Session #24: What are Agency Proposal Reviewers Looking For? National SBIR/STTR Conference June 18, 2014 National Science Foundation SBIR / STTR Francisco Estevez-Molinero, M.Sc., MBA Commercial Reviewer 1
NSF SBIR/STTR Submission Logistics 2 SBIR and 2 STTR solicitations released per year (concurrently, in December and June) All proposals are externally-reviewed by domain experts Reviewers: Academics, investors, industry, entrepreneurs Review criteria: Technology and commercial aspects Dialog encouraged throughout the process Timeline Phase I: Decision: 4-5 months after proposal receipt Cash in the Bank: 6 months after proposal receipt Funds and Funding Rate Phased approach, apply at every phase (no fast-track): PHASE I Feasibility Research (6 months - $150,000/$225,000) PHASE II Research Toward Prototype (24 months - $750,000) PHASE IIB Matching funds against outside investment (12 to 24 month extension, up to an additional $500,000) Funds set-aside for NSF SBIR (Fiscal Year 2014) SBIR: ~$160 million STTR: ~$18 million Funding rate varies 2013, e.g. Phase I: 385 awds 23% Phase II: 101 awds 54% 2
Decision + panel summary and reviews NSF Review Process Overview You Two distinct audiences technical and commercial Program Director Groups similar proposals, selects reviewers Individual Reviews reviewer* reviewer reviewer reviewer* reviewer* reviewer reviewer *Each proposal assigned to at least 3 reviewers. Panel (1) Convenes All proposals discussed as a group Panel Summary Minimum 1 sentence on: Innovation Proposed Broader Impact/Commercial Potential Proposed From both the technical and commercial perspectives: Strengths Weaknesses Suggestions $ or $ Program Director Considers panel advice Adapted From: NSF Funding: a view from the inside Richard McCourt (NSF HER/DGE) Key Considerations for NSF SBIR/STTR Non-dilutive funding NSF is not the final customer More or less topic agnostic. Broad topics (9!) cover most innovations. Grantees keep their technology and resulting IP (the government does have royalty-free rights that, to date, NSF has never used) Funding is ONLY for R&D, so successful proposals stress the importance of R&D on company/product viability Document-driven process, and lead times (esp. until the big money ) can be long. Phase I to Phase II bridge supplemental funding is available. NSF wants grantees to successfully commercialize their technologies Investment dollars beyond SBIR are needed 3
Recent Program Statistics About 10-15 acquisitions of Phase II grantees per year Leverage: for FY2013, 52 Phase IIB awards made by the were based on $83 M in third-party investment (the vast majority private funds) Company data from FY 2013 Phase I awardees: 86% of Phase I awardees have 10 or fewer employees 68% of Phase I awardee companies were incorporated since 2008 76% of Phase I awardees had never had a Phase II award from any agency From the Reviewer s Perspective What are NSF SBIR/STTR reviewers REALLY looking for? 4
Funding Criteria We fund high-risk, high-payback innovations and R&D with high potential for commercialization (company vision and track record) Commercial revenues Company growth Follow-on investment / deals Exits (mergers/acquisitions) to small businesses that demonstrate strategic partnerships with research collaborators, customers and equity investors We do NOT fund projects lacking technical risk or innovation (evolutionary optimization of existing products and processes) If there s no technical risk, why fund R&D? If there s no innovation, it s not appropriate for NSF our goal is to bridge the early-stage funding gap projects where we don t see a strong chance of resulting commercial outcomes This applies to the project AND the proposing company/team projects where our funding won t move the needle If we can t make a big impact on the company s prospects, there are usually better ways to raise analytical or market studies of technologies Technical Review Criteria (Phase I/II) Intellectual Merit Is the proposed plan a sound approach for establishing technical and commercial feasibility? To what extent does the proposal suggest and explore unique or ingenious concepts or applications? How well qualified is the team (the PI, other key staff, consultants, and subawardees) to conduct the proposed activity? Is there sufficient access to resources (materials, supplies, analytical services, equipment, facilities, etc.)? Does the proposal reflect state-of-the-art in the major research activities proposed? (Are advancements in state-of-the-art likely?) As a result of Phase I, did the firm succeed in providing a solid foundation for the proposed Phase II activity? 5
Commercial Review Criteria* Broader Impacts 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? Can the product or process developed in the project advance NSF s goals in research and education? Does the proposed activity broaden the participation of underrepresented groups (e.g. gender, ethnicity, disability, geography, etc)? Has the proposing firm successfully commercialized SBIR/STTR supported technology where prior awards have been made? *Commercialization is strongly considered in Phase I proposals, but the questions in this deck and the heaviest emphasis on commercialization occurs for Phase II proposals. Commercial Review Criteria Market Opportunity Does the proposer succinctly describe the product or service and the customer needs? Is the business model for this innovation clearly defined? Is the model a service, product, license or other strategy? Has the company described how they are going to get the innovation to market? Can you tell where they are in the development cycle? Are the critical milestones required to get to market clearly defined? Is there some strategic reason (societal benefit) for the nation to invest in this innovation? If so, what is it? 6
