (DOT) $7.9 M
Department of Commerce (DOC): National
Oceanic and Atmospheric Administration (NOAA)
and National Institute of Standards and
Technology (NIST)*
$7.5 M
Environmental Protection Agency (EPA) $4.2 M
Grants
Contracts
*NIH and ED also issue contracts; Within DOC, NIST issues grants and NOAA issues contracts
17

18. Snapshot Across the US (FY2011-2014)
18
$3,790,314,574.23
$289,879,650.33
$432,061,165.72
$433,781,861.53
$452,770,411.58$467,026,829.68$532,377,340.20
$543,594,132.06
$634,710,717.00
$1,333,573,513.20
$2,283,767,814.83
All Other States & US Territories
FL
OH
PA
TX
CO
NY
MD
VA
MA
CA
Top total award dollars went primarily to 10 states:
CA, MA, VA, MD, NY, CO, TX, PA, OH and FL

19. Agency SBIR Differences
Granting Agencies
 Investigator initiates
approach
 Less-specified topics
 Assistance mechanism
 More flexibility
DOD DHS
HHS/NIH NASA
EPA
DOT DOC
Contracting Agencies
 Agency establishes plans,
protocols, requirements
 Highly focused topics
 Procurement capability
 More fiscal requirements
HHS/NIH NSF
USDA
DOE DoED
19

20. 20
TOPICS

21. Identifying Agencies With Topic Areas Aligned
With Your Interests/Technologies
 Search Agency Solicitations
 Agency Websites: available at http://www.sbir.gov/agency-contacts
 sbir.gov: http://www.sbir.gov/solicitations
 grants.gov and fbo.gov: www.grants.gov, www.fbo.gov
 SBIR Gateway: http://www.zyn.com/sbir
 Follow up with agency personnel listed with individual topics
 Attend SBIR Conferences: national, regional, and state
 One-on-one meetings with agency program managers
21

22. sbir.gov
22

23. sbir.gov
23

24. Fastest Way to Find Topics That Relate to Me?
Use www.zyn.com
24
Search with key words that
describe your tech expertise,
such as “additive manufacturing”

25. Search Results on www.zyn.com/sbir for
“Additive Manufacturing” Topics
National SBIR/STTR Gateway Search Service Results by Zyn Search© Searched SBIR/STTR Topic files for "additive manufacturing" and found 25
matches.
(SBIR) Air Force - Electron-Beam Additive Manufacturing Process Control for Titanium Alloys
Score: **** Electron-Beam Additive Manufacturing Process Control for Titanium Alloys Air Force SBIR 2009.1 - Topic AF091C-
002 Aviation and Missile RD&E Center (Missile) - Otho Thomas - (256) 842-9227 Opens: December 8, 2008 - Closes: January 14,
2009 AF091C-002 TITLE: Electron-Beam Additive Manufacturing Process Control for Titanium Alloys TECHNOLOGY AREAS:
Materials/ Processes....
(SBIR) Navy - Additive Manufacturing for Transducer Development
Score: **** Additive Manufacturing for Transducer Development Navy SBIR 2012.1 - Topic N121-094 ONR - Ms. Tracy Frost -
tracy.frost1@navy.mil Opens: December 12, 2011 - Closes: January 11, 2012 N121-094 TITLE: Additive Manufacturing for
Transducer Development TECHNOLOGY AREAS: Materials/Processes, Sensors ACQUISITION PROGRAM: This topic is intended to
benefit future FNC projects for ASW, MIW & UUVs....
(SBIR) Air Force - Method for Evaluating Candidates for Additive Manufacturing (AM) Processes
Score: **** Method for Evaluating Candidates for Additive Manufacturing (AM) Processes Air Force SBIR 2014.1 - Topic AF141-
213 Opens: December 20, 2013 - Closes: January 22, 2014 AF141-213 TITLE: Method for Evaluating Candidates for Additive
Manufacturing (AM) Processes KEY TECHNOLOGY AREA(S): Materials / Processes ...
(SBIR) Navy - Aluminum Alloy Development and Use in Additive Manufacturing Process Design for Drive System Gear Boxes
Score: **** Aluminum Alloy Development and Use in Additive Manufacturing Process Design for Drive System Gear Boxes Navy
SBIR 2014.1 - Topic N141-062 ONR - Ms. Lore Anne Ponirakis - loreanne.ponirakis@navy.mil Opens: Dec 20, 2013 - Closes: Jan 22,
2014 N141-062 TITLE: Aluminum Alloy Development and Use in Additive Manufacturing …
25
This search engine finds relevant Topics published by various Agencies.

