# Winning SBIR Contracts ## Метаданные - **Канал:** MIT OpenCourseWare - **YouTube:** https://www.youtube.com/watch?v=-U3-idg31L4 - **Источник:** https://ekstraktznaniy.ru/video/20894 ## Транскрипт ### Segment 1 (00:00 - 05:00) [] Well, welcome all for a wonderful warm January. Uh what better to warm yourself than by the fabulous thing of free government money. Um I'm Steve Djerzinski. Uh I've got a bunch of background that I'm going to go through in a second, but I wanted to give you guys a little bit of um the history of this particular lecture. A couple years ago I looked around at MIT and I said why is it that we don't have anything on, you know, like really winning SBIRs and what the process is to like win them, not just how to fill out forms. Um and it turns out that most people like provided us consulting and some people um you know, aren't really allowed to say the things that I want to tell you guys about. Uh so I decided to just put this together. I did it last year. We had uh the ones that I know about, the three people that applied all won awards and actually one company decided to just go and raise venture capital, so and they just closed a $5 million round. So hopefully you guys will be in that same boat shortly. Um okay. So I'm Steve Djerzinski. I've got my undergraduate in mechanical engineering from MIT. I was originally a roboticist, uh which kind of gives you a certain mental model of the world that everything works in feedback loops and every time you're trying to control something, you always have to get the feedback on it and make it kind of correct what it didn't do. Um I've got a patent on the space shuttle's robotic arm, so when arms were trying to move solar panels, they would vibrate like crazy, so we came up with an algorithm to move it a lot more quickly and a lot with a lot less vibration. Um I then went uh back to Sloan and got a Sloan Fellows degree, so I have both that kind of weird engineering viewpoint and then also an MBA. Um and in between those two I was down at Georgia Tech and I created the what I call the first faculty venture studio. And yes, it was formed before the Deshpande Center at MIT. So, um and this is basically uh a process that you go through the university and you look at all the technology they have and you say, "This is great. How can What are the commercial applications for it? " We our innovation was basically bringing in fundable CEOs into the university so that they could form companies within our venture lab. So, it was like a university lab, but it was for venture creation. And that's still going today. You can look it up online. I think they've done about $2 billion worth of startups now. And today I'm running a co-foundry in Kendall Square uh forming multiple companies from that technology. Um but in terms of this class right now, uh my experience with federal contracts is about 40 million bucks roughly. Sorry Sorry, this is the $23 million list of all federal contracts I've done. Um and I will tell you that I was either the PI or the primary business person on all of these contracts. So, I have interfaced with NASA, NSF, DOE, ARPA-E um for all of these things as well as DOD, which is not on the list, but um I've done a ton of work that way. And over the years I've discovered kind of this, you know, all money is not equal, right? There's different colors of money and there's different motivations for the funding that you get and understanding that before you get into it is really critical. So, um I wanted to make a specific uh characterization of disruptive technology. Um a lot of people uh talk about or I I did my MBA actually on technology innovation, which was focused on thinking about how do you commercialize incremental technology advances and how commercialize radical technology ventures or disruptive technology? Uh and the classic example and you always see these pulled together uh is if you have an incremental technology, then it's very easy to just go and talk to your customers about what do they want? I mean, if I just took a generic customer and I said, "What do you want? " they would say, "Exactly what I have right now, but cheaper, faster, and with better quality, right? " I mean, that's like an easy thing to sell because it doesn't disrupt their model, right? So, commercializing incremental innovations should be fairly straightforward. What I really want to get into and what I think the SBIR program is uniquely designed for is disrupting uh crazy innovations or or sorry, commercializing crazy technology and it's uniquely positioned in funding those kinds of activities. So, uh to this point, one of my favorite quotes from Henry Ford, if you if I asked people what they wanted, they would've said a faster horse, right? Cuz they all had horses at the time. They just wanted what they had right now just a little bit faster. They wouldn't have said, "I want a vehicle that has four wheels that I have to start up every day and stick gasoline in, right? " Um along those lines uh Steve Jobs, another quote I love, which is ### Segment 2 (05:00 - 10:00) [5:00] "What we have found is that in general, customers don't know what they want until you show it to them. " So, now what we're here today talking about is, "Great, I've got this cool technology and I want to reduce it to a product that I can show to a customer, but where do I get that funding? " Right? Let's see. So, that um over the years everyone's talked about the valley of death over the years and I have a unique view of this. And one is that governments and universities, there's a ton of money available to do research on the next cool thing, right? If you have no application, but you have really cool research idea, there's a ton of money at the National Science Foundation and DOE to go discover neat things. But if you're in the university, there's a certain vector that your funds have to go in and they have to go towards finding new interesting things, new interesting research. As soon as you start doubling down on the same money going after an application and going after commercial, that's considered not the right use of funds, right? You have to get different sources of fund to move it towards the commercial landscape. And then you go on the other side in the private sector, Wall Street has a ton of money, right? So if you have a customer that wants to expand or if you want to expand your operation and you've got 10 years of financials, there's a ton of sources to do that, but it's that gap in between and how do you fund that's the real challenge. Um and I know there's a bunch of solutions out there, but I've looked around at, you know, foundations and angel investing and VCs and really what I've come to over all of these years is that the SBIR is really the best program to fund that gap. Um and often when you go and talk to end customers, they'll say, "Hey, this is great research. Where can I buy the product? " And then you sort of have to gulp, you know, there's a lot of work between this paper that I just got published and actually having a product that you can play with and understand how it works. So what I found is if you talk to end customers about a disruptive technology and you don't have it reduced to practice or something that they can use and try, you're going to just talk to a lot of customers that don't understand or they're going to be nice to you or other things. So that's really where the SBIR comes in and specifically a lot of the pro programs we're going to talk about today. Um and the way that we look at this at the Kendall Square Co-Foundry is by a focusing on these two sort of blue squares. I call them a technology project if it's a technology that has a lot of interesting research dimensions to it, but there's no real customer that either understands or has been engaged or really knows kind of how to purchase it, right? Or how to even interact with it at some stage. Um so in that mode you're exploring new applications. And if you're in this mode of exploring new applications, uh, the worst thing you can do is take recourse funding, in my opinion. So. Uh, and this is a little bit controversial. So right between these two And then on the right hand side, sorry, we have company projects, which are Okay, we've got them, you know, we've got a demo, and we've got things that people can use, and we now just need to understand how to fund them more so that we refine them, you know, debug them, and get them in a package that the customer really wants. But that's only after you have clear customer focus. And a lot of times, uh, people, especially in, you know, around MIT, there's a ton of funding available for equity funding. You know, angels and VCs, that's all recourse funding. And I want to caution you all that crossing that line when you're in this exploration mode can be a little bit crazy. Because when you're in this exploration mode and you take recourse funding, it's like I have an obligation to somebody, but I don't really know what direction I'm going yet. And you keep in mind I've been doing this for many decades, so I've seen a lot of oopses in this space. Um, so if you're on the left side of that line, grants and non-recourse funding, absolutely, that is the perfect source of funding to reduce things to practice. Um, and then if you're on the right side of the line, where you have customers and you've got traction, then getting recourse funding is okay. Um, but uh, I mean, it's it's absolutely the way to go, and especially if you need growth capital. So I know I have a lot of I have invested, investor friends, and a lot of them say, "Oh, no, we like to take technology risks. " And then you realize that maybe that's not such the best idea for your technology because you still don't know what direction it needs to go in. I can tell you that they love to invest on the right hand side when you have customer traction, and you just need to, you know, if you the pump is already going, and you need to just jam more, you know, jam more capital into that pump and keep cranking it out. So, over the