How to survive the valley of death as a startup.
Getting from R/D to the market is a potentially lethal pathway, so much so it's referred to as the Valley of Death http://www.forbes.com/2005/11/17/utilities-emerging-tech-cz_1117energy_programs.html Surviving it requires a deft combination of private and public financing, preferrably without giving away the store. Probably the most common public lifeboat for companies looking for early stage financing is the SBIR/STTR program.
The SBIR/STTR program (Small Business Innovation Research Grants/Small Business Technology Transfer Grants) are administered by the Small Business Adminstration. 11 federal agencies participate in the SBIR program and 5 in the STTR program. (http://www.sbir.gov)
Combined, these programs offer over $2B dollars to companies with commercializable technology. And the best news is that the government won't take a piece of your company when they give you money.
SBIR grants are awarded as Phase I grants (about $100,000) for six months, Phase II grants (about $1M) and then Phase III. There are several variations on the theme but that's the main idea. Several companies ladder SBIR grants, accumulating precious dollars that don't dilute subsequent investors. STTR grants differ from SBIR grants in their terms and conditions and amounts of money available.
Like most government grants, the application process is tedious, extremely competitive and requires SBIR grantsmanship skills to be successful. More good news is that there are people to help. If you are interested in SBIR money, here are 3 things I'd suggest to get you started:
1.Check the websites of the SBIR program, various agencies offering them, and other clearinghouses for information, like http://www.zyn.com
2. Take an SBIR/STTR workshop when it comes to a theatre near you. I plan to attend a 2.5 day soup to nuts event in January for $250. It is worth every penny.
3. Consider hiring a consultant to help you land the grant (http//www.pbcinc.com)
Though you might walk through the valley of death, the SBIR/STTR program is there to comfort you.