Commercial Review Criteria Company/Team How mature is the company (early stage or expanding)? How big is the company and where do the entrepreneurs want to take the company? What are the financial resources? Does the company have other external funding sources such as investors or strategic partners? If there is current revenue, what are the sources of the revenue? Does the company provide revenue history over the past three years? In your opinion; how well is the team poised to take this innovation to market? Have they taken similar products to market previously? Does the company have additional outside advisors, mentors, partners and stakeholders? Is the corporate structure consistent with the company s vision? Commercial Review Criteria Product/Technology and Competition Did the company described the features of their technology? Do they provide a compelling value proposition to the customer? If so, what are they? What validation is there from the market about the proposed value proposition? What does the company think people will pay for the innovation or service enabled by the innovation? Is there any evidence that this assumption has been validated? Does the company demonstrate a realistic understanding of the cost to take this innovation to market? Who are the main competitors in the market space? Does the company clearly describe how they are going to compete: price, performance or other? Has the company adequately addressed the IP landscape? Is there evidence that a patent search has been undertaken? Is there adequate evidence that the company knows its position in the IP landscape and has a management plan for handling IP issues as they arise? 7
Commercial Review Criteria 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? Do they have a phased plan to bring these funds to the table? Is there evidence of commitment for the funding beyond the Phase II effort? Are the revenue streams for this innovation described? When will those revenues be received? When does cash-flow break-even occur? Are the pro-formas reasonable given the state of the innovation? Has the company adequately described and tried to validate the assumptions behind the models? Panel Rating HR - highly recommend for funding Meet all the criteria for high-risk, high payback innovation research Technical plan is sound Team is well-qualified The proposed work leads to a marketable product/process or service R recommend for funding if funds are available or With Revisions Generally meet most of the above criteria; however Certain weaknesses exist in the technical plan and/or market intelligence that should be addressed prior to funding DNC - do not consider for funding Fail to meet some or all of the above criteria Does not automatically mean no funding 8
Connect with NSF SBIR/STTR Funding and webinar announcements, news, and success stories Online: nsf.gov/eng/iip/sbir/ and nsf.gov/eng/iip/sttr/ Quarterly Update Listserv: Click here and hit "send" Twitter: @NSFInnovateSBIR Channel: NSFInnovationIIP Extra Slides 9
Data Points for SBIR/STTR Basics 2011 Reauthorization Changes http://www.sba.gov/content/key-changes-sbir-and-sttr-policy-directives General jumping off point, award search http://www.sbir.gov/ Congressional legislation http://history.nih.gov/research/downloads/pl97-219.pdf Data at 60,000 feet http://www.sbir.gov/awards/annual-reports The SBIR/STTR Program Small Business Innovation Development Act of 1982 Small Business Innovation Research (SBIR): Requirement to set aside 2.5% (now, 2.7%) for all agencies with > $100M of external R&D funding Small Business Technology Transfer (STTR): Requirement to set aside 0.3% (now, 0.4%) for all agencies with > $1B of external R&D funding Congress designated 4 major goals: Stimulate technological innovation in the private sector Use small business to meet federal R&D needs Foster and encourage participation by minorities and disadvantaged persons in technological innovation Increase private-sector commercialization innovations derived from federal R&D 10
Resources Available ($) Innovation Spectrum --Phase I-- -----Phase II------ ------Supplements------- Industry Valley of Death Investors Academia Discovery Development Commercialization Level of Development 11
Industrial Innovation and Partnerships (ENG) Senior Advisor, OSDBU Donald Senich Division Director Grace Wang SBIR/STTR Program Joe Hennessey Grant Opportunities for Academic Liaison with Industry (GOALI) Donald Senich Industry/University Cooperative Research Centers (I/UCRC) Larry Hornak Industry/University Cooperative Research Centers (I/UCRC) Shashank Priya Partnerships for Innovation: Accelerating Innovation Research (PFI-AIR) Barbara Kenny Partnerships for Innovation: Building Innovation Capacity (PFI-BIC) Sara Nerlove Assessment, Diversity, & Program Support Gracie Narcho Program Support Manager Mary Konjevoda Operations Specialist Greg Misiorek Science Assistant Lindsay D Ambrosio Einstein Fellow Steve Griffin Program Specialist Alexandria Hale Program Specialist Caroline Hayer Program Specialist Willis Phan Contract Staff Advanced Material & Instrumentation (MI) Ben Schrag Advanced Material & Nanotechnology (MN) Rajesh Mehta Biological Technologies (BC) Ruth Shuman Chemical and Environmental Technologies (CT) Prakash Balan Education Applications and Technologies(EA) Glenn Larsen Electronic Hardware, Robotics and Wireless Technologies (EW) Murali Nair Information and Communication Technologies (IC) Peter Atherton Semiconductors (S) & Photonic (PH) Devices and Materials Steven Konsek Smart Health (SH) and Biomedical (BM) Technologies Jesus Soriano Experts/Special Topics George Vermont 12