SBIR/STTR at the Department of Energy (2016) / Chapter Skim
Currently Skimming:
7 Insights from Case Studies and Survey Responses
7 Insights from Case Studies and Survey Responses
Pages 151-184
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From page 151... ...
Box 7-1 lists the case study firms, all of which were DoE SBIR and/or STTR award winners. Full case studies, carried out in 2015-2016, can be found in Appendix E
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From page 152... ...
2 National Research Council, An Assessment of the SBIR Program at the Department of Energy, Washington, DC: The National Academies Press, 2009.
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From page 153... ...
b National Research Council, An Assessment of the SBIR Program at the Department of Energy, Washington, DC: The National Academies Press, 2009. The chapter summarizes case study and survey data regarding program impacts and management issues.
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From page 154... ...
More recently, DoE has extended its requirements for Phase I and Phase III applications, placing more pressure on companies to have a well-defined commercialization plan in place, and companies have begun to view SBIR/STTR through a more commercial lens. However, as discussed in Chapter 2, the DoE topic development process still does not align tightly with the drive for improved commercial outcomes, and significant disconnects exist between the SBIR program and downstream opportunities that might be available within DoE.
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From page 155... ...
(PSI) subsidiaries tend to replicate the R&D culture of the parent company (many publications in peer-reviewed journals, use of SBIR funding)
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From page 156... ...
One spinout still exists but has been sold three times. Knowledge Effects The DoE SBIR/STTR programs have supported the development of numerous innovative technologies.
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Many of the survey respondents and case study executives noted that the SBIR/STTR programs have provided critical support in developing core innovations and platform technologies (see Box 7-4)
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Hardware especially is hard to develop with private equity/VC approaches; the desired time scales are too short." • "The SBIR program provided the critical funding to evaluate and attempt to develop an innovative technology that had the potential to simultaneously reduce green house gas emissions and generate methane from deep coal beds." • "In the early days DoE funding helped [the company] to develop the technology in the new lighting arena by encouraging technology innovation and overcoming the financial risk associated with this." also reported that the share of funding devoted to the seed stage declined sharply from 46 percent in 2013 to 25 percent in 2014.
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From page 159... ...
• In addition to the National Laboratories, Muons has partnered with eight universities: Cornell University, University of Chicago, Florida State University, Hampton University, Illinois Institute of Technology, North Carolina State University, Northern Illinois University, and Old Dominion University. None of the case study companies focused exclusively on STTR.
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From page 160... ...
Many of the 2014 Survey respondents stated quite bluntly that the company would not be in existence without the SBIR program (see Box 7-5)
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The whole company grew and evolved because of this funding." • "SBIR funding enabled development of a technology that no other program or private investor supports. In our case it is a development of an airborne sensor for environmental observations." • "The SBIR program is unique in that it supports technology development that would otherwise not be funded as it falls between the cracks of traditional investment.
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. In particular, companies stressed that the SBIR program can provide the necessary confidence that peer review provides, while the provision of non-dilutive funding sets the stage for successful efforts to raise funds in the private sector.
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From page 163... ...
Several survey respondents stated that little funding is available for long-cycle or high-risk research aside from SBIR. One respondent wrote: The SBIR/STTR program is effectively the only significant early stage non-dilutive funding source for long incubation time, high risk, high payoff technologies, such as advanced materials and manufacturing technologies, that could not be developed or commercialized by private enterprise without the program.
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From page 164... ...
are increasingly reluctant to fund projects that are not well along the path to market. The DoE SBIR/STTR programs therefore support the early development of technologies that may have substantial social or even commercial value downstream, but which are too far from the market to attract other funding sources (see Box 7-7)
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From page 165... ...
In 1998, DTI received SBIR funding from the Navy for an advanced radar system. In 1999, DTI received multiple Phase I and subsequent Phase II awards to assist the Stanford Linear Accelerator Center in adopting solid state switches and sources.
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Overall, he considered the DoE SBIR program to be a good program with which to work.
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• Noncommercial topics. Several companies said that some DoE topics are clearly designed to address specific technical needs of the topic manager and have little commercialization potential.
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From page 168... ...
However, some of its recent awards for neutron optics were in topics that showed limited commercial potential given market realities for that technology. A survey respondent made a similar point: SBIR topics in DoE and DoD have become extremely focused on narrow agency programs and yet demand substantial commercialization potential without the realization that their focused topics have no substantial commercial potential outside of the specific agency needs.
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From page 169... ...
said that DoE topic managers continue to regard SBIR/STTR as a tax on their research funding, and therefore seek to use it to provide tools or technologies that could further their own scientific interests and programs. These topic managers have no interest in commercial potential and therefore do not review topics for commercial potential before the solicitation is released.
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From page 170... ...
Dr. Johnson remains concerned that the DoE SBIR/STTR programs appear to expect commercial outcomes soon after the conclusion of a Phase II award.
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For example, one company executive said, "DoE has an excellent reputation for running an open program where each proposal is evaluated on its merits, with high-quality technical review." Criticisms focused on the following: • The lack of transparency in funding decisions • Uneven quality of commercial review • Overly specific demands for commercialization plans • Anonymous reviewers and lack of supervision Dr. McDermitt (LI-COR)
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Commercialization Review Some companies and survey respondents expressed concern that the commercialization plans demanded by DoE for Phase I and Phase II are not helpful. One survey respondent said, "[A]
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A number of survey respondents argued that the current emphasis on commercialization comes at the cost of potential important innovations (Box 7-9)
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to reviewer comments before final decisions are made. These opinions were echoed by comments from survey respondents.
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Funding Mechanisms: Phase IIB Dr. Walsh (Vista Clara)
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Dr. Walsh observed that there seems to be no clear connection between the SBIR program and other parts of the agency.
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Better practice would be for DoE to seek out the best technology without placing a cost-share hurdle upon the provider." • "The SBIR program leads to new technology innovation and development critical to growing America's economy and jobs. Its lack of integration into other Federal mission objectives and non-SBIR funding programs means that the DoE is missing the opportunity to really advance these embryonic technologies to major scale impact upon DoE mission objectives." • "There is a huge disconnect between what constitutes ‘market driven demand' and the nature of the R&D, pie-in-the-sky projects which are funded.
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Funding Levels Given the recent increase in funding levels, there was less interest in this issue among both case study companies and survey respondents.
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My experience with legal personnel at Brookhaven was that they were completely ignorant of the goals and constraints of the SBIR program." Mr. Kempkes agreed that National Laboratory staff do a poor job of protecting company IP: the Laboratories are more academic than commercial, and hence they have a different mindset.
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From page 180... ...
is a strong supporter of the STTR program and believes that companies are best positioned to determine whether a project should be SBIR or STTR, based on the needs of the project. He observed that a separate solicitation for STTR is likely to generate poor quality partnerships put together primarily to pursue funding, and that SBIR/STTR should provide a single opportunity for funding Dr.
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Although Dr. Walsh (Vista Clara)
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From page 182... ...
observed that, 5 years ago, she would have wanted to see the STTR program folded into the SBIR program, in large part because managing International Trafficking in Arms Regulations (ITAR) in the context of a partnership with an RI are often extremely challenging.
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said that small instrument sales in support of the National Laboratories' missions are in the national interest and that this class of SBIR topic should be assigned evaluation criteria that properly reflect their value to those missions. Alternatively, if DoE only wants proposals capable of large commercial returns, it should revamp its solicitations to bring them into conformance with that objective.
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He suggested that program managers should be given the flexibility to revert STTR funding back to the company in special circumstances. One survey respondent recommended: "[T]
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