1. Success in attracting further research funding for ongoing development offers evidence indicating that a project is on the path to commercialization, even if no sales have yet been made.

    • Over one-quarter of projects that received additional funding reported the acquisition of additional funds from other federal sources and 13.2 percent reported funding from other companies.9 This suggests significant interest in these projects—not least from DoD, and possibly also among the prime contractors (a likely source of funding from “other companies”).

    • Venture capital is not widely available to companies primarily focused on the Defense market. Hurdles associated with regulations in federal acquisition, and the limited size of many defense markets tends to limit venture funds’ interest in the DoD market. Only 30 projects—3.8 percent of respondents with some additional funding—reported receiving venture capital,10 although the average VC investment that was received is much higher than the average investment received in each other category, at more than $5 million per project.11

  1. Additional SBIR awards are a further signal of commercial potential.

    • Given that SBIR is a highly competitive program, the acquisition of related SBIR awards also suggests that a project is moving along the development path toward commercialization, not least because commercialization potential has become a significant component in the decision to make an SBIR award. 43.5 percent of respondents indicated that they had received at least one additional related SBIR award.12

  1. SBIR is in broad alignment with the needs of the DoD agencies and components.

    1. DoD’s SBIR program has contributed to significant enhancements of its mission capabilities.

      • A central mission of the DoD SBIR program is to use the inventiveness of small companies to solve DoD’s technical problems, and to develop new technologies that can be applied to the weapons and logistics systems that are eventually used by the Armed Forces.13

General Accounting Office, Small Business Innovation Research Program Shows Success But Can Be Strengthened, RCED–92–32, Washington, DC: U.S. General Accounting Office, 1992.

9

Derived from NRC Phase II Survey, Question 23. See also Table App-A-37.

10

Ibid.

11

NRC Phase II Survey, Question 23. See also Table App-A-37. Similar to sales, the amount of venture funding is skewed with only eight projects reporting $5 million or more in venture funding.

12

See Table 4-12.

13

Interviews with SBIR program managers.



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