26. What Does A Defense Topic Look Like?
26

27. What Do Health/Medical Topics Look Like?
27

28. 28
APPLICATIONS

29. Keys to Submitting a Good Application
 Read and understand the topic
 Communicate with the technical person at the agency responsible for the
topic if you require clarification on the topic scope
 Agencies, particularly contracting agencies, may have periods when you
cannot communicate directly with their personnel to ask questions
because of fairness requirements
 Comply with the application requirements (read the solicitation)
 Get registrations done early
 Include required documents; pay attention to word and page limits
 Don’t submit at the last minute!
29

30. Review of Applications
 Granting agencies
 Typically use external peer review
 Reviewers agree to keep
application information
confidential and certify that they
don’t have conflicts of interest
 Contracting agencies
 Typically utilize agency personnel
for review
30

31. 31
COMMERCIALIZATION

32. Commercialization
 “Commercialization” refers to technology maturation and
customer capture, whether by direct sale or license of a
technology, or integration into a larger product.
 Since the SBIR and STTR programs were created there has been
increasing emphasis on increasing positive commercialization
outcomes from SBIR and STTR awards
 The 2011 Reauthorization statute mandated these changes
 Implementation of Transition Rate metrics
 Increased flexibility for Technical/Commercialization Assistance
 Sequential Phase II awards
 Commercialization Readiness Pilot Program for Civilian Agencies
32

33. Commercialization Transition Rate
 The SBIR/STTR Reauthorization Act of 2011 required
all agencies to implement two transition rate metrics
 Phase I  Phase II transition rate
 Applies to companies that have received > 20 Phase I awards in the past
5 years
 Metric calculation example for FY 2014
33
𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝑷𝒉𝒂𝒔𝒆 𝑰𝑰 𝑨𝒘𝒂𝒓𝒅𝒔 𝑭𝒀 𝟐𝟎𝟎𝟗 − 𝟐𝟎𝟏𝟑
𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝑷𝒉𝒂𝒔𝒆 𝑰 𝑨𝒘𝒂𝒓𝒅𝒔 𝑭𝒀 𝟐𝟎𝟎𝟖 − 𝟐𝟎𝟏𝟐
≥ 𝟎. 𝟐𝟓

34. Commercialization Transition Rate (cont.)
 Phase II  Phase III success rate
 Applies to companies that have received > 15 Phase II awards during the last 10
fiscal years, excluding the two most recently completed fiscal years
 Metric calculation example for FY 2014
 Companies that fail to meet either metric will be ineligible to apply for any
Phase I awards for 1 year
 Prior to submitting your application, companies can see if they fail to meet
either metric by checking the SBA company registry (sbir.gov)
34
𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 + 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑓𝑟𝑜𝑚 𝑃ℎ𝑎𝑠𝑒 𝐼𝐼 𝐴𝑤𝑎𝑟𝑑𝑠 𝐹𝑌 2002 − 2011
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑃ℎ𝑎𝑠𝑒 𝐼𝐼 𝐴𝑤𝑎𝑟𝑑𝑠 𝐹𝑌 2002 − 2011
≥ $100,000
OR 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑃𝑎𝑡𝑒𝑛𝑡𝑠 𝑓𝑟𝑜𝑚 𝑃ℎ𝑎𝑠𝑒 𝐼𝐼 𝐴𝑤𝑎𝑟𝑑𝑠 𝐹𝑌 2002 − 2011
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑃ℎ𝑎𝑠𝑒 𝐼𝐼 𝐴𝑤𝑎𝑟𝑑𝑠 𝐹𝑌 2002 − 2011
≥ 0.15

