The Therapeutic Discovery Project Credit has been the talk of the bioscience community since the legislative text was released on May 21st. The program will infuse the industry with both tax credits and cash grants for qualified investments in therapeutic R&D. The hope is to stimulate continued growth and progress for therapeutic discovery, including diagnostics and delivery vehicles.
Over the past month there has been much debate over the potential rules and regulations. One such topic of discussion revolved around the inclusion of Federal Grants, such as SBIR/STTRs, as a qualified investment. How can you claim a Federal Grant as a qualified investment? To many that seems as double dipping. According to the IRS, not if you claim that Federal Grant as gross income.
The IRS form, NIH form and final instructions, including FAQ’s from the IRS, were released on June 18th. This question is specifically answered by the IRS.
Q. Can a company apply for the new credit or grant for a project for which the company is already receiving other grant money (e.g., an SBIR award), or does the project have to be completely self-funded to qualify?
A. A taxpayer must reduce the amount of a project’s qualified investment for any grant that is not included in gross income, unless the grant can only be used for costs not included in the definition of a qualified investment. See Notice 2010-45 § 4.01(4).
This could significantly increase the amount of award to many small companies that are funded both privately and through SBIR/STTR grant awards.
There is more to being a successful SBIR company than just receiving the funding award. Understanding how to run and grow your business is critical. Learning about and making connections through networking can put your company (and technology) in front of just the right people that will make a difference when it comes time to commercialize your innovation or integrate your technology into another’s product.
The nationally recognized Advanced Technology Development Center (ATDC) helps Georgia technology entrepreneurs launch and build successful companies. Founded in 1980, ATDC has helped create millions of dollars in tax revenues by graduating more than 120 companies, which together have raised more than a billion dollars in outside financing. Since SBIRGA is now a service of ATDC, you, as Georgia entrepreneurs, can take advantage of the assistance ATDC provides.
This Thursday, ATDC will be hosting an Open Forum where you can come hear what ATDC has to offer and ask questions about all their services. Click here to learn more and to register.
The NIH has announced it has once again contracted with Foresight Science and Technology to provide 50 SBIR Phase I awardees with Technology Niche Analyses (TNA™). Only FY09 or FY10 SBIR awardees are eligible to apply. Each company is only eligible for one assessment even if you have received multiple awards. The earliest start date for Group A is July 27th.
Each TNA™ will examine the commercial potential and market for the product/service being developed using NIH SBIR funds. This report can be beneficial in identifying partners, investors or customers.
“Well of course people want my innovation! I did a patent search, and there’s nothing else like it on the market!”
That is not always an accurate correlation, but I hear it often.
Having a patent does not prevent anyone from developing a product like yours.
A patent is a legal document which gives you the right to have a monopoly on your product. IF someone else develops and tries to sell a product that is like yours, then you have the legal right to sue them and make them stop. It doesn’t prevent them; it just gives you legal claws if they do. You will still have to proactively monitor the market to make sure no one IS infringing. If you do find something, the burden of proof and cost is on you—you must incur the time to research and the funds to bring about a potentially lengthy legal fight.
Being first to patent also does not automatically mean that you have a market—there might not be any patents because there ISN’T a market for your idea. With the rising costs of obtaining patents (U.S. as well as various international), it would be worth your time to investigate whether patents are the best protection (i.e. something like a trade secret might be more appropriate) and if there is enough market pull to actually pay for the protection.
Whether you are a brand new company looking for initial
funding sources or you have an established organization and are considering
alternative sources of funding, keep in mind that a strong business development
strategy can be as diverse as your investment portfolio. In today’s world of technology start-ups and
entrepreneurship, a business plan is a living document that is molded through
peer reviews, investor reviews, consultants, false starts, hard knocks, and
maybe even a class or two. Regardless of how it started or how it
currently looks, the business development section of the plan should reflect the
planned activities for raising revenue for the company. SBIR/STTRs may not provide a lot of profit,
but they can be an important piece of a revenue plan for a small technology
company. SBIR is still “free money” in
the sense that a business owner does not have to give away shares of ownership
or equity in the company. However, an
SBIR proposal is not a 3-5 page cut-and-dry proposal to a customer offering a
product/service for $XX,000 to be delivered on a given date. SBIR proposals, rather, typically require a
minimum of 80 hours of preparation in addition to time required to research a
market and the target agency expectations; this is time that is at the expense
of the company. SBIR and STTR projects
are research and development funds (grants and contracts) dedicated to proving
the feasibility and potential of high-risk, innovative technologies. At the end of Phase II of an SBIR project,
the corporate business plan should include activities dedicated to commercializing
the technology (i.e. transitioning to the warfighter or selling to the public). Partnerships with prime contractors,
licensing agreements with distributors, presentations to VCs, economic
development grants- they are all valid approaches for bridging the gap to
commercialization of a new technology.