you know, as you sort of look at all the sources of funding that are out there, what you come to is that SBIR is the best source of funding for this exact stage being in this sort of deep technology space. Yeah, so don't take recourse funding at this stage. And I'm sure you're getting ### Segment 3 (10:00 - 15:00) [10:00] lots of angels who are like, "Oh, no, we'll give you a 100 grand. Oh, we'll give you 200 grand. " You can still take it, right? I mean, what do I don't have any control over you, but I don't recommend it. Okay. So, um perfectly designed for this. It's about $4 billion of federal funds every year. Uh and if and that's expended every year. That's given out every year. So, if you were to sort of do the math on what size venture capital fund that would be, venture capitalists give out about a fifth of their um total capital under management every in their new funds every year. So, that would be about a $20 billion equivalent venture capital fund. Um and the expectations are simply um uh that you will do the good work. It's there's no expectation of getting paid back or that you'll be commercially successful or anything. Um and I want to point out that some equity vest investors do actually view winning an SBIR as a positive for their due diligence. So, especially if it's uh sometimes there's a lot of DOD people that have some deep technology expertise and if they decide to fund you, that's a that's an indicator on the outside that says, "Oh, well, you must know what you're talking about because we know this these guys at the DOD and they know um you know, if you're just not if you don't really have what it takes or if you do. So, so that's a good thing. All right, and I wanted to go into real quick on the incentives of the different funding sources. Um Charlie Munger from Berkshire Hathaway uh has another favorite quote of mine, "Show me the incentives and I'll show you the outcome. A lot of times if you already know what the incentives are, there's no even point in asking the question. So, um you guys probably I'm sure you all know about angel investors and VCs. The biggest distinction between an angel investor and a VC is an angel investor is investing their own money. So, they can write a check whenever they want to, right? There's no like I feel like right I you seem like a nice guy, I can write you a check, no problem, right? A VC actually technically gets money from limited partners. So, they have someone else up the chain that they respond to. And so, what I'm going to say might sound a little crass, but it's absolutely true if you think about the structure of the relationship, okay? So, their motivation is to maximize return, get a big piece of equity, and get to a fast exit. Now, I've talked to a bunch of VCs and they'll all of them say, "No, no, we're slow investors. " I can tell you that may be true, but the question really is the limited partners that are that have put money in them, do they actually feel that they're slow investors too? And maybe there may be a couple out there that do actually do that. But, by and large, the whole reason why limited partners like big pensions funds allocate a little bit of money for the VC is because they expect those really high returns. And the only way you get returns is that it's return versus time. So, if you stretch the time out, the return has to go through the roof in order to kind of meet the obligation of that sector. So, I still stand by these two motivations of a VC. Now, let's talk about SBIR program manager. Does anybody want to take a guess at what their first motivation is? Science? — Getting ideas to market. — That would be great. What do you think their first motivation is, though? Creating jobs? Yeah, those are good motivations. Those are good. Anybody else? — Use the funds. — Using the funds properly? Yep. Um I would argue that the first motivation of an SBIR program manager is to not get fired. Okay, and I I say this sort of tongue in cheek, but it's important to remember when you're interfacing with them that they're not in it to like do you favors and you know, cut a deal and all that stuff because when you it's interesting to me to interact with both VCs, angels, and SBIR program managers because it's a very different ballgame. You know, when sometimes, you know, when you're in it you're both in it to make a lot of money with VCs, right? You both want to like make high returns. And with SBIR program managers, they're like So this is the argument for why when you go out and you look to find all of those things about how to win an SBIR proposal, they talk about filling out the proposal correctly. And you're like come on. I know how to fill read instructions and fill this out. But the reason is cuz if they get a proposal that's awesome and there's something wrong with it and you didn't read the instructions correctly, they can't technically go back and ask you to correct it even if it's a minor glitch. So they have to reject you and it's like heartbreaking to do that because if they do, then they'll, you know, run the risk of losing their pension or other things. So that's the number one motivation. The second motivation is to not be embarrassed by their decision to fund you. And I say this also a little bit tongue in cheek because but it's really important because if you come across as, you know, a little bit flippant or, you know, not quite professional in like the use of funds, then it's going to be like, well, you know what, there's like 10 other guys behind you that I can give money away to. Why should I spend a lot of time on this guy? And then the third ### Segment 4 (15:00 - 20:00) [15:00] is to fund interesting technologies to progress their agenda. And there's probably also, you know, create jobs and everything else too. So I wanted to lay that out so you kind of understand when you're going through this whole process like, why is it so bureaucratic and why do I have to fill out all this stuff it out again, you know? And why is it taking so long for them to make a decision on anything? So now hopefully you understand a little bit of a perspective on their motivations. Um okay, so So, this is I like to do a little market study like what are we talking about here at the SBIR program, $4 billion. This is just the phase one awards from 2022. And I did look to see if there was new information available. This is the latest data we have from the federal government. Um and just to give you kind of the idea of how many, you know, each agency funds and kind of how much they have obligated. So, I said $4 billion for those of you paying attention, this is only $838 million, but it is only phase one. So, um and you can see here that like the Department of Transportation funds 12, probably not a big program there. They have a pretty small budget. And you can see the DoD is the big beast here with uh the maximum amount. Um and also it's interesting just to see kind of you know, the Department of Commerce, 39 awards and 39 companies. Nobody doubled up, but some of these other ones like DoD, there's quite a few doubling up there, right? Anyways. Okay, so let's look at the phase two. Phase two numbers look pretty similar, and this is where you get the $4. 4 billion total, phase one and phase two. Um Uh you know, you can see the average award size from that from 2022 as well. Okay, so I hopefully all you guys saw the um notice that the prerequisite was to watch that uh video by Ben Shrag of the National Science Foundation. Uh if you didn't, you can go back to the calendar, the IAP calendar, and click on the link there. It's about 20 minutes long. It's perfectly, you know, he just goes through the basic stuff of what you got to do. He answers all the questions about the administrative process, what sites to register with, how long does it take, and how does the NSF do their applications. So, as we'll talk about in a second, there's a big difference between NSF all these agencies and their SBIR offerings. Um we will have uh next This is the intro class. And then on Wednesday we're going to do the advanced class where we're going to talk about a lot more cool stuff about review process and about AI use in application process. And Ben has agreed to uh to call in on that. So if you guys want to get your questions ready for Ben Shrag, he's been at the National Science Foundation for 12 years, I think. Maybe longer. Um uh great guy uh and very open to kind of helping out. He did I did send him the registration list of all you guys. There's about 70 of you that signed up and he said, "Very impressive. " So he's also a nice guy, too. Okay, so let's talk about the federal funding aspect of it. The um the point that I want to make with this federal funding and if you don't know, it's like 3. 2% of all anybody who has extra any agency that has an extramural R&D budget, blah blah, you know. Doesn't matter, right? As long as you look at the agencies, you see how much they've got, that's all that matters. But for you to know, it's a law that was written that says three it has to be 3. 2% for SBIR and then down here it's 0. 