Event Review: Building Your Company with Non-Dilutive Funding - Introduction (2 of 4)

August 26, 2017 SDEE Workshop:  Building Your Company with Non-Dilutive Funding 

By Roberta Vezza Alexander, PharmD, PhD

Welcome to the first part of the series, Building your company with non-dilutive funding. It summarizes the talk of Jiwu Wang, PhD, President & CEO, Allele Biotechnology, at the SDEE event on October 26, 2017.

Jiwu described the differences and similarities between different government funds.


An important difference between small business innovation research (SBIR) and small business technology transfer (STTR) grants is that the principal investigator (PI) of a SBIR grant needs to spend at least 50% of his or her time as an employee of the company that applies. Under the STTR program, instead, primary employment is not stipulated and the PI does not need to be primarily employed by the small business that is applying for the grant.

SBIR grants phase I, phase II, and fast-track

SBIR phase I grants are shorter, easier and quicker to write, and give less money than phase II. Usually phase I grants award $150,000-225,000, while phase II can go up to $750,000. One cannot apply for a phase II grant without having received a phase I grant first. Phase I grants have been the main source of income for the first few years of Jiwu’s company. If you are a small company that does not need a lot of resources and does not have a lot of time to write elaborate grant proposals, phase I grants are good enough to get you going. If you apply consistently, it gets easier and easier to write successful proposals.

The fast track is a combination of phase I and II, and one can apply for fast track without having been awarded a phase I grant first. Thus, the fast track is quite an efficient way to apply to 2 grants at once and is definitively something to consider.


SBIR contracts

Differently from grants, SBIR contracts focus on specific topics. Thus, contract applicants can only propose ways to solve the pre-determined set of problems requested by the NIH. There is some flexibility, though, and Jiwu gave 2 examples of how his company was awarded SBIR contracts even if the topic of the contract was not the core technology of Allele Biotechnology. Similar to SBIR phase I grants, the budget of the contract is $150,000 to $225,000 for 6-9 months, and the intellectual property belongs to the business (“grantee” or “offeror”). Both grants and contracts can move on to Phase II. The grantee can apply, while the offerer needs to be invited.

While one can apply to SBIR grants 3 times a year and provide a final report, the application for contracts is once a year and the applicant has to provide reports every month in addition to the final report.

Chances of getting SBIR grants (especially a phase I) or contracts are pretty good, and the more preliminary data you have, the better. In general, the success rate of SBIR grants is much higher than RO1, for example, and it is possible to apply for a SBIR grant with the same research proposal that had been rejected in the form of an RO1 application.

Stay tuned. Part 3 of 4 will be featured in next week's blog. The first part in this series can be found here

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