There is no single-solution for raising revenues that fits
every small company. SBIRs can be a
terrific start or can complement a more aggressive strategy. Either way, when developing a business plan
or preparing an SBIR proposal, the overall strategy of the company and how the
SBIR project fits in that strategy must be evident. The federal SBIR/STTR program was designed to
help small technology companies develop innovative technologies and grow their business
from that initial research. The end goal
is an operational product that meets a market need and a company that has the
ability to provide that product. Let us
know how we can help your company make SBIR part of your business development
plan…
“What I am supposed to put in this commercialization section?” for this SBIR proposal. Have you asked yourself this question while writing your proposals? Have you asked the Georgia SBIR Assistance Program this question as you are preparing your proposal? Have you tried to search the web to find an answer, only to generate more questions and still would what direction you should pursue? Hopefully I can give a little help and provide some useful context to help answer that question.
Like all the great mysteries of the modern world, the honest answer is “It depends.” The definition of “commercialization” is determined by the agency that the proposal is going to. Synonyms for commercialization strategy range from “transition plan” for the DoD, to “infusion strategy” for NASA technologies, to productization and the traditional definition of selling to the public for NSF and NIH technologies. So what does this mean when developing your proposal strategy and themes- don’t forget who the customer/user of your agency’s technology is.
The DoD wants to defend and protect by equipping the US warfighter with the most advanced technology available. The commercialization strategy should explain the size of the market potential (units and value) in the DoD market. Ultimately the strategy describes a transition plan for moving the technology to an acquisition program that will put the technology in the warfighters’ hands. A short description of how the technology could transition to civilian operational environments is an added perk, but probably not the primary focus of the section.
NASA SBIRs/STTRs are trying to achieve a vision of exploration, terrestrial science, aeronautical advancement, or space operations. Their end users are typically NASA scientists and engineers that are executing projects to accomplish these visions. Infusion is the process of transferring the technologies developed under SBIR/STTR into a NASA mission to accomplish the vision of the project. There may only be one or two actual instances of the technology needed to accomplish the mission, but if there is a technology that will meet that need, that is a commercial success for NASA SBIR. Again a public application of the technology certainly supports the case for NASA investment in the SBIR project, but if you do not map out a path for how NASA can put the technology to use, you could be missing the customer with the real need.
Most of the other agencies have a much more general public focus. The end user of an NSF, USDA, DoT, or NIH SBIR sponsored project is Mr. Joe Smith that you meet on the street, work with in your office, or visit when you have a particular need that technology can provide or improve. Developing commercialization strategies for these agencies typically means committing to a derivative of a licensing model or product development plan for delivering the innovation into the general markets. Competitive analysis, market sizing, pricing, development plans, and launch activities need to be briefly addressed to qualify your understanding of the value of the technology and to convince proposals reviewers that you know what it is going to take to make this innovation a reality.
Keep these ideas in mind as you are preparing your NASA and USDA proposals for the Sept 4 deadline, the next round of DoD proposals that will be posted the end of July and closes Sept 24, or the NIH and NSF proposals that will be submitted in December.
The National Cancer Institute (NCI) announced the launch of their pilot Bridge Award Program and is seeking applications from small business concerns (SBC). This program is designed to address the funding gap known as the "valley of death" between the end of a Phase II award and product commercialization for those developing cancer therapies or cancer imaging technologies. Previously funded Phase II applicants in this space are encouraged to apply. Award requests of $1M per year for up to 3 years are allowed. While those with matching funds will be given priority, a match from a third party investor or strategic partner is not required. This program is designed to attract third party investment in this capital intensive phase of commercialization. For more information on the program please click here.