45% for anybody over a billion for STTRs. And that's the university focused one and I've got [clears throat] it some more detail on that. Um the other thing that I want to go into is that even though it's called SBIR and I call it SBIR because the National Science Foundation calls it SBIR and they were the first agency to have this program. Uh the DOD guys call it SIBER. So if you hear that SIBER, it's like they pronounce out SIBER and SITTER, I think STTR. Um And that's just a an example that says just because it has the same name doesn't mean it's the same in all agencies. In fact, it's very different across all agencies. I think the only thing that's the same is the sort of percentage of the budget that's allocated. So whatever the DOD's extramural budget is, they got to allocate that percentage to that program. And then I think it carries the name within the DOD, but then how it's implemented is very different and I've got a bunch of slides on that as well. So just so you don't know, it's phase one, you have to win the phase one in order to qualify to apply for the phase two. Um typically it's like a 10% to 15% success rate on winning the phase one, and then it's about a 50% success rate on winning the phase two after you've completed the work on the phase one. And then commercialization. So the NSF has So there's federal money at phase one, federal funding at phase two, and there's no three. So a lot of people are like, what's the point of commercialization? The point of commercialization is to track the data on how you've performed so they can report back later. NSF has a similar model, um but in a lot of programs have this and I just want to ### Segment 5 (20:00 - 25:00) [20:00] point out this phase two B, which is even though I said there's no federal funding at phase three, with the exception of phase two B, right? Which isn't technically phase three, but it's shown here on the phase three side. Uh it's a two-to-one matching of private investment, uh and it had you have to get at least a million dollars of private investment, and I actually did this a few years ago, so I'm familiar with the process. And since we were just talking about non-recourse and recourse funding, that million dollars does need to be recourse funding because you can't do things like, "Hey, I'll just loan myself a million dollars, get a half a million dollars from the NSF to match it, and then I'll pay myself back immediately, right? " They figured that out. So uh you can't play games like that. Um you actually have to get, you know, and and there are letters of support that have to come from the investors that show how they actually structured the investment and put it into your company so that you can get the half a million dollar match. And it's up to a half a million dollars, right? So if you only get 250K, you get 125,000 of match from the phase two B. Eligibility: for-profit. You can't be a non-profit and get NS SBR. Uh fewer than 500 employees, owned or controlled by US citizens, and the startup or established companies are fine. Uh that's all fine and good. That's the That's what the the law says, but let's look at like who actually wins them. And this is the number of employees. This is from FY01 and it's the DoD winners, but it's still relevant today. So occasionally they'll fund a one-person company. So if you're one person and you have a crazy idea that you want to do that, you know, there's a chance. More than likely they want to do two to nine person company, right? That's kind of like the sweet spot, right? Somebody that's kind of does the business side, somebody that technology side, or maybe you're two technology nerd founders that happen to be social. Social nerds, those are always good. Okay. By definition. Okay. Let's see. Um okay, so this is where I want to really split the SBIR program into two parts. When you start to dive into the agencies to really get the solicitations that you want to apply for, I want you to think about them in two buckets. One is market-driven agency and the other is mission-driven agency. So a market-driven agency does not have the customers internally to the agency. They have them, you know, the marketplace is the customer, right? Um So a great example of a market-driven agency is the National Science Foundation or the Department of Energy. Um where they see the technology you have, they understand how it, you know, how it great it is, but they need you to go out and sell it to somebody. That's an important distinction between a mission-driven agency like the Department of Defense. The Department of Defense is like, "We're at war. We have a theater of war. We have immediate needs of like super awesome batteries for our troops, and we are the customers. " Well, we and all of our uh defense contractors are the customers. So we are going to define exactly what we want. So what you find what this boils down to is that in a market-driven um agency SBIR program, you'll get these kind of like do something in optics, you know, do something cool in optics that customers really love, right? And then you get like on the DOD side of things, you get things like we need a battery that fits in this pack that has this kind of temperature controls on it that will last for this long and only, you know, only weighs this much or is, you know, is below this number of thing. So, it's far more specific uh in its offering. So, it becomes a lot more challenging for you guys to match kind of whatever you're working on with the solicitations on the mission-driven side of things. Um the opportunity though, of course, is if it's harder for you to match, it's harder for everybody to match. So, there's probably fewer competitors in that. And in fact, I mean, if you look at the numbers, you'll see that if there is, you know, in a very specific solicitation, if there's a broad, you know, a broad offer, sometimes they have these broad announcements where it's like, "Ah, we want to do something, you know, propose something really cool to us. " And you find that it's a lot harder to win that because there's just so much more applications in that space. So. And of course, NASA's a mission-driven agency, too, because trying to go to Mars, right? They're trying to get stuff up in the air. — [cough and clears throat] — Yo. Yeah, go ahead. — Um this is your interpretation or is it on their website somewhere? — This is America's Seed Funds interpretation. That that is yeah, that's right from the website. Um and this is also from the NSF website. Yes. — Can you keep the slides? — Yeah, I'll post them to the WhatsApp group. Um and I apologize. I blocked out the middle section here because it's really old information. But this is really good. So, the other um side of it that I wanted to talk about is kind of the contract award type. And what do we've got our C's and G's here, right? Contracts and grants. The difference between a contract and a grant is important only in that uh when you receive the funding as a grant, it just becomes kind of, you know, you wrote this scope of work and we all agreed that this is the right thing for ### Segment 6 (25:00 - 30:00) [25:00] you to do. Here's the money, go do your scope of work and then write us a report when you're all done and you know, and you already have all the money. So hopefully the money was spent properly and everything else. A contract on the other hand is, okay, we agree that this is the work that we want you to do. Why don't you go ahead and get started and here's some milestone payments that we're going to make or it's a reimbursable contract where you actually have to do the work, submit an invoice and get paid. Um the reason why I make this distinction is because when you guys go to apply, when you like talk about like why does it take so long for me to get this grant approved? And it's because once they say, here's your award, here's the money, there's not a lot of recourse, right? So they there's a lot of due diligence up front before you get to that grant point. On a contract, there's still going to be due diligence up front, but once it's engaged, it's kind of like, you know, if something happens mid-project, they can easily pull the plug if they need to and there's not so much money expended on that. So that that's an important distinction as well that you should take note of as you kind of go through the process and decide kind of who you want to review things. The review process for a lot of these, no surprise, if it's a mission-driven agency, it's going to have internal reviewers. Um and if it's a market-driven agency, they're going to get external reviewers. So that means uh you know, when you apply for one that's a market-driven agency, they have to go and find reviewers that aren't conflicting your proposal and that takes that process takes some time. Um but it's also important for you to remember that it's not just going to be the program manager that's going to review it, it's going to be people who understand the industry. And you have an opportunity in the application to say like, these are our direct competitors, do not get anyone on the review panel from that and they take that extremely seriously. So I would include that in your in your application if you if you're worried about that. Um and then I mentioned kind of the research topics are specific as or broad uh and then whether or not they provide gap funding and whether or not the communication can be restricted like specifically on mission or if it's open. So, kind of lines up naturally with sort of the um uh you know, mission-driven, market-driven balance. Any questions on that? This is just a more updated view of kind of the real numbers of what the agency budget is. And this is on I mean, sbir. gov has a lot of this information automatically, but I wanted to give you this information and then give you my experience and color on top of it. So, so if you want to go back and redo these slides, you can go back to the sbir. gov and get all the data from there. Um one of the strategies we're going to talk about on Wednesday is kind of thinking about the timing of things. So, you know, the the benefit of SBIR is you don't give away any equity funding, right? But the challenge of SBIR is that, you know, time is a vacuum, right? It's like It's like, "Are you guys done reviewing that yet? What's going on? " You know, there's so many things going on in the world of federal government, but this is kind of the pace they operate under. And if you don't know, the federal government's annual budget closes September 30th every year and then a new budget starts October 1, at least it's supposed to. Um and typically a lot of these processes are driven towards kind of making sure that all the awards are allocated by September 30th. Um not always, sometimes they sort of spill over. Uh but if you think about kind of how these things solicitations come out and when you want to apply for them, um you just keep these things in mind because the last thing you want to do is say, "Oh, I'm ready to