Texas Startups Need to Apply for SBIR Grants

By LAURA LOREK
Founder
Silicon Hills News

Robert-Allen Baker, SBIR policy and program analyst speaking to a group of Austin technology leaders about the SBIR program.

Robert-Allen Baker, SBIR policy and program analyst speaking to a group of Austin technology leaders about the SBIR program.

A few weeks ago, the Small Business Innovation Research program announced its Fall National SBIR/STTR Conference on Nov. 11-13 in Austin.

The conferences are generally sold out but registration numbers were really low for this one, said Robert Allen Baker, SBIR Policy and program analyst.

“We always do these conferences in Washington, D.C.,” he said.

So Baker investigated how many Phase I and Phase II SBIR awards went to Texas companies since 2009 and was shocked.

“Only 230 odd awards – way lower than we expected,” Baker said. “And only 51 companies. And seven companies won 63 percent of the Phase I awards.”

His conclusion: SBIR is doing something profoundly wrong in Texas.

Other states like Massachusetts, Virginia, Maryland and California, they each received thousands of Phase I and Phase II SBIR awards during the same time period, Baker said.

SBIR is a national program, coordinated by the Small Business Administration, in which 11 federal agencies award $2.3 billion in research and development grants to small businesses. The Department of Defense is the largest agency. Small Business Technology Transfer, known as STTR, is another program that awards grants to small businesses.

On Sunday night, Baker met with about 25 technology leaders from Austin in the home of Roy and Dale Truitt for drinks and appetizers and to hear a presentation from Baker on “Commercialization in the Innovation Ecosystem: SBIR and its role in delivering innovation.” The Small Business Development Center Network at Texas State University arranged the event.

Austin looks like an emerging Silicon Valley, Baker said. And the city has more tools now than ever before to develop the tech ecosystem here, he said.

“Forty years ago in the valley, we didn’t have an SBIR program,” he said. “SBIR has changed the landscape tremendously. It’s not a competitor to the Venture Capital industry, it’s complementary.”

Right now, angel investors fund the majority of U.S. startups, Baker said. In 2013, they invested $24.8 billion in 70,730 deals to more than 268,000 individuals, according to stats from PwC Money Tree. Venture Capital funds just 2,099 deals worth $20.7 billion in 522 firms. The mean angel round is less than $1 million.

A startup can still get angel or VC investment and an SBIR grant, Baker said.

“There’s nothing else like this supporting innovation,” Baker said.

Some of the Austin companies, which have received SBIR grants, include Spot on Sciences with $1.8 million from the Defense Advanced Research Projects Agency. Spot on Sciences makes an easy to use blood sample kit. Lynx Labs, a spin out of from the University of Texas, has also received an SBIR grant. The company makes a camera with specialized software that can capture 3-D environment.

SBIR/STTR grants are a three phase competitive program, Baker said. In Phase I, companies get up to $150,000 and Phase II they can get up to $1 million for a two year award. In the last phase, the program focuses on commercialization and funding comes from the private sector or government agency or both, Baker said.

The Department of Defense also has a Rapid Innovation Fund, Baker said. It can award up to $3 million for a two-year award to a company that creates a product to satisfy an operational or national security need.

For more information on the SBIR/STTR program, entrepreneurs can register to attend its Fall National Conference at the AT&T Executive Education and Conference Center. Also visit the SBIR Gateway for direct links to every Federal Agency program. And visit the Navy SBIR University for a series of video tutorials for beginner and advanced entrepreneurs on applying for grants.

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