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Project Financial Analsis for Company

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					 National Science Foundation
       SBIR/STTR Program
             F. C. Thomas Allnutt
Division of Industrial Partnerships & Innovation

            Modified and updated by Joe Graben, Director
            USM Business & Innovation Assistance Center
                            May 1, 2009




                                  Vermont June 2008 – Grant Writing
    Participating Agencies
                 DOD    Defense
                 HHS    Health
                 NASA   Space
                 DOE    Energy
                 NSF    ~$110 Million
                 DHS    Homeland Security
                 USDA   Agriculture
                 DOC    Commerce
                 EPA    Environment
                 DOT    Transportation
TOTAL ~ $2.3B    DoED   Education
 Est. FY 2008
NSF SBIR/STTR Innovation Model
    Phase I B               Phase IIB
                           Third-Party
   Third-Party
  Investment +
                 Unique   Investment +
                                                 Private Sector or
                                                    Non-SBIR
     1:2 NSF     to NSF      1:2 NSF
                            Matching
                                                    Investment
    Matching                             MATCH
                                         MAKER

    PHASE I                 PHASE II                 PHASE III
   Feasibility              Research                  Product
   Research                  towards               Development to
  $100k/6 mos               Prototype               Commercial
                          $500k/24 mos                Market




                                           Taxes
    Federal
  Investment
    Phase I - Solicitation Topics
   2 Solicitations released per calendar year, typically:
     – Sept. for Dec. closing

     – March for June closing

   Each Solicitation will offer 1 or more topics that
    represent:
     – Investment/business-focused technologies

     – Market-driven technologies

     – Special topics in response to National needs

    Keep a watch on the topic offerings of the current
    solicitation for opportunities most relevant to you
New Developments!
 Current solicitation is only SBIR
 Three topics:
  •   Bio/Chemical Technologies (BC)
  •   Software & Systems (SS)
  •   Electronics, Components, and Engineering
      Systems (EL)
 Juneand December Deadlines
 STTR is now a separate solicitation
Doing Business with NSF

   NSF is not the Final Customer
   NSF is not buying a product, process,
    software, or intellectual property
   NSF wants to see the grantee successfully
    commercialize the innovation
   Company needs investment dollars beyond
    NSF SBIR/STTR
 Commercialization Analysis
   Phase II NSF Projects
The Data
– Success rate ~ 40% for 240 projects (multi-year analysis)
– Success criteria – product sales I year after completion and $1
   MM sales after 6 years
Risks
– Market Failures > Technology Failures
– 50% more likely to fail based on Market Forces
Importance of Partnerships
– ~60% of successful projects have a “strategic partnership”
– ~30% close university tie
– Phase IIB funding: 75% success rate (vs. 31% without)
Key Takeaways
 Market   risks > Technical risks

 Partnerships  and External Financing
 are Critical indicators of success

 Partnerships   take time
Most Proposals Fail Because
 Lack of identified opportunity (science
  projects)
 Lack of perceived technology risk
 Lack of clarity (e.g. poor work plan)
 Other issues
    –   IP ownership and landscape
    –   No clear technology advantage
    –   Competitive landscape
    –   Path/Time to market
    –   Distraction to the company mission
   Didn’t read the directions
Takeaway
   Many SBIR/STTR programs out there!
   At NSF ~$100M/year granted primarily for seed-
    stage development in…
    –   Software & Systems (SS)
    –   Biotechnology & Chemical Technologies (BC)
    –   Electronics (EL)

   Program to mitigate technical risk and bridge the
    “Valley of Death”
   Investment in Country’s Innovation Capacity
NSF Merit Review Process
   NSF Merit Review
    –   Typically reviewed by panel meetings
    –   Panelists from Academe, Investment Community,
        Industry
    –   Confidential with signed CDAs by panel
 Phase I – all proposals receive a minimum of
  3 reviews & both technical and commercial
  review
 Phase II – 3 reviews & both technical and in
  depth commercial review
SBIR/STTR Reviews
 Technical    Review
  –   Technical Merit
  –   Broader Impact
 Commercial     Review
  –   Team
  –   Market Opportunity
  –   Technology, IP, and Competition
  –   Financial Plan
    Why does NSF care about
      commercialization?
   What is the NSF Vision?
    “…catalyze the strong progress in science and
    engineering needed to establish world leadership
    and secure the Nation’s security, prosperity, and
    well being”