apply for that NIH grant. " Like, "Oh, well, the window just closed like last week, so now I've got to wait another 6 months or something to do that. " Um as you think about these dates, you could we can also talk about, you know, applying to multiple ones so you can see kind of how they ramp up and whether or not you want to hear from one before you apply to another one. Um I usually don't recommend that. I usually just recommend you just go for it. Um yeah. Okay. Yep. Oh, yeah. Yeah, so uh specifically for the DOE and DOD and some of the ones that are mission driven, they're going to have very specific topics or solicitations. I mean, topic and solicitation are kind of the same word. And they do what's called like a pre-release, so the yellow and the green areas, they'll send out kind of these are the solicitations that we want to officially open on the official date when the green bar turns when it turns fully green. Um and that's um that's to sort of test market their solicitation ideas. Sometimes they pull them back cuz they realize, "Oh, you know, somebody else Like I think frankly inside the DOD, I don't know this for a fact, but I think what happens inside the DOD is they post solicitations and then like some other agency over here is like, "Hey, we already have that solved. You don't need to fund that. " So they And you know, because they're such a gigantic operation, they don't necessarily talk to each other, right? So there's all kinds of things like that. So that's why they have a pre-solicitation period. And then when it's open So I should say that uh when the topic is uh when it's like on pre-release or if it's a topic release, you have the opportunity to ### Segment 7 (30:00 - 35:00) [30:00] talk to the program manager directly and talk about the solicitation a lot more freely and openly. As soon as it's locked down, they like say, "You can't ask me any more questions. " Or any questions you ask have to be publicly posted so everybody can see all the questions. So that's kind of your opportunity to talk to them about about, you know, specific issues you might have or specific opportunities. Yes, sir. — The CTAS uh has two different ones. Um when you apply, is there a way to apply to both the R&D contracts or the other option? — Good question. Uh all of these things are constantly changing. So I like to take the approach, especially for stuff that takes a long time, to just be aggressive and like apply for as many as you can and then pull them back. I know a lot of people are like, "Oh, that's a lot of extra work for potentially no gain. " But, you know, you'd rather be in the game, right? And then decide to not play than to just like step aside from the beginning. So, we'll get into that in 1 second. There is some certain There's some finance There's some federal laws that you have to be aware of. So, — as I said, you don't want You don't want to go to jail and your your uh program manager doesn't want to lose their job. So, um yeah, and actually specifically to that point, um eligibility and usually I do this talk for uh for MIT students that are currently in school or maybe a postdoc, so you have a current situation right now, but you're looking to start a company and you want to apply for one of these things. Eligibility is determined at the time of award, which is not the time that you submit the proposal, and it's hear back from them on the reviewers, and it's not the time that they're asking you for due diligence questions. It is the time of award that you have to be employed or whatever you say in your application. And it's totally fine for you to say, "I'm at the university and my plan is to start a company once I get out and I'm applying for this, and here's the team that I've put together. " Um that's important. Uh the other one is the PI is not required to have a PhD or MD. A lot of people think that's true because the data shows that often the PI has a PhD or MD um because they're required to have expertise and oversee the um scientific and technically the project, right? If you have a state statement of work, you have a you have your R&D plan, and somebody has to oversee and manage all of that stuff. And if they're not technically kind of like well-known within that space that you're doing the work in, then you're not really qualified. So, typically the easiest way to do that is to have a PhD. So, but it's not required. Um okay, so this is to your question. Applications may be submitted to different agencies for different work for similar work. But you cannot get an award from different agency for duplicate projects. In fact, that last bullet lands you in jail. So it doesn't really give it much, you know, that that's really bad. Um when you apply to multiple different agencies um for the similar stuff, it specifically asks you, have you applied to other stuff? So and there's a strategy that, you know, that we can talk about on Wednesday, um but I will just tell you I don't usually recommend doing that unless there's a lot of synergy, unless it totally makes sense that like the NIH has this cool thing and they need the NSF to fund some software part of this biotech, you know, like if you have some related technology and you want to really be aggressive and kind of apply for both of them to sort of fund two different parts of the same product, you know, that you can put things together like that. Um So it is you can totally apply the same technology to two different agencies. You have to disclose it to both of them and once you get an award, you have to make a decision, am I going to take that one or that one? So I mean, I guess you're you're sort of upping your game, right? If it's a 15% success, then you got two of the same thing, then maybe it's 30% success. Yes, sir. — Uh first point, at the time of award, I've really struggled with the answer to this. Um you have to have an incorporated company when you submit the application? — Um So if you watch Ben's video, you have to um you have to register with all of those agencies. And I think part of that registration means you have to have some kind of an entity. It can be a you know, your own sole source schedule C company, so you can do it under your social security number. — Then following on that, uh you might for a student at Postdocs, how do you recommend people navigate incorporating and dealing with the conflict of interest office at institutes? Something that I've really butted heads Yeah, or not butted heads, but it's usually difficult, to know, yeah. — Okay, so I'm going to repeat that question and then I'm going to not answer it. So, the question was, how do you navigate the conflict of interest office? Uh that's really challenging. And that's the subject of the lab you're in, the department that you're in. Um a lot of some departments are like, "Hey, that's great. That's kind of what we want to do. " Other ones are like, "No, no, we have plans to commercialize that already. You can't take that on your own, right? " So, it becomes this huge challenge. Um so, I don't have a good answer to you. Uh I think it's always a diff- a difficult answer. ### Segment 8 (35:00 - 40:00) [35:00] We're trying to get technology commercialized here, not deal with politics, but unfortunately, humans are involved in everything, so there's always going to be politics. Yes, sir. — Also, I would like to ask about the PI. Uh do you need to be national permanent resident in the United States, or can be can it be uh under a visa or — So, I'm going to answer that question in two ways, and I'm totally going to caveat it, meaning I could be wrong. But, the company itself, as I mentioned in the eligibility stuff, has to be 51% owned by US citizens or permanent residents. The PI, the work needs to be done inside the United States for most agencies, and I've seen some exceptions to this sometimes, but it's been kind of weird and I didn't really understand, like, I've got a guy who's going to be in Israel for the summer, and he wants to do some you know, there's like, you know, he's not a US citizen, but he's one of these key guys, so that's a hard question. Good hard question, which I don't have an answer to, so. — Yeah. — [snorts] — Um so, okay, so one quick thing on SBIR versus STTR, I don't want to go too far into this, cuz we'll talk about that on Wednesday, but um uh the SBIR permits you to have a research institution partner, and the STTR requires you to have a research institu- partner. So, I've done both. I can tell you that the overhead associated with engaging with the university, kind of to your point about conflict of interest, how do you resolve that? How do you get a clean license? Um becomes very challenging. So, I know we're sitting here at MIT, love MIT. Um I think if you took a $300,000 phase one and you took 30% of it, which is like 90k, and you gave it to MIT, it would quickly cut down to about 45k, maybe even less uh for the actual researcher to do the work. So, it becomes really challenging to do that. Unless, if you really want to engage a university and they have some fantastic equipment or some fantastic people that you can't get access to otherwise, in which case you can view that kind of process as, you know, table stakes, right? If you want to get in the game and you want to use this great equipment, then that's the I mean, that's the reason why we're here because they have it it's not cheap, right, to run this place. So. Um what I usually recommend people do, if you do want to engage in a university, is to apply for an SBIR, and then you can actually take 30 per 33% of the phase one and outsource it to your research institute if you want, and you can do that through consulting agreements and other things that are a little bit easier to kind of get through. But you probably still have the same conflict of interest challenge that with that one as well. The award is always made to the small business. So, that's a great thing because then that puts you in control of receiving the funds and then paying the university as opposed to, you know, begging the