By : Jake Halliday
Source : http://www.columbiatribune.com
Category : Small Business Grant
Opinions vary on the value of government-funded programs, but thank goodness for the Small Business Innovation Research program.
The Small Business Innovation Research, or SBIR, program was created in 1982 to provide support to small high-tech firms that play a role in technological advancement and to increase private-sector commercialization of innovation derived from federal research and development.
Federal agencies with outside research-and-development budgets of more than $100 million are required by Congress to administer SBIR programs using an annual set-aside of 2.5 percent for small companies to conduct innovative research or R&D that has potential for commercialization and public benefit.
SBIR grants are awarded only to for-profit companies — not to universities. Some might challenge why public funds are being awarded to private companies, but there is a clear public benefit: jobs.
Virtually all job growth over the past two decades has been by innovative small businesses. Large corporations have given us shrinking employment over the same period.
Overall, Missouri businesses lag behind many states in tapping these grant funding resources.
But here at the incubator in Columbia, we are doing fairly well.
One of our companies recently received a $671,000 SBIR award from the National Institute of Mental Health. Another has completed a $250,000 Phase I grant from the National Cancer Institute and is in line for a $1.6 million Phase II award.
The significance of SBIR funding for high-tech startups cannot be overemphasized.
Venture capital firms do not fund startups. They come into the picture later, after the companies emerge from their period of highest risk.
Startups are funded mainly by angel investors — brave souls with extra cash and an above-average tolerance for risk.
Actually, angel investment across the country totals about $25 billion annually — on a par with the total investment by professionally managed venture capital firms.
There is a problem with angel capital, however.
It is very, very expensive for the entrepreneur. An entrepreneur can expect to give up, on average, a 25 percent to 30 percent ownership stake in his or her startup for a $300,000 angel investment.
That is where the SBIR funding comes into its own.
No equity ownership is surrendered; there is no debt to be paid back. Angel investors really like to see their companies secure SBIR grants. A grant benefits the company without diluting the investors’ ownership. Also, the scientific review conducted by the granting agency is rigorous and equivalent to a “seal of approval” by world experts in the field.
Funding strategies for startups usually are a combination of angel investment and SBIR grants. One of our incubator companies took its technology from the lab to the marketplace with $300,000 in angel investment and $700,000 in grants. Long may this continue.
Sorece : http://www.columbiatribune.com/news/2011/dec/17/startup-funding-helps-to-create-jobs/
Source : http://www.columbiatribune.com
Category : Small Business Grant
Opinions vary on the value of government-funded programs, but thank goodness for the Small Business Innovation Research program.
The Small Business Innovation Research, or SBIR, program was created in 1982 to provide support to small high-tech firms that play a role in technological advancement and to increase private-sector commercialization of innovation derived from federal research and development.
Federal agencies with outside research-and-development budgets of more than $100 million are required by Congress to administer SBIR programs using an annual set-aside of 2.5 percent for small companies to conduct innovative research or R&D that has potential for commercialization and public benefit.
SBIR grants are awarded only to for-profit companies — not to universities. Some might challenge why public funds are being awarded to private companies, but there is a clear public benefit: jobs.
Virtually all job growth over the past two decades has been by innovative small businesses. Large corporations have given us shrinking employment over the same period.
Overall, Missouri businesses lag behind many states in tapping these grant funding resources.
But here at the incubator in Columbia, we are doing fairly well.
One of our companies recently received a $671,000 SBIR award from the National Institute of Mental Health. Another has completed a $250,000 Phase I grant from the National Cancer Institute and is in line for a $1.6 million Phase II award.
The significance of SBIR funding for high-tech startups cannot be overemphasized.
Venture capital firms do not fund startups. They come into the picture later, after the companies emerge from their period of highest risk.
Startups are funded mainly by angel investors — brave souls with extra cash and an above-average tolerance for risk.
Actually, angel investment across the country totals about $25 billion annually — on a par with the total investment by professionally managed venture capital firms.
There is a problem with angel capital, however.
It is very, very expensive for the entrepreneur. An entrepreneur can expect to give up, on average, a 25 percent to 30 percent ownership stake in his or her startup for a $300,000 angel investment.
That is where the SBIR funding comes into its own.
No equity ownership is surrendered; there is no debt to be paid back. Angel investors really like to see their companies secure SBIR grants. A grant benefits the company without diluting the investors’ ownership. Also, the scientific review conducted by the granting agency is rigorous and equivalent to a “seal of approval” by world experts in the field.
Funding strategies for startups usually are a combination of angel investment and SBIR grants. One of our incubator companies took its technology from the lab to the marketplace with $300,000 in angel investment and $700,000 in grants. Long may this continue.
Sorece : http://www.columbiatribune.com/news/2011/dec/17/startup-funding-helps-to-create-jobs/
