Non-dilutive federal seed money helps researchers make high-tech concepts a reality
If you’ve ever tried to bring a product to the marketplace, you know there is a significant gap between when you need funding to develop your product and when investors are ready to support your concept. It’s a catch-22 that puts many entrepreneurs in a holding pattern as they search for ways to set themselves apart from the pack and receive a piece of the limited startup funding available. Some new business owners may join incubators or enter startup competitions wasting hours, even weeks, chasing a long shot and giving up equity.
Luckily for high-science entrepreneurs, there are other resources out there to support your success, including government programs designed to provide seed money for entrepreneurs to realize their new technology. If you are a researcher or entrepreneur in high-science, such as advanced materials sciences, biotechnology, cybersecurity, data analytics, health sciences and energy, there is non-dilutive government seed money available to help bridge the gap between concept and investor support.
The U.S. Small Business Administration’s (SBA) Small Business Innovation Research (SBIR) program (https://www.sbir.gov/) offers $2.5 billion in federal grants annually to help bridge the dramatic gap between when researchers and innovators need funding to when investors are ready to support their concept. The SBIR grants offer entrepreneurs who are trying to bring their product to the marketplace a better chance of receiving funding than many other funding sources. Individuals applying for earlystage (Phase I) grants can receive up to $250,000 in initial non-diluted funding. There is a significantly higher chance of receiving SBIR funding than in a typical venture capital competition, which may offer less funding and certainly will require giving up some equity.
While venture capitalists typically want to invest in concepts with quick turnarounds that high-science researchers may not be able to provide, the SBIR program specifically targets researchers and entrepreneurs who are solving national business challenges that take years to address. These complex issues require seed money so researchers and innovators can build their concept to a point where typical investors may be interested.
The SBIR program connects business owners with federal agencies that can benefit from their product creating access to organizations that will not only support product development but may use the product if it enters the marketplace.
While the SBIR program is a unique opportunity for high-science researchers and innovators, currently, women, minority, and veteran entrepreneurs account for less than 20 percent of recipients. The Women’s Business Development Center (WBDC), is working to address this discrepancy and invite others to join us in these efforts.
The WBDC recently launched a new program to make Illinois more competitive in the high-science industry. The InventIllinois program supports researchers, inventors and entrepreneurs in the state through business advising and commercialization support from experts to help them compete for SBIR grants. The organization’s long history of working to foster economic empowerment for underrepresented groups through entrepreneurial counseling makes it uniquely qualified to ensure diverse business owners are represented in the SBIR program. While the program serves Illinois, the SBA supports similar programs throughout the country.
The best way to increase the number of women, minority and veteran business owners receiving SBIR grants is to increase the number of diverse researchers and entrepreneurs applying to the program. That is why the WBDC wants to be sure more people apply to access the federal seed money available through SBIR grants.
The best part of the program? Entrepreneurs get the funding they need to bring their concept to life without having to give up a piece of your company. These non-diluted funds allow them to continue to own and control their idea while developing it to a point where investors can help them take your product to the next level.
For high-science researchers or entrepreneurs interested in applying for SBIR funding, there are a few things you should keep in mind:
Communicate the impact of your technology
Your proposal should explain the real-world problem that your product will solve. Present your technology as the most innovative solution to the issues our government and our communities care about most.
Promote your ideas
Social media gives you the opportunity to promote your company and product to the government agencies that may fund you. Develop your social media presence and find ways to engage with targeted agencies and the SBA. Building your footprint now will also help you grow your brand and reach future customers.
Get corporate partners on board early
Build relationships with corporations that may be able to utilize your product once it is developed. If they think your product is something they may be able to use, ask them to submit a letter of intent for your application in which they express their interest in working with you if you are able to develop your product.
These few simple steps will help to elevate your application and, more importantly, your business so you can find the resources you need to make your concept a reality.
As president and CEO of the WBDC, I understand the many hurdles tech entrepreneurs, especially those in underrepresented groups, must climb to develop their product. It’s time business owners think outside the incubator box and start accessing federal seed money to take their business to the next level.