university to make its payments. Yes, sir. — I see some SBIRs where I think there's a clear difference with the STTR. So, the STTR is like 30% more. Um — Oh, like the award amount is 30% more? Yeah. — You make 70 or something, and then they pull in more, 30% more. But um I've seen others where it's like you choose, but it's the same budget. It's kind of like, okay. Um I go the SBIR route. But at the same time, yeah, I've heard that it's you're more likely to get um uh to get awarded if you have an STTR. What's your opinion? — Yes. So, uh that's the — you you took the words right out of my mouth. So it is more challenging to get an STTR, but the same thing I was saying earlier, if there's more hoops to jump through, there's going to be far fewer applicants cuz most people are going to be like forget this. And then, you know, in fact, I've heard rumors that um uh there's a lot of sources of funding that have to go into STTR, they just can't get anybody to apply for. Cuz it's just not a lot of money and it's challenging. So it's like if one person applies for it, they'll win it, right? I mean, hope you know, it's got to be meritorious and all that stuff. It can't be I'm not talking about just like putting together a napkin or anything. — I think that's what it's used for. Phase two or phase three I think. — Uh well, you have to have a phase one to get a phase two. So what however you came in the phase one, if it's SBIR or STTR, then that would define how you go phase two. — So we heard this like if we are in an SBIR right now and it's like if phase one and then it seems like we can apply to phase two, we get the invitation. But then is um someone came from an institution and said no, you have to go with a partner with an institution. Uh and we were like well, but that is an SBIR. We were not sure that we could even migrate to an STTR. It made up in a matter of budget like — Yeah, I'm not sure. I'm not But I mean, the that situation, there's a lot of those situations. So you've got the SBIR program and STTR program and as I excuse me, as I said, they get whittled down and converted into what however the agency wants to run them. So it may be that there's a specific challenge that somebody has in a department and they need this funding to do, you know, I don't know. So that may ### Segment 9 (40:00 - 45:00) [40:00] be what you're running into. Okay, so I wanted to go into the proposal submission details, sort of how to get these how to win these things. Um uh and the it's typically a 25-page proposal. They usually don't accept unsolicited proposals. Um and they evaluate it number one based on the technical merit. So, you guys are going to love this if you're technical nerd. And then, you know, number two on kind of the other sort of commercial merit and the firm's qualifications. Um, I will say that, uh, I say this to all the I'm going to do a lecture on the nuts and bolts class, too, but a lot of times I do some mentoring at MIT for student project teams, and a lot of times when people look at grant programs or awards, and they're like, "Well, we could get this award for $5,000. " Yeah, but we need like 300 grand to do this thing. What's the point in doing that award? If you're a team that's just getting together, and you're just a bunch of individuals, if you can do something together under a cohesive unit and say, "We won this award as a team. " That kind of adds credibility to this next phase, which is kind of like talking about the firm's qualifications, right? Well, if you just come in with three people that just put a firm together, like the firm doesn't have any qualifications. It's just three guys that decided to come together and put it put a name on our on top of our heads. Um, so I would say I wouldn't necessarily poo-poo some of the smaller ones just to give you guys a chance to kind of put together a business. Um, yeah, okay. So, let me keep going here. So, this is directly from the National Science Foundation research. gov uh, proposal preparation process. There's a whole bunch of stuff in here that you guys can all figure out how to fill out. It's all details around it. But what I wanted to focus on was the project description, and then the letters of support. And this is specific to the National Science Foundation. These two areas are the most important things for you to spend most of your time on. Everything else you can should be able to just plug and chug. I mean, read the instructions and do it correctly, of course. So, a project description is 15 pages. It has an elevator pitch. It has a commercial opportunity, company and team, a technical solution, and the technical merits R&D plan. So, this is for a phase one. This is the first time that an agency would fund this project or this technology. So, the focus of a lot of the work needs to be on the technology solution and the technology merits R&D plan. So there's a bunch of other stuff that we put together, right? Commercialization and all kinds of ideas. At the phase one level, it should be a technology demonstration project. So you don't necessarily know who the customer is. You probably have some ideas, so you want to talk kind of through like who could potentially use this? Um but you really want to focus on the technology differentiators at that phase. Uh and then letters of support uh Good letters of support are um customers who would buy after phase one. So if you can figure out how to explain what your technology does and you've got a good customer that says, "That looks interesting, you know, I would buy it if it were reduced to practice in this way. " That would be great. Um investors with serious interest in the outcome, that means like "We read their business plan. We love what they're trying to do. We see a huge opportunity in the marketplace, um but they have some significant technical challenges and they are just the team to do it, right? " Like that would be the ideal letter of support from an investor and proving that they actually like know what they're doing. Um and then partners who would invest uh after a successful outcome. So if there's if you need to like a path to market and you need a serious couple of partners in order to get to that marketplace, those guys along the way saying that you talked to them is a great letter of support. So what are bad letters of support? Um there's way too many consultants who get paid from the fund and it's kind of like, "What's the point in telling me you support this project? Of course you do, right? " Um An investor with no knowledge of the technology, so some people are just like, "Yeah, you should fund these guys. They're a friend of mine. " And then senator or congressman who want to support the companies in their district. I there's plenty of these. I don't recommend them, but they don't hurt. So, you know, if you want to do them, that's fine. I mean, I consider them a bad letter of support, but maybe this is Steve's opinion here. Okay. Questions? Oh, sorry. I've had to take this spam likely or scam likely call. Questions on any of that stuff so far? — Uh yeah, so the or well, are these times that you can ask questions and the service fees are set? — Yeah. So So, good question. Um on the STTR side of things. So, on the SBIR side of things, you can only outsource a maximum of 33% for the phase one to an outside research institute partner. In other words, 66% of the technology and the innovation has to be with the small business firm. That's the reason why it's an SBIR. When it's an STTR, it's like some of the technology expertise can be with the company, but a lot of it is probably at the university, which is ### Segment 10 (45:00 - 50:00) [45:00] why there's a minimum 30% um for the research institution, right? Which means the small business gets 70% and then the um uh 40%. So, so that you know, there's some gap between those two. If you hit the minimums on both sides, you have some gap to fund other things, right? So, but that you know, that has to be in the budget. So, a lot of times you it helps with negotiation. So, if you're engaged with a national lab, for example, I've done a bunch of work with DOE's national labs, um you know, you kind of go through the You don't have to worry about negotiating. You just be like, "Well, this is defined in the SBIR, that's how much we're going to do. " So. Yep. — So, the STTR, the 40% is uh for the small business concern, is that the maximum or is that the minimum? — That's the minimum for the small business concern and 30% for the research institution. Yeah. So, that the total is only 70% and you have 30% of slop in between. So, you could do 40% for the research institution if you want, or you could can 50/50, right? That's within the the range. Any other questions? — Oh, okay. So, I heard that there is a Basically, there is some kind of markup for like the overhead. — Yeah. Yeah, that that's what I was saying one of the challenges is with a research institution for an STTR, you know, if you if you're if you have a $300,000 phase one award, 130% of it goes to the research institution. Uh that's $100,000, but then you got to multiply by take a half of it and that's the amount that actually can go to the to do the research. The other half of it goes to overhead. Typically, I mean, just rough numbers. Maybe even more than that in some places. I don't know. Does anybody know what MIT's overhead rate is? — I don't know. 59. — 59. Okay. Any other questions? Yes. — talking about the timeline of different institutes. — Yeah. — If I wanted to choose, what how many months you suggest that is minimal for the first time writing a grant? — Mhm. Uh that's a good question. Um So, if it's the first time writing a grant and you're going after a broad solicitation, I mean, you can get started on it. It's typically like two months, I think. Is you know, if you already have the technology and you know what it is and you want to put it in the right format for this, I think two months is about the right amount of time that people allocate for it. Um Uh that's for a broad one, but if you have