For any entrepreneur thinking about pursuing an SBIR to fund their idea, Tanya Barham, CEO of Community Energy Labs, has a simple piece of advice: Do it.
The federal Small Business Innovation Research program funds innovative technology developed by startups. The program has about $2.2 billion at its disposal, the result of federal budgeting that requires certain agencies to set aside research and development money to work with small businesses.
Locally, Portland-based VertueLab, a nonprofit investing in the cleantech space, has its own program that will help entrepreneurs navigate the SBIR process. And that help is free.
Barham has secured about one-third of her company’s funding from SBIRs from the National Science Foundation, the Department of Energy and the U.S. Department of Agriculture. She has worked on these with the help of VertueLab’s Leon Wolf, an expert in SBIRs and federal funding assistance.
Working with the government shouldn’t be discounted by entrepreneurs, said Barham.
“I love working with the government. They understand that good technology, to go from idea to commercialization, is multi-staged,” she said. “I knew we needed that time.”
Community Energy Labs is an internet-of-things and software platform that helps building owners monitor and control their environments to keep them comfortable and also reduce energy consumption. The company is initially targeting the K-12 education market: Energy and building costs are the second biggest expenses for districts after employees.
Since 2014, VertueLab has helped secure 48 SBIR awards to 28 different companies for a total of just more than $20 million in awards. So far this federal fiscal year, 14 proposals have been submitted, said Wolf.
See also: 5 alternative pathways to startup capital
Awards come in two phases. Phase One awards offer between $50,000 and $250,000 and generally test ideas' feasibility. Phase Two awards can reach $1 million and focus on commercialization. These awards are non-dilutive grants, meaning those collecting them don't need to give up ownership or equity.
Competitive applicants hit three points that the federal agencies look at. They must:
- Have a unique, innovative technology
- Understand the market potential and explain why the market will adopt it
- Have a qualified team and access to the subcontractors and labs for prototypes
“It’s almost like this twist on the VC pitch (about how) is this is going to be the greatest invention ever, but, we just need a few hundred thousand dollars from the federal government to push it up to the point where its de-risked,” Wolf said.
Successful applicants also align to the goals of the agency they are pitching, said Wolf. Topic areas the government is interested in funding and solicitation timelines are available on the SBIR website.
Wolf likes to work with startups on a 10-week timeline from the time they know they will apply. It takes time to pull all the needed information and sign up for any special systems that agencies want applicants to use.
For Barham, the SBIR process has become just that: a process.
“The first one was completely reconfiguring your brain to figure it out,” she said, but she leaned on Wolf and the help at VertueLab.
“(Eventually) you see a rubric. If you are a good student, (the government) is the best customer. They tell you what they want and how they will grade it. You just have to listen to what they say.”