   What is the NSF SBIR/STTR Vision?
    To be the pre-eminent federal resource to leverage
    high technology through small businesses to
    stimulate our nation’s innovation leadership and
    contribute to the U.S. economy and society
Commercial Review Guidance

Revenue and Finance Plan
   Does the company demonstrate adequate
    knowledge for the level of financial resources
    it will take to get the innovation to market?

   Does there appear to be a plan to bring
    reasonable resources to bear to get this
    innovation to market?
Competitive Proposal - Hints

 Answer the right question
 The right question
    –   Not Can it be done but Should it be done
 Communicate with the Program Manager
 Prepare an Executive Summary for the
  Communication
    –   Team
    –   Market Opportunity
    –   Technology
    –   Competition
   Listen to the Feedback
Doing Business with NSF

   Ideas do NOT equal business opportunities
   Do your HOMEWORK, describe the
    opportunity
    –   Remember the time component to value of
        money
 Get some market validation BEFORE you
  come to NSF SBIR/STTR
 Consider proposal as ADVOCATE at the
  table
 Proposal as “selling” document
Technology Review Guidance
Intellectual Merit
     Does the proposal reflect state-of-the-art in the
      major research activities proposed?
     Is the proposed plan a sound approach for
      establishing technical and commercial
      feasibility?
     How well qualified is the team (the PI, other
      key staff, consultants, and subawardees)?
     Is there sufficient access to resources
      (materials, supplies, analytical services,
      equipment, facilities, etc.)?
Technology Review Guidance
Broader Impact
     What may be the commercial and societal
      benefits of the proposed activity?
     Does the proposal lead to enabling
      technologies (instrumentation, software, etc.)
      for further discoveries?
     Does the outcome of the proposed activity lead
      to a marketable product or process?
     Evaluate the competitive advantage of this
      technology vs. alternate technologies that can
      meet the same market needs.
     How well is the proposed activity positioned to
      attract funding from non-SBIR sources once
      the SBIR project ends?
Commercial Review Guidance

Company/Team
 Based on the information in the proposal, is this is a
  seed, early stage or expanding company?
 How well is the team poised to take this innovation
  to market?
 Have they taken similar products to market
  previously?
 Do they have additional outside advisors, mentors,
  partners and stakeholders?
 Is the corporate structure consistent with the
  company’s stage and vision?
Commercial Review Guidance
(continued):
Product/Technology and Competition
Has the company described the features of their product or
     service that are going to provide a compelling value
     proposition to the customer?
What validation is there from the market about the proposed
     value proposition?
Does the company demonstrate knowledge of the competitive
     landscape?
How is this company going to compete: price, performance or
     other?
Does the company appear to understand issues regarding IP?
Is there adequate evidence that the company knows its position
     in the IP landscape?
Does there appear to be a management plan for handling IP
     issues as they arise?
      Questions?
Useful Links:
  www.sbir.gov (SBIR Resource/gov run)
  www.zyn.com/sbir/ (SBIR Gateway)
  www.nsf.gov/eng/iip/sbir/ (NSF SBIR homepage)
Contact info:
Tom Allnutt
  email: tallnutt@nsf.gov
  phone: 703-292-5332
Contact
    To learn more about how the MS-FAST
    Program can help your company compete in
    the federal SBIR/STTR programs contact:
           Joe Graben, MBA
           Director – USM/BIAC
           Phone: (228) 688-2280
           E-mail: Joseph.Graben@usm.edu

        "This U.S. Small Business Administration (SBA) Cooperative Agreement
         is partially funded by the SBA. SBA's funding is not an endorsement of
             any products, opinions, or services. All SBA funded programs are
                    extended to the public on a nondiscriminatory basis."

				
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