35. Commercialization Assistance
 Technical/Commercialization Assistance Programs
 $5000 during Phase I and $5000/year in Phase II
 Agencies provide these services through one or more
contractors
 Small businesses may elect to specify their own vendor instead
of using the agency’s contractor(s)
 The goal of these assistance programs is to improve
commercialization planning and outcomes
35

36. Commercialization Readiness Programs
 Commercialization Readiness Program
(CRP) at DOD
 The purpose of the CRP is to accelerate
the transition of SBIR and STTR funded
technologies to Phase III, especially
those that lead to programs of record
and fielded systems
 Commercialization Readiness Pilot
Programs at Civilian Agencies
 Pilot programs being initiated at some
of the agencies
 10% of SBIR and STTR funding may be
used towards improving
commercialization outcomes
36

37. Commercialization Paths
 The path to commercialization requires many small businesses to successfully
navigate a path that involves additional investment (federal and private), a
choice of business models (licensing vs. manufacturing), and partnering
arrangements
37

38. Tracking Commercialization Outcomes
 Improving Commercialization
 Agencies and SBA are gathering commercialization outcomes in
order improve the operation of the SBIR and STTR programs
 The National Academy of Sciences is required to carry out a study
every four years on the SBIR and STTR programs
 Data Requests
 Please comply with requests to submit data on your follow-on
investments and revenues as part of these efforts
 Individual small business data will be kept confidential
38

39. P.L. 112-81, SIGNED INTO LAW
12/31/2011, CONTAINS 41 NEW
PROVISIONS THAT TRANSFORM
SBIR AND STTR
39
SBIR/STTR
REAUTHORIZATION UPDATE

40. Funding Related Provisions
FY Set-aside SBIR Set-aside STTR
2011 2.5% 0.30%
2012 2.6% 0.35%
2013 2.7% 0.35%
2014 2.8% 0.40%
2015 2.9% 0.40%
2016 3.0% 0.45%
2017 3.2% 0.45%
Section 5102 – SBIR and STTR Allocation Increase
40

41. Funding Related Guidelines
Section 5103 – SBIR and STTR Award Levels
Allowed to increase by up to 50% over guidelines after which need SBA Waiver
* Agency waiver from SBA required to exceed award + 50%
Program Phase I Phase II Previous
SBIR $150,000 $1,000,000 150K/1M
STTR $150,000 $1,000,000 100K/750K
Program Phase I Phase II Previous
SBIR $225,000 $1,500,000 Flexible
STTR $225,000 $1,500,000 Flexible
41

42. Provisions Impacting SBCs
 Section 5108 –Special Acquisition Preference
Agencies, prime contractors shall issue Phase III awards to the greatest extent practicable.
 Section 5125 – Definition of Phase III
“Phase III is work that derives from, extends or completes efforts made under prior
SBIR/STTR funding agreements.”
 Section 5138 – Technology Insertion Reporting
Phase III award data must be included in SBA’s annual report to Congress.
 Section 5144 – Simplified Paperwork Requirements
SBA shall issue guidelines to ensure that each Federal agency simplifies and standardizes
the paperwork requirements of small businesses.
 Section 5162 – Competitive Selection Procedures
All awards must be made pursuant to competitive and merit-based selection procedures.
42

43. Provisions Impacting SBCs
 Section 5104 – Agency and Program Flexibility
 A firm may receive a Phase II award from an agency that is not the one that
awarded their Phase I award.
 A firm may receive a Phase II award under a program that is not the one
that they received their Phase I award under.
 Section 5105 – Elimination of Phase II Invitations
Invitation, pre-screening and pre-selection processes are no longer permitted
for Phase II proposal submission.
 Section 5106 – Pilot to Allow Phase Flexibility
Authorized to establish a Pilot Program that will allow for a Phase II award to
be made without regard to whether or not the firm received a Phase I award.
43

44. Provisions Impacting SBCs
 Section 5107 – Participation by VC Firms
Firms majority-owned by venture capital operating companies, hedge funds
and private equity are now included in the SBIR program.
 NIH, DOE, NSF up to 25% NIH has implemented
 DoD and other agencies 15%
 Section 5109 – Collaborating with Federal Labs
No waiver is required for partnership with Federal Labs and Centers.
 Section 5111 – Additional SBIR/STTR Awards
Firms are eligible to receive one additional Phase II award for continued work.
 Section 5121 – Technical Assistance for Awardees
The amount allocated for Technical Assistance for awardees is increased to
$5,000 per award per year. Phase II and STTR awards now included.
44

45. Provisions Impacting SBCs
 Section 5122 – Commercialization Readiness Program at DoD
 The Commercialization Pilot Program is no longer a pilot, and is
called the Commercialization Readiness Program.
 Program is extended to STTR.
 Section 5123 – Commercialization Readiness Pilot Program for Civilian
Agencies
Allows Civilian agencies to allocate not more than 10% of SBIR funds to
establish commercialization readiness pilot programs.
 Section 5126 – Shortened Award Decision Period
Selections must be made within 90 days of the solicitation close.
NIH & NSF one year from solicitation close.
45

46. Provisions Impacting SBCs
 Section 5140 – Consent to Release Information
Firms must give consent before their information is released to Economic
Development Organizations.
 Section 5143 – Reducing Fraud, Waste and Abuse
SBA must include measures in the SBIR Policy Directive to prevent fraud,
waste and abuse in the SBIR/STTR programs.
 Section 5165 – Commercialization Success
 Federal agencies must establish a system to measure a firm’s success rate
of moving from Phase I to Phase II and from Phase II to Phase III.
 Agencies must establish a minimum threshold for these rates.
 If a firm does not meet these minimum thresholds, they will be suspended
from the program for one year.
46

47. Reporting Related Provisions
 Section 5138 – Technology Insertion Reporting
Phase III award data must be included in the annual report to Congress.
 Section 5161 – Report on SBIR/STTR Program Goals
Federal agencies will develop and report metrics that evaluate the
effectiveness and benefit of the SBIR/STTR programs to the people of
the United States.
 Section 5167 – Report on Manufacturing Activities
The Manufacturing report is now included in the Annual Report to
Congress.
47

48. Audit/Study Related Provisions
 Section 5136 – Accuracy in Funding Base Calculations
GAO will complete an annual fiscal and management audit.
 Section 5137 – Evaluation by National Academy
 The National Academy of Sciences (NAS) will evaluate the SBIR/STTR
Programs.
 The NAS will evaluate the number of positions created by each SBIR award.
 Section 5139 – Intellectual Property Protections
The Comptroller General must conduct a study of Intellectual Property
Protections in the SBIR program.
 Section 5142 – GAO Study of VC
Comptroller General shall conduct a study of the impact of requirements
relating to VC operating company, hedge fund, and private equity firm
involvement in the SBIR/STTR programs.
48

49. Status of SBIR/STTR
Reauthorization Provisions
 Phased implementation of reauthorization provisions
commenced 28 January 2013 and is well underway
 Policy Directives are issued and available at www.sbir.gov
 Eligibility and other rules are described in detail in individual
Solicitations: read the Solicitations carefully!
 Coordinate with SBA and other agencies
 See Agency-specific talks for details!
49

50. 50
FAQs

51. 51
GETTING THE MOST FROM THE FALL
REGIONAL SBIR/STTR SUMMIT

52. What Federal Agencies Are Interested in My Technology?
52
 Go to www.sbir.gov
 Find “Agency Microsites”
on the homepage.
 Review Agency snip-its
and websites describing
Agency mission, website,
uniqueness, budget, topic
announcement schedule
and other information.
Department of Defense Microsite

53. Proposals that Win SBIR/STTR Awards
Results differ by Agency, but
government-wide about one-
third of FY awardees are
newcomers each year.
You can do this!
53

54. Intellectual Property, Data Rights Issues
 While Federal guidance is available from the U.S. Patent & Trade
Office (USPTO), many states provide assistance – learn how to
search for it.
 USPTO Pro Bono Program attorneys are available here for consultation –
remaining space subject to availability
54

55. FY2016 Outreach Planning
55

56. Questions?
56