Playing Startup Leapfrog
Say, Mr. or Ms. Life Sciences Entrepreneur – How does a direct path to Federal funding sound? A means of gaining capital to accelerate technology development? A way to leapfrog your way to product commercialization?
Sound good? You bet it does. That’s why, if you’re a startup or other small life sciences business and you aren’t plugged into the Small Business Innovation Research (SBIR) program, you’re missing out big time.
SBIR and the companion Small business Technology Transfer Research (STTR) programs have Congressionally mandated requirements of all agencies that fund R&D to set aside 3.5% of their extra-mural research budgets for companies that have fewer than 500 employees.
Agencies that participate (and their recent SBIR/STTR allocations) include the National Science Foundation at more than $200 million, the National Institutes of Health at more than $900 million, and the Department of Defense at more than $1 billion. For entrepreneurs and start-up companies, SBIR and STTR offer the chance to plug directly into these sources of Federal funding.
The recent Brookings Institution report, Capturing the Next Economy: Pittsburgh’s Rise as a Global Innovation City, points out that our region is experiencing what we at PLSG call an “SBIR deficit,” stating, “[regional] pre-seed and other startup support activities are insufficient to meet the needs of the city’s deep bench of research entrepreneurs, and the gap is only growing as Pitt and CMU increase their translational research capacity.”
Our own more detailed analysis of the SBIR deficit indicates that the region is leaving about $13 million a year of grants from NIH and NSF on the table. That equates to regional startups missing out on roughly 30 seed-stage grants (at $150,000 each) and 10 early stage grants (at between $750,000 and $1 million each).
And please note the word “grants.” These are not loans or investments expecting a payback or share of equity. That also means the funding to your company is non-dilutive. And this region is not capitalizing on this available capital in anywhere near the potential that exists.
NIH’s current call (https://grants.nih.gov/grants/guide/pa-files/PA-18-574.html) includes literally hundreds of topics spanning dozens of institutes, centers, and divisions. We are especially pleased to see that it includes a number of topics related to Health IT, one of the Pittsburgh region’s most promising areas of life sciences start-up company proliferation and growth. Indeed, it reflects opportunities in all of the hottest Health IT markets and the most contemporary of technologies.
If you are SBIR-savvy, you already know that a single SBIR thread of R&D can provide nearly $5 million of funding for your start-up (combined Phases I, II and II-b). If you didn’t know that, now you do.
One thing you may not know is that they’ve changed some rules of engagement, including a new policy on clinical trials and a new process for submitting applications called FORMS-E. Details are in https://grants.nih.gov/grants/guide/notice-files/NOT-OD-18-123.html. The next deadline is April 5 – still plenty of time, but not much to waste.
My next blog will describe some specific areas of opportunity for local entrepreneurs interested in pursuing SBIR and STTR grants.
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