to go into the specific solicitation topics, then it becomes a lot more challenging because you have to make sure that your technology matches whatever's in that solicitation. So, it might take an extra month or so to kind of make sure that it's focused on that, especially if it's your first time around. Any other questions on this one? Yes, sir. — Um so, for the letters of support, — Yeah. — Uh let's say that you are in a phase one and there's this uh specific department that is actually going to buy your technology. And you want to get more resources to actually finish that project. — Mhm. — Uh Do the letter of support would be useful for the NSF uh as they are like for example that the letter of support being from the government. It's a customer at the end. That's That's why I — I think it would be fine. Um a lot of times a lot of these things it's like did you actually talk to a customer in phase one? Which is kind of unusual, right? But you know that a lot of times that's important. Um if it's if that customer is so tight that they have a conflict then that's a concern, right? If they're too close to the technology then it's like, "Okay, well, this is just your friend, right? " So We I've done several where there've been uh prominent professors from lots of universities around that have given letters of support not as customers but just as technology advocates to the baseline technology, which has been great. Because one of the things that you'll realize is that the reviewers when they sit in a room, they have 20 of these proposals that they got to read through. And really what they do is they just go through the proposal themselves. They don't go to a website and go do extra research on stuff. And that's probably the most important thing for you to recognize is that, you know, they've got to review 20 of these things. The easiest thing in the world is to say no, right? So they're just looking for reasons to say no on any of these items. And if it takes extra work to go and like advocate for you, they're not your friend, right? They're there to just do the review. So what you want to do is make it very easy for them to say yes. Um so if there's a bunch of letters in there that say, "This is great technology, you know, I'm a well-known person in my industry and I say this is great technology. " That's great cuz then they don't have to go out and like talk to anybody else. They just see it right there in the package. So All right. Yes. Question what? — There is one uh as you can see of grants that you recommend us better than other — One Which what it I didn't hear that. — One in kind of agency of grants that you ### Segment 11 (50:00 - 55:00) [50:00] recommend us better than other? — One agency. Well, I love the NSF. So, you know, what can I say? I mean I I have some funding from the NSF. Um but it really it's really a match. So, you know, I wish they would rename it, you know, SBIR. Why I guess the SBIR has the brand name. So, everybody knows what that is. Um but within each agency there's a lot of different things. Like for example, I know some people that really have done a bunch of research and have a bunch of collaborators within the specific, you know, Air Force Research Lab. And so therefore the DOD and the solicitations that come out that match their stuff are a perfect match for those guys, right? So, it's like why would you go to the NSF and try and convince somebody that you have some good commercial when I have something that's, you know, ready-made for that solicitation. So, it's really kind of a custom question. If you are like, I have a cool idea and it's super, you know, techno-nerdy and I think there's a commercial market for it, then you know, the NSF is sort of designed to fund that. I mean, that's the reason why they're they kind of came into this. Um I will tell you that they do like to fund and they actually make a preference to first-time companies. So, if you if it's your first-time company and you want to do first-time funding, that's kind of their sweet spot. They prefer to do that. In fact, if you go back a second or third time, it's kind of like, uh You've already we already got you going. Now you're supposed to be on your own. So. Um Any other questions? Otherwise, we'll keep going. Yes. Yep. — So, if we are applying to grants, for example, DOD and NIH — Yeah. — but they are two different things. For NIH, they are looking at, I don't know, something — Yeah. — But the same company, of course, the the product at the end is the same thing. — Yeah. — Two aspects. — Yeah. — We can only accept one of them. — No. So, the it's the key Thank you for asking that question. The question is if we have two proposals that have different um scope of work. So, like I'm doing software development over here and I'm doing, I don't know, you know, drug discovery over here or whatever it is. Um, those are two different proposals. So, the the distinction is if I take the exact same proposal and I just change, you know, NIH to DOD over here and I apply the same thing here. So, it's the same, you know, I'm doing software development here, same person, same thing doing software development and innovating the technology in the same way. That's what you can't do. And a lot of people have done that, you know, it sort of makes sense. It's like, well, my chances of winning are 15% and I just, you know, let me just invert that and so, you know, submit it to six different agencies and one of them will hit, Can do the math on that, right? Um, so, yeah. So, so, you're if you And in fact, I think I like that as a strategy. If you have a product and it has multiple technologies that influence it, you can certainly go and find a bunch of sources of funding from different SPRs. And as soon as you get your company registered and everything else and kind of go through that process, that's kind of a big hump to get over. And once you're there, it's like, you know, one of the reasons why I've done a lot of federal government work is because it takes a long time to get you up over that hump in the first place. And once you're there, it's kind of like, I might as well just keep, you know, figuring out who else needs my solution that can be solved. So. Yeah. Unless I know anybody else has any other questions. She's already got two down, so, yeah. Go ahead. — If about the team, — Yeah. — should they be officially registered in like the company as part of the employees? Because for many of startups, one person with their day job, — Yeah. — support, they spend time, but officially they are working without So, are they okay and because of the limitations of their like primary employer, they don't go officially in the system. — Right. I got you. So, the distinction is And this goes to the budget and to the application. So, the question was, if somebody's outside and they're going to come work at the company once you get funding, how do I put them into the proposal? Um if they are one of the key people that you need to do the technology work. So, they're like a named person on the budget that says, I need, you know, whatever, 120 hours out of this guy, then it's a harder question because then you have a real challenge around are they actually a full-time employee of the company or part-time, you know, depending on how much time you put in the actual proposal, then they need to be in the company at the time of award. Um if they are just kind of one of these extras, so a lot of budgets will just say, you know, like computer software developers or something, right? Like they're just extra or you know, instrumentation specialists or something. Those aren't as critical to kind of uh to sort of winning the proposal, um then you can leave it at time, you know, you can do it after award, in fact. It's not that critical. So, it's really a uh a function of whether or not you And if you use the bio, someone's bio in your proposal, then you're saying that these people are adding to the team and adding to the credibility, and that's part of the decision process. So, they have to be in the company at the time of award cuz that's what they made their decision on, right? They're like, well, here's what they want to do, they've got this person who has this background and is perfectly matched to do that, and they've got budget allocated to make them do the work. That has to be contained in. So, you have to figure out how to get them in the company at time of award, I guess. — Okay. ### Segment 12 (55:00 - 60:00) [55:00] Yes. One more question then we're going to get on here. — Letters of recommendation? — Yeah. — If people have written articles, magazines, — Huh? — things about us, which they have like experts in the field, would it be better to use that article or ask that person to write something specifically for the grant? — Well, so you can always put press in the proposal if you want. Um uh I'm thinking I mean, if you're going for a phase one, that's usually like you have press already? Like that's pretty far advanced. — Well, there are COVID grants that I get similar to FAR systems, and so people just figure it out on their own, right? — Yeah. — I mean, you can certainly add it, but I guess you know, the what it's supposed to be for is for deep technology development that's not been commercialized yet. So, if you're already commercialized, then it's like maybe we should be doing something else. So, okay. All right. So, so this is the right way to get started on this whole process. So, um before you spend any money on creating a company or any administrative time, you can do a project pitch for the National Science Foundation or a quad chart for everybody else. And actually, you can do a quad chart for the National Science Foundation, too. So, why do I say this? Why am I telling you to do this right now? And we're going now. Um because I want you to talk to the program manager that's appropriate for your technology. So, and the best way to do that, if you think about these program managers, right? They've got hundreds of calls and people complaining to them, "Give me money. Why aren't you giving me money? I'm so great. " Uh the quad chart is what I what some of my friends call a um love language for the SBIR community. It's like a consistent way to kind of put your company and your technology innovation in a format that's easy for them to digest. And the reason why I want you guys to do this is because I want you to have the best success possible. So, if you put it in a quad chart format and send an introductory email to the program manager that's appropriate, and you already know all this background, then they're going to say, "Oh, this person knows what they're doing. They're going to follow the rules. They're not going to waste my time. Uh this sounds like somebody that I really want to fund, right? So, I've got this uh quad chart here, and I understand what they're doing. It fits in the in the area, and I can give them quick feedback, and they're not going to ask me a bunch of dumb questions to keep me on the phone cuz they're trying to be my friend, right? Um so, let's uh let's um do that. And once you have a call with a program manager and describe to them what's on the um uh quad chart and the situation with the company and everything else, then you can do the administrative work and the and you know forming the company and everything else. Um, and as Ben says in his video, there's like sam. gov, research. gov, sba. gov, and it could take like 30 days to do that. So, to your question about 2 months to write the proposal, if you don't have any of this stuff registered yet, it's another like 30 days to do it. You can do that in parallel with writing the proposal. I mean, you just submit stuff and then you just wait for it. Um, one other comment I like to make is that if you guys are in startup mode and you're trying to decide, should I raise equity or should I go for grants? Uh, one of the wonderful things about grants is that there's a deadline. So, you got to get it all done and get it submitted, and then once it's in, there's nothing you can do. You just have to sit back and like wait for them to review it, right? Which is a wonderful thing, frankly. People are like, ah, you're waiting and why am I or it's taking No, no. You guys have 8,000 other things to do. You get this done, it's like a homework assignment, right? You got to submit it, get it in, and then you got to And in fact, they often take uh a lot of comments um uh they often don't want to be bothered after you submit it, and that's a like a negative. So, it's it's beneficial in both areas. So, if you if you're a lot of times in companies, I'll say, why don't you guys go ahead and fill this proposal out, submit it, and then go get busy with your investor conversations and discussions. Because what I didn't say is uh you know, the on the SBIR side, there's a deadline, so that you can't do anything after a certain date on that particular proposal, but in the world of raising capital from investors, there is no end to the amount of meetings you could have and the amount of follow-ups you could have. So, that becomes a gigantic time sink if you're not if you don't manage your time carefully, so. Um, I do want to say that the solicitation that a lot of times people will take information and they'll try and sell it to you online and say, hey, this is the you know, this is how this thing works and there's all kinds of consulting companies out there, but the uh the PDF that you download from the website that is the solicitation, that's the official document. Um and that's the legal document that that's the ultimate source of facts. So, if you're looking for the ground truth of how should this grant be done or how should this contract be done, it should be in the solicitation. And if it's not, then you're going to ask the program manager then. Okay. So, uh what I'd like to do now is take 10 minutes. And if you guys all have laptops, you can download this quad chart template, which is from 2018. I realize it's old. I'm going to start the timer now, and then I'm going to take questions while you guys all get busy on ### Segment 13 (60:00 - 65:00) [1:00:00] that stuff, and we'll wait 10 minutes. Yes, go ahead. — Yeah, so we sent the letter to the program manager, and he didn't respond. We thought that they didn't provide pre-submission tailored feedback. How do you get that feedback? The feedback they said get positive feedback. Um you we just send them like a detailed questions or — Oh, yeah. So, okay. So, well, I'm we're timing. Everybody's doing their quad charts. Um so, the point of that is once you once we finish this exercise and you have your first call, there is another a few other steps that I'll talk about in a second, which is to go find the right guy that you need to talk to or gal. Um and then what you want to get is this looks interesting. This is exactly the type of stuff we would fund. Right? So, go ahead and fill out a you know, an application for this. That would be fantastic. You may not get that. You may get like, "Okay, it's not terrible. " Right? Which is kind of you have to lean into that and realize that that's a positive. Right? So, like not being told to go, you know, like, "This is wrong. " is a good thing. Um and you may also get just like, you know, "Hey, this is not the right thing. We've done this eight times already, and we've never had any success for it, so don't bother. " Which is fantastic, right? Cuz then you don't have to waste your time, you know, all this time trying to fill out an application and and to for no avail. So. — But do they give you a Are they available for a call? Because from what I got from this email is like kind of like no, we don't give any feedback. — Oh, oh, so they are available for a call, but they may be wary about giving you specific feedback to make your proposal more competitive. So, you can ask them some questions, but you a lot of times they won't they'll just won't answer. And we can ask that of Ben on Wednesday, by the way. Feel free to ask him any questions you want, and you'll get the fantastic answers like excuse me like um you know, I'm not at liberty to discuss those things or you know, it's against certain rules all that kind of stuff. — We heard that it's also cool to approach them, but we've never gotten anyone to pick up our calls. — Probably because you didn't email them a quad chart ahead of time and show them that you're you know, that you're awesome. So, other questions on this stuff or you guys are busy digging in? Yes. — So, you mentioned that they're not allowed to give feedback under certain circumstances, but it looks like they can if you just reach out to them or anything like that. So, what's this boundary — Uh so, they can't I forget what the legal limitations are, but they can't kind of tell you that hey yeah, we would totally fund this. They can tell you that like there's a match or there's a good likelihood of match. Um you know, they can't give you any guidance around what to change, you know, they But really what you're what really what you're trying to do and I think I have a slide on this, so I apologize for repeating it ahead of time is just develop a relationship with the funder. Right? So, so and what I want you to do is it in the right way and in the sort of compatible way and I want you guys to all do your homework ahead of time so you don't ask silly questions about what the SBIR program does and all that kind of stuff, but that you're trying to get to you're trying to those top three motivations of the program manager, they won't get fired, they they won't be embarrassed by funding your technology, and they'll be excited about actually like oh, this is cool stuff. I mean, this is what we we I highly doubt you'll ever get any SBIR program manager to say, "Wow, this is really cool stuff. We should fund this. " Right? That's not in their DNA, so. Okay. Hash, what's up? — Uh this fund comes directly from the federal government. Uh I'm just filling out sam. gov for the ID. They ask for the issue. — What was the question? — Is this fund is coming directly from the federal federal government or is it coming from federal government to some agency and then to — Well, it's a federal agency, so I guess it would be coming from the federal government. — But the question that I'm still applying for this ID to apply directly for federal grants or loans. — Yes. — And So, it has to be yes there. — Yes. — I don't know. — You guys are supposed to be the smart ones that can fill stuff out properly. Any other questions on this? Otherwise, I'll chill out for a few minutes while Um So, just one quick note. If you notice, there's a company, state, name, email, phone. A lot of times people miss that on the top of the thing. Nope, we're not doing that again. Okay. So, that quad chart is for every technology and that even works with the National Science Foundation as well. Um has a new process where you have to fill out a project pitch. And I know one person in the audience has done this already. And what you'll notice is that the technology innovation, the technology objectives, the market opportunity, the company team is very similar to the quad chart just sort of in paragraph format. Um and I think because the NSF is so broad ### Segment 14 (65:00 - 70:00) [1:05:00] and — [clears throat] — has so much um leverage to fund a lot of things that they decided to put this process up front to make sure people didn't waste their time and they didn't waste their time, you know, finding reviewers. So, you have to submit a project pitch to them first um and you have to select kind of what area goes in and until you get a sort of encouraged to apply response from them, you can't fill out a phase one. So, this is a necessary step in the overall process. Um and these instructions are on that website, so you can take a look at that as well. Um So, what I want you to do after that is find the agency, the solicitation dates, and contact information and prepare for a one-on-one call with the specific program manager. So, to find the agency, you can go here. I mean, sbir. gov has all this stuff, but you can actually search for all the awards that were funded previously and find something that's similar to your technology. Um and then search for the agency that's funded and then within that agency, you find this if there's an open solicitation, the dates and deadlines, and find the official PDF of that and the specific topic for your technology. And this is I'm talking about like mission-focused ones now. Um in the I know the broad-based ones, the market-focused ones will have very broad ones, so it's fairly easy to s- read through their solicitation and find where you would where your technology would fit. Um for the like the DoD ones that have like a thousand different solicitations, you do have to go through and find kind of at the lower level and then find the contact name of the person that's going to fund that topic. And that's the person that you want to email your quad chart to. Um and set up a call with cuz that's the person that wrote the solicitation, got a bunch of people to input on, you know, like what should the solicitation be, and they're going to be the ones that are going to, you know, convene a review panel and look at your proposal. So, that's the person that you want to really kind of be in contact with. Um and of course, if there isn't actually a person on that solicitation, which sometimes there isn't, uh they usually have a general SBIR contact that you can say, "Hey, this is my technology. I'm interested in this topic. Who should I speak with at the firm? " Um And of course, you know, just using standard good sales process, you send an email and you follow up after a few days and then after that and then you send another follow-up email and stuff. So, um okay. So, this all brings us to the homework that you guys maybe are already done on uh on Wednesday. Or you can even send it in to me ahead of time. There may be an extra prize if you send it ahead of time. Um you should already be familiar with the one-on-one stuff from that video and from this talk. Uh but I want you to list all the agencies and the topics that put potentially good fund your technology and then research other technologies that have funded there. Uh have your complete quad chart done. And then prepare questions for your call. So, so what I would recommend your call have is just general feedback of fit for your technology with their agency. So, making sure there isn't like some weird you know, "Oh, you didn't know about this other thing. We don't actually fund that technology, right? " That that's A fast no is a great thing in this world because, you know, there's all kinds of money out there and you want to really find where you should focus at. Um Building a relationship with the future funder. — [snorts] — And then you want to ask questions and find out others you should talk to. So, that's the last question that you want to ask them. Um and if often they'll say, "No, I'm pretty much the only person. " Which is fine, you know, they could say that. But they might say like you should really talk to this person or other person. This is the advanced tip is that those people are probably also on the review panel for your proposal. So, when you say, "Oh, that's nice. Yeah, I should talk to them, too. " Yeah, well, they don't have any money, so why should I talk to them? Well, they can't tell you they're on the review panel, but more than likely they will be. Or there's some partner that you should really talk to that they want to get their opinion of. So, they may not officially be on the review panel, but if you get to that point, you definitely want to engage all the people around that any of those people mentioned. So, um I did mess this up one time when somebody was like, "You should really talk to this person. " And I was like, "Eh, I don't have time for that. " And then, you know, we didn't get funded and I'm like, "Oh, because that was the key person that was going to weigh in on our proposal to say yes or no. Dang it. " So. Okay. Um So, that's the homework for Wednesday. On Wednesday, we're going to talk about all of the wonderful AI tools that make this whole process way easy. And if you want to submit your material to me early, I might give you access to some of those cool tools up front before we get too far down the pathway. So, just as a just as an incentive there. Um Questions on this? — No, everything's crystal clear. Um so — Yes. — Do we send the ### Segment 15 (70:00 - 75:00) [1:10:00] homework to this uh email address? — Yes, send it to me. You can send it to Steve at cofoundery. global or sjd@mit. edu or I have a million emails. Okay. Questions on any of that stuff? We're almost done here, guys, so please bring up the questions. Everything's good? Ready to rock and roll? Anxious to get AI to help you do all this stuff? Well, I will say one thing, which that and I'll probably repeat this on Wednesday, so maybe I shouldn't say it now, but anyways, I'll say it anyways. Uh what I found is that AI gets you from kind of an F to a B. And then it really takes humans to get you from a B to like an A A+ where you actually get funded, right? Where funding level is A. So, so no, you can't have AIs just go and get you go get me a bunch of money, right? Like that's fantasy land. Um and I would highly recommend that you guys ask Ben that question when he gets on the call on Wednesday. Like, how do you know, do you encourage AI usage? Um, I mean ultimately it's people funding people. So, and people can still tell that it's an AI behind the scenes. So, — especially if you have a phone call with them, they're going to know that you're not an AI or a human. So, Um, and then this is the agenda. We'll go over timing and calendar management and applying well in school. Um, I do want to talk about a budget example because the a lot of times the budget is important in the review process. Um, that's a sanity check about here's what you're proposing to do, here's the cool technology, here's the market opportunity, here's the team that you have working on it, and then why are you giving all this money to that guy? You know, like forget it, you know, that's obviously you had it all lined up, but your budget doesn't match with what your intention is. So, as long as you've got like a good plan and it's like, oh well clearly the key technology guy needs to get a bulk of the budget then that makes all the sense in the world. So, we'll talk about that. Um, and then we'll talk about the review process in a little more detail. Uh, and then I've got a whole bunch of uh, generative AI stuff. And then the last I think half hour of the class will have a chance to chat with Ben on the call. So, questions on that? — I have a question about phase one to phase two. — Yep. — Um, I've heard that there's some audit that takes place. — Mhm. — And you have to have some — Yeah. — Can you talk a little bit about how that happens and what you have to have? — Sure. I mean, we'll talk about it more on Wednesday, but uh, there's something called a CAAR, a CAR. I think it's like audit and accounting. I'll just cut to the chase, okay? There's a whole bunch of stuff. The hardest part that everybody in your shoes has to deal with is that if you are spending the government's money, you have to show that you're allocating it correctly. How do you correctly? I'm paying for people's time. How do I show that I'm paying for people's time correctly? I'm keeping timecards. So, if you have a proper timecards keeping system in your accounting system and you're allocating it to the right people for the right amount and you have proof of that and you have sign-off on that, then you pass the car. So, that's this for phase two now. So, this is you've already got the phase one and you're trying to you basically apply for phase two, you go through the review process, you get a proof you get like, "Hey, we want to fund this. " But, you have to go through the due diligence checklist, which means are you a real company? You know, what's your accounting system? What's your, you know, financial prospects and all that good stuff? And can you manage this fund cuz it's, you know, it's a million bucks, right? It's not just few hundred thousand bucks. So, it's a lot more money, a lot more time. So, they want to run you through a lot more diligence at that phase to make sure you're okay to get the funding. So, and the DOD is even harder. So, there's a whole I forget what it's called, DFAST or something like that makes you go through a whole bunch of audits and stuff. I've done it, so I can it's why I'm grabbing my head cuz I'm getting headaches right now. So, let's break. Unless there's other questions. Any other questions? Yes. — What about accelerated track that you can submit phase one and two? At least for NIH I know they prefer side than others. — Yes. — Do you write comments last thing? — Um so, uh the fast track usually is a lot more popular cuz everybody's like, "Why am I wasting my time with this hundred thousand bucks and then I get a chance to get a million bucks? Like, why can't I do it all at once? " That means that there's more applications and there's a lower chance of success. Um that is exactly what a conversation with a program manager would be like, "Hey, we're thinking about applying for phase one. We're not sure about SBIR or STTR. We're also thinking about fast track, you know, where would this be best fit, right? " And usually fast track it means that you've already got the commercial partners lined up for phase two. So, it's like I'm ready to kind of go to phase two. So, I want to jam all this stuff together. And you have to be like totally kick ass to do the fast track stuff. So, there's a lot of examples where people are just like ### Segment 16 (75:00 - 75:00) [1:15:00] they're perfectly aligned with the solicitation that came out. So, it's like we don't want to waste our time doing a phase one and phase two. We want to just go at it. And that's that those are great candidates for fast track. So. Other questions? All right, guys. Thank you. See you Wednesday.