An Assessment of the SBIR Program at the National Institutes of Health (2009) / Chapter Skim
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Pages 79-129
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From page 79... ...
However, PAs are, according to NIH staff, better understood as ways to articulate scientific areas NIH supports, but where all ideas are still investigator-initiated/investigator-driven.15 In fact, the data show that SBIR awards have increasingly come from PA's and RFA's. JoAnne Goodnight, NIH SBIR Program Coordinator, private communication, Nov 1 2006 15 UNEDITED PROOFS
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From page 82... ...
SOURCE: NIH. The data show that overall, PA's have become an increasingly important component of the award flow within the NIH SBIR program, and that the trend suggests that this importance will continue to increase.
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From page 84... ...
Assessment is usually done by comparison – comparing programs and activities, in this case. Three kinds of comparison seem possible: with other NIH programs, with SBIR programs at other agencies, and with early stage technology development funding in the private sector, such as venture capital activities.
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From page 85... ...
SBIR programs at other agencies are organized very differently and - at DoD and NASA at least – have quite different objectives. NIH SBIR might be compared with venture capital activities, but these are typically focused closer to market, and include much larger investment (an average investment round of $7 million in 2005 as against less than $1 million for SBIR)
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From page 86... ...
4.2.2 Sales and licensing revenues from NIH SBIR awards BOX A A Note on Data sources Research on the NIH SBIR program has benefited from the existence for three independent data sources on outcomes from the program. These are: • The NRC Phase II Recipient Survey (hereafter the NRC Survey)
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From page 87... ...
They are harder to reach as time goes on because small businesses regularly cease operations, are acquired, merge, or lose staff with knowledge of SBIR awards. o Success is self reported.
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From page 89... ...
are concentrated in the $0-1M range. None of the sources indicate that more than UNEDITED PROOFS
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From page 90... ...
Entries in the DoD database constitute a formal part of the SBIR application process, capturing updated data at that time about commercialization from all previous SBIR Phase II awards, and companies may therefore be more likely to ensure that their responses are conservative. The DoD responses are also from fewer companies, as they include a number of companies with numerous responses: only 108 companies accounted for all the DoD responses, compared with 495 companies for the NIH survey.4 Sales are highly concentrated.
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From page 91... ...
This degree of sales concentration confirms the view that from the perspective of sales, the SBIR program at NIH generates a considerable number of projects that reach the market, no more than 10% of which generate sales greater than $5M in total from the surveyed projects. Two of these larger winners, Optiva5 and Martek, are discussed in the boxes below.
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From page 92... ...
Martek developed the technology underlying these products directly as a result of SBIR funding, according to Henry Linsert, founder and CEO. The result has been explosive growth for the company, rising from about $5M in 2000 to more than $185M in 2004.
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From page 98... ...
NIH might wish to consider further what makes projects in some sectors more commercially successful than others – and might even consider whether shifting SBIR resources toward those more successful sectors might be warranted: UNEDITED PROOFS
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From page 99... ...
Although none of the agencies currently gather data about company size during the application process itself, size may be an important predictor of commercial success. The following data show that there are differences by size of company: UNEDITED PROOFS
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From page 101... ...
SOURCE: NRC Survey. 4.2.2.6 SBIR-only focus One question about the role of the SBIR program concerns the extent to which simply acquiring SBIR awards can substitute for further commercial activity.
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From page 102... ...
However, it is possible that licensing has some kind of multiplier effect by providing the licensee with a critical piece of technology. This could potentially create a substantially larger commercial impact than is captured in the direct sales data of the licensor, and this larger impact would be based on technologies developed with SBIR funding.
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From page 104... ...
4.2.2.8 Additional Investment Funding Further investment in an SBIR project may be further – though by no means sufficient – evidence that the work is of value, at least to the funding party. About 37% of NIH survey companies received some funding other than further SBIR awards, although the NIH survey did not ask about amounts of investment.
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From page 105... ...
) The NIH Survey did not ask respondents how much funding had been provided, only whether there had been some amount of further non-SBIR funding, as well as the sources of the funding The NRC data differ from the DoD and NIH data in that its respondents reported a higher likelihood of their projects attracting third party funding other than SBIR.
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From page 107... ...
Private Investment from US venture capital 154,617,045 33.9 15 3.9 10,307,803 Private Investment from Other private equity 141,992,212 31.1 40 10.4 3,549,805 Private Investment from Foreign investment 39,616,075 8.7 12 3.1 3,301,340 Private Investment from Other domestic private company 21,624,866 4.7 31 8.1 697,576 Your own company 82,118,851 18.0 188 49.1 436,802 State or local government 6,290,000 1.4 23 6.0 273,478 Personal Funds 9,850,408 2.2 67 17.5 147,021 College or Universities 236,500 0.1 7 1.8 33,786 Total 456,345,957 100.0 383 100.0 1,191,504 SOURCE: NRC Survey. Table 4-11 contains the first detailed data on sources additional funds for NIH SBIR-funded projects.
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From page 109... ...
We have identified a total VC investment of approximately $1.59BN in these 50 companies, a total that dwarfs the $272M investment in these companies via the NIH SBIR program. There are four particularly striking findings regarding the data on external funding: • Sixty five percent of all respondents reported no additional funding for their project.
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From page 110... ...
4.2.2.11 Additional SBIR funding Aside from third party investment, the Federal government in many cases makes further investments via the SBIR program itself. Both the NIH and NRC surveys attempted to determine how many additional SBIR awards followed each initial award (see Table 4-13)
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From page 111... ...
It is also an indirect indicator of the SBIR program's support for small businesses. As shown by Figure 4-8, the median size of companies receiving SBIR awards is relatively small – far lower than the 500 employee limit imposed by the SBA.
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From page 112... ...
, but 8,090 (52%) of those FTEs work for the top ten companies - and three of those companies are no longer eligible for SBIR awards because they employ more than 500 persons.
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From page 114... ...
For example, one company grew by 3,700 employees after receiving the surveyed SBIR award. In the NIH survey, 94% of respondents claimed that they had increased staff as a direct result of the SBIR award, although the survey did not ask about the size of employment gain.
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From page 116... ...
Similar results were found from the NIH Survey: 9 NRC survey, q.12 UNEDITED PROOFS
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From page 117... ...
Figure 4-11 shows the percentage of NIH respondents who agreed that the specific outcome in question had occurred "because of the product, process, or service developed during this project"10 In addition, the NRC Firm Survey determined that 3 firms with NIH SBIR awards had had initial public offerings, and that a further 3 planned such offerings for 2005/6. Seventy-five out of 445 companies (16.9%)
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From page 120... ...
A further 24 (3.1%) have reached the intermediate milestone of approval for clinical trials.
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From page 121... ...
Instead, we offer a series of efforts to provide indirect evidence about support for agency mission in the NIH SBIR program. 4.3.1 Targeted populations One way to evaluate the support provided by SBIR to the agency mission is to assess the populations targeted by SBIR projects, and the NIH survey seeks to do so.
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From page 125... ...
At NIH, in-house use is rare, as contracts account for only about 5% of all SBIR awards and the agency directly utilizes very few of its funded projects' outputs.
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From page 127... ...
Sociometrics, for example, has claimed that every one of its more than 20 SBIR awards has been directly translated into a product. Similarly, Morphonix has used SBIR funding to develop the award winning children's video game described in Box I
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From page 129... ...
also shows that its use was widespread. 4.3.6 Visionary and long-term research Much policy attention has been focused on the need for measurable outputs from the SBIR program.
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