I was unable to attend Friday’s BioHouston event on new funding opportunities for small businesses. Fortunately, Stephanie Kreml of BCM Technologies was kind enough to share her notes.
Michael Weingarten, Director of the NCI Development Center, gave the presentation (slides) on Friday. In addition to going over the structure and requirements for the existing SBIR/STTR programs, he introduced a new SBIR Bridge Award Program. This program aims to fund companies that had promising findings during Phase II but were not able to get far enough to attract external funding.
For the Bridge Award, the NCI will give startups $3 million over 3 years, specifically to companies with a focus on cancer imaging and therapy. To be eligible, the company must raise third party funding and have these sources identified in the application. The source of these funds can be another company, VCs, angels, foundations, academic institutions, or state/local governments. The NCI sees this as a way to help them with due diligence of these startups and to help bridge the gap of the “Valley of Death” by meeting third party investors halfway.
The NCI has committed up to $10 million in FY2009 with two upcoming application deadlines: September 19, 2008 and February 27, 2009. These awards will be extended to current and recently expired Phase II NIH SBIRs, and the original funding institution does not have to be the NCI. Yearly milestones must be defined and will be reviewed before the next year’s funding is distributed. After a company has been notified that they are a recipient of the Bridge Award, they will have a couple of months to secure the third party funding; however, no funds will be distributed from the NCI until the third party agreement has been secured.
Here are some other interesting facts and figures that Mr. Weingarten provided: The total budget for the SBIR program is currently $2.2 billion, of which $600 million is controlled by the NIH, and $100 million of that is controlled by the NCI. Within the NCI, the SBIR program constitutes 2.5% and the STTR 0.5% of its budget. He also stated that the number of SBIR applications in recent years is down by about 40%. The funding rates are around 40% for Phase I and 20% for Phase II SBIRs.
The NCI is expanding its Development Center with 10 new positions. Previously the SBIR program was run like all other academic grant programs, but the NCI realizes the need for a more business based management, with more emphasis on marketing and networking. They are recruiting people not only with strong scientific backgrounds but also strong business backgrounds and a proven track record. Ultimately, the NCI would like to increase its return on investment out of the SBIR program.
One last interesting bit, Mr. Weingarten mentioned that motions have been put before Congress that should relax the requirement of 51% ownership by individuals for companies applying for the SBIRs, meaning that companies with majority ownership by VCs may become eligible. The SBIR program is up for renewal in September, so we should know soon.
Also, Deborah Mansfield of the Houston Technology Center was present, and she mentioned that the $3 billion Texas Cancer Fund also requires matching funding, and that SBIR grants can be the source of this match.
