How to finance your innovation with non-dilutive funding

6 key criteria for winning SBIR/STTR awards

One of the fastest, most-sure forms of funding and growing your business — and keeping 100 percent ownership (or not diluting it) — is through federal SBIR/STTR contracts and grants.

It’s easy to figure out whether you’re eligible to participate in the SBIR/STTR programs. As long as you’re the principal researcher who’s employed by an American owned and operated, for-profit business with 500 or fewer employees, you’re eligible for the SBIR program.

iStock_000008623660MediumNaturally, there’s more to it than that, or there’d be no need to turn to angel investors, venture capitalists — or even friends or family — for funds.

Non-dilutive money is very attractive, yet it’s a complex form of funding. And if you know how to navigate all the intricacies of the process, you’re likely to get funded.

Government agencies use the following six key criteria before they’ll even consider funding your small business or innovation through SBIR/STTR awards.

  1. Science and engineering innovation.

    Government agencies look for leading edge innovations that meet a current need. You know whether yours fits the bill because when comparing it to other technologies in your field, yours meets an existing need and you feel yours ranks highest.

    That means you’ve done your research. This includes reviewing related existing technical literature to determine whether your innovation is truly that: An innovation.

  2. How well do you know your SBIR agency?

    You also need to understand how SBIRs work, including the specific agency’s SBIR program criteria, or advice, to ensure your innovation matches its mission. For example, if your’e seeking NIH funding, your first step is to contact your NIH center. Understanding the background of how each agency works makes lighter work when preparing your proposals for grants.

    There are a few ways you can get that information:
    Do the research yourself. Our experience has shown that small businesses that are unfamiliar with a specific agency make many mistakes; some of those mistakes mean they don’t get funded.

    Sign up for a training course, so you can save a few bucks. Many small businesses find that without a deep understanding of a participating SBIR aency, working through the process is very painful. And while it’s certainly possible to learn how to navigate government red tape, teh real point here is considering the time value of money. Is your time better spent figurin gout how to work with a government agency, or focusing on your innovation?

    Hire a firm that’s experienced in writing small, innovative businesses’ proposals for SBIR government agencies. At Green Tape, writing winning proposals is one of our specialties. We’ve helped many small businesses grow through federal sBIR/STTR awards. In fact, we’ve helped one client grow from $1 milion to $100 million in revenue in fewer than five years.

  3. Your principal investigator and team matter

    Your principal investigator’s education is important to SBIR agencies. These agencies seek a qualified subject matter expert with a Ph.D., or someone who is working toward his or her doctorate.  Yet there are exceptions. If you have a great deal of experience — and are known for it — some government agencies take that into consideration.

    Your team is important, too. Whether they are employees or subcontractors, your team members must have technical expertise to perform the work, as outlined by the principal investigator.

  4. Create an action plan

    SBIRs are all about tasks and processes. For example, if you’re pursuing a Phase I SBIR, you must know which objectives can be finished within six months for $150,000. Your specific goals, or statements of work, outlines your action plan to meet those objectives — including tasks, due dates and who’s responsible for which ones.

    Agencies want that information and expect you to follow your plan, with some level of variation. That means you don’t have to spend the money exactly as you’ve budgeted it, yet  agencies expect you to achieve your program milestones. In fact, it’s the only thing you need to accomplish.

  5. Identify your commercial market the best you can

    SBIR agencies like to know your plans for commercializing your product or service. Knowing the size of your market, your competition, potential partners, the relationships you’ve formed with potential customers and the steps you’ve taken to protect your intellectual property are also closely scrutinized by SBIR agencies.

  6. Where’s the other money?

    Beyond that, the agencies want to know if your project is likely to get additional funding through Phase III, venture capitalists, angel investors or other sources.

    Further, communicating the benefits of your technology and how scientific knowledge will be enhanced helps SBIR agencies better understand — and fund — your project, both now and in the future.

    If you’ve won an SBIR once, it’s much easier to win more federal awards and grow your business without giving away ownership to investors.

Green Tape has deep experience in helping clients win SBIR awards; our award win rate for clients is three to five times the industry standard. To learn more about how we can help you win SBIR awards and grow your business, contact us today.