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Federal Funding Supports Small Business Innovation

MADISON, WI. -The SBIR/STTR Annual Conference, held June 19 th at the Crowne Plaza in Madison, addressed small businesses that compete for federal research and development funding, in the form of grants and contracts. The major topics ranged from intellectual property rights and protection to preparing cost proposals for applications to developing the commercial possibilities of technological innovation.

35 companies were honored at the evening Technology Awards Banquet, for winning 83 awards, a total of more than $23 million dollars. These companies produce innovation in fields including life science, biotechnology, and medical instrumentation. They use federal funding opportunities to improve the technology that drives their business strategies.

Wisconsin’s technology-oriented small businesses are increasingly successful in gaining federal awards. Kevin Kelbel, President of the Wisconsin Small Business Innovation Consortium says that SBIR/STTR funding is key to developing the state’s technology industries. Federal funding allows businesses to research and develop new projects while retaining patent/utilization rights and avoiding overburdening debt. Additionally, these sources allow businesses that are typically too small to attract major government contracts to access federal funding.

Orbitec, a Madison company that develops technology for space travel and exploration, has benefited greatly from the SBIR program. Between June 2001 and September 2002, the company received 15 awards, primarily contracts with NASA, for a total of nearly $4 million. Eric Rice, President & CEO, says of the SBIR program, “It’s vital. We’re an aerospace company – the government goes to Boeing and Lockheed Martin for big jobs and it’s hard to compete. SBIR gives us a way to get into federal programs and go forward to Phase III’s: sole-sourced contracts.” Orbitec recently received a $57 million Phase III contract, the largest in NASA’s history. Five of Orbitec’s awards are Phase II contracts, supporting prototype development from Phase I research. Currently, NASA is the primary recipient of the company’s innovations, but Rice sees unlimited potential for spin-offs that will directly reach the consumer market. “We’re developing plant growth for astronauts, but there’s no reason it can’t be plant growth in your dining room,” he said. The technology that Orbitec is developing could directly impact the future of space travel and the possibility of space colonization.

Not all of the award recipients are directly involved in biotechnology. nPoint Inc., a Madison company, the was spun out of the University focuses in nanotechnology and positioning. They utilize technological innovation to enhance mechanization .The company makes motion-control devices that allow researchers to move objects with incredibly high resolution and accuracy, and can also be used to enhance manufacturing devices (microscopes, for example). Katerina Moloni, Vice President of Marketing, describes the focus of their innