Last month I discussed ‘Does “Free Fit Your Needs?’, but sometimes a better way to clarify something is to discuss the negative. So today, I want to talk about when SBIR funding is not right. It might seem strange, but the staff of the SBIR Assistance Program spends a fair amount of time helping companies realize that this “free” federal money is not a good fit for them.
So why would it not be a good fit? The short answer is that this is a government program. Therefore, it is a structured program with rules that may limit the flexibility of a company. Common reasons not to pursue SBIR funds include:
- The technology application requested by the government is tangential to the company’s business plan. This can distract the company from its efforts at developing the most promising application of the technology.
- A technology’s stage of development does not fit the SBIR rules. SBIR funds proof-of-concept and then development of a prototype, so companies that have exhausted their friends and family money developing and testing a prototype and now need funds to finish development and get the product to market, are beyond SBIR.
- The SBIR program time-frame does not match the development time-frame of the technology. SBIR may not be a good fit if a technology’s window of opportunity is shorter than the 3-4 year time-frame from initial SBIR application through prototype development and testing.
- The company does not have the time to put a quality SBIR proposal together and wait for a response. As a rule of thumb it often takes 100 man-hours to develop a competitive proposal and then typically six months to learn if the company will be funded. Some companies do not have the time to make this investment.
- For university-based researchers who want to be entrepreneurs working within the confines of government and university regulations can be tricky. While a number of very successful Georgia companies have spun-out of universities using SBIR, it does require additional planning. Some researchers are unable or unwilling to make the necessary modifications.
While a company must seriously weigh the pros and cons of pursing SBIR funding, the SBIR program has helped dozens of Georgia companies succeed in obtaining “free” SBIR money to develop new products. Some of these companies may not have even gotten off the ground without this funding. If it fits with your technology and your company, SBIR can be a sweet deal.