How the federal government can fund your small business

So, what do Qualcomm, Symantec, iRobot, and Sonicare Toothbrush have in common? The answer: these are all businesses were seated by money from the federal government, through the Small Business Innovative Research Program. Here in the region, about 250 million dollars a year goes into startups developing high technology.They get to keep their commercialization rights, and sell to the government as a prime if they develop something meaningful. This program is a fantastic opportunity for startups in the D.C. region, and to talk about it, we were joined by Robert Brooke, director of federal funding programs at the Virginia Center for Innovative Technology.

ABERMAN: Robert, thanks for joining me.

BROOKE: Thank you for invitation.

ABERMAN: Well, I know this is something you’ve spent your life promoting. Tell me, why are you jumping up and down, and giving a big thumbs up for this program?

BROOKE: I’ve been at the Center for Innovative Technology for about sixteen years now. Every year I realize another year’s gone by, but it’s the best job I’ve ever had, because it allows me to engage with technology companies from across the spectrum, from life science, biotech, government, DoD-focus, weapons, communications, you name it. It’s there in the government. And the SBIR program funds all these technologies as well. So, CIT, we’re a nonprofit working to promote technology development across the Commonwealth.

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The SBIR program is something I promote, as a federal program, because it brings non-diluted funding. It’s not getting more state funding, all the states are always having problems with trying to fund organizations like CIT, and other state organizations. But this is non-diluted money coming into the state. So, over 130 million a year comes in Virginia, as you mentioned, 250 million in the region here every year. So, what gets me out of bed every day is the opportunity to talk to early-stage entrepreneurs who are trying to find that critical capital, that the SBIR program was designed to provide.

When a company goes to a venture capitalist or bank, they say “come back when.” Come back when you’ve got a prototype, come back when you’ve got first customers, come back when you’re making a lot of money. People would say, well, if I had that I wouldn’t have to come back when. So, the SBIR program was designed to answer that come back when problem with funding early-stage, I’m-not-quite-sure-if-it’s-going-to-work technology. I think that the wide-eyes of these early-stage technologists make me love doing what I do.

ABERMAN: If I’m an entrepreneur, when I hear non-dilutable, that means to me that I’m taking money and I’m not selling stock, right?

BROOKE: Correct.

ABERMAN: I’m not issuing debt. I’m just doing a research project for the government, where I keep commercial rights. It sounds too good to be true, but there must be some complexity to it. What are some of the things that an entrepreneur has to do in order to be able to get this money?

BROOKE: First of all, they need to figure out what agencies might have a fit for what they’re doing. And so, there’s several things. There’s a fit with the agency, and usually whatever you’re doing there is more than one agency, typically, that might have interest, and usually that’s where we uncover, help companies figure out maybe the non-traditional agencies looking for what they’re doing. Secondly, it’s how much money. How much money do you think you need in this early stage?

So, early-stage, typically companies at the seed stage are asking for all this money in one lump sum, and sometimes they think they need two or three million dollars, or a million dollars, and the SBIR program helps them carve that down. We always consult with companies and talk about, what are the key milestones that you need to first uncover? So, the amount of money, and the amount of time that they’re looking at.

If you hear about these hackathons, developers get together over the weekend, put together some new idea for a product, and then they want to be putting it on the iTunes store to sell this technology in three weeks, or three months? Well, great, could be an eventual product, but that’s not SBIR. SBIR is going to be anywhere from a two, to three, or four year development. So, you’re really trying to develop new, unproven technology that you, quite frankly, don’t know is going to work yet.

ABERMAN: So, is this a research application? I mean, this isn’t like a venture capital fare where I turn in a presentation. I have to do a work plan, right?

BROOKE: Yeah. A lot of the companies I work with, the average company getting SBIR is about eight to ten employees. So, pretty small. Some are startups. Some agencies don’t mind funding companies that are starting up. National Science Foundation, for example, even NIH, they know they’re going be engaging with companies, and researchers, and doctors, and postdocs at University at this early, early stage.

ABERMAN: They’re going to be early, that’s the key to it. This is a program to create new technologies, that ultimately can be great businesses. The Small Business Innovative Research program, two and half billion dollars a year, ten percent of the money comes to our region. It’s arguably the largest source of seed capital for technology businesses here. So, you’ve got my attention, and I’m sure a lot of people’s attention. And that’s good news, because you and I together, doing an event with the CIT in a couple of weeks, relatively soon, around: how do you go about getting money? So, tell us a little bit about that.

BROOKE: Yeah! The conference is, I like to tell people I run these conferences, and I only hold them every couple of years, because it gives me enough time to forget how much effort it takes to run a conference. We get about 100 to 150 people to show up, and it’s a two-day event. We typically try this, since we’re in the D.C. area we have the luxury of being able to have access to these agencies, and I’ve been working with them for many years, so I send an email, and they’re usually very responsive, and want to participate.

There will be dozen of the agencies coming to the event, they’re going be exhibiting, giving a little talk, but we’re also going to be talking about the basics of the program, as well as for those who, maybe, have won SBIR, some of the advanced concepts, and commercialization discussions. How do you find customers, using the SBIR as a sole-source contracting vehicle. We’re trying to make it low cost, the national SBIR conferences have, in the last five years, been held over in National Harbor, and they were running 400, 450 dollars a ticket. This is 125 dollars per head.

ABERMAN: Well, Rob, thanks a lot for taking the time. and I just want to make sure everybody now knows, Uncle Sam may not be giving away free money, it’s our money, but it’s being made available to entrepreneurs to grow great businesses here in the D.C. region. Thanks for joining us.

BROOKE: Thank you for the opportunity.

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