By Rob Meissner, TCV Growth Partner-
Each year, the National Science Foundation awards over $200 million is SBIR grants. With $225,000 for a Phase I award and $750,000 for a Phase II award, these grants can be a great source for non-dilutive funding for early stage companies. As with any grant application, success depends on understanding the audience, the grant reviewers, and delivering an application that matches their expectations. The key to success is remembering that through your responses to the various topics in the application you are weaving a story. The story that you need to write sounds something like this:
This is exciting technology that addresses a significant market opportunity. (If it also addresses a societal need or problem, even better.) There is currently significant technical risk, but with the NSF’s $225K Phase I grant, a proof of concept can be established and the technology de-risked.
Let me unpack each of those elements.
Exciting Technology – How do I know if they will view my technology as exciting? First, review NSF’s current topic list to see if your project fits into one of their research interests. Second, recognize that the NSF is interested in breakthrough technologies and those that advance the state of the art. When you describe the innovation that you are commercializing, make sure that you clearly highlight the revolutionary nature of the innovation.
On the flip side, the NSF is not interested in incremental improvement. If this applies to your situation, see if you can frame your technology is still a breakthrough development or reaching an inflection point. During the review process for a Phase I grant that I submitted, I was questions whether what we were doing was more evolutionary than revolutionary. I responded that although this was an advancement in technology that had been around for a long time, the breakthrough was that we had advanced certain metrics to the point that it could be commercially viable for the first time. We won the grant.
Finally, to be exciting, the technology needs to be at a certain level of maturity. They don’t fund proposals that just tout great ideas. You need to have enough preliminary data to establish that you can achieve some sort of breakthrough. If you have the data, make sure to include the highlights are in your proposal in an easily digestible format.
Significant Market Opportunity – As much as the NSF seeks interesting technology, the SBIR program is about commercialization. Proving the market opportunity is critical. You need to demonstrate that the proposed technology addresses an identified customer need. While not absolutely required, you really need to have done significant customer discovery. [If you don’t know what customer discovery is or how to do it well, get assistance.] When you describe the target customer, the problem that you solve, and your value proposition, specific insights gleaned from your customer discovery interviews need to be included. You are allowed to submit three letters of support. I would use at least two of them to buttress your case on the market opportunity.
Your discussion of competition needs to support the notion that this is an attractive market opportunity. I’ve seen far too many grant applications which claim that there isn’t really any competition. When you do so, you are communicating to the reviewer that you really don’t understand your potential customers or there really isn’t a market opportunity. If it is a real problem for customers, they would be doing something today to address it. If it was a large opportunity, there would be significant competitor trying to solve the problem today.
Current technical risk - The nature of other grant applications leads many to downplay the technical risk in commercializing their innovation. That may be appropriate for other funding opportunities, but it is not the right approach for the NSF’s SBIR application. The NSF sees their funding as de-risking a promising technology to enable it to attract other investment. Be sure to articulate the technical risks that you will address in your SBIR project.
Establishing Proof of Concept with the $225,000 Phase I Grant - The goal of a Phase I grant is to establish proof of concept. Somehow, despite the very large range of funding needs for early stage companies, this $225,000 grant is exactly the right amount to get this done. First, if $225k is sufficient to complete the commercialization, you are not likely to be funded. You are better off soliciting that level of funds from friends and family. If you need orders of magnitude more funding to establish proof of concept, then you are also unlikely to win a SBIR grant. If you fit in the Goldilocks range in the middle, then you need to craft your project goals and objectives appropriately. If you achieve your objective during the project, will it prove the commercial viability of your innovation? Is it likely that you can attract other funding based on the success of the project? Answering these questions is a great place to use one of your letters of support.
If you need further assisting weaving your story into a SBIR grant application, contact TCV Partners at firstname.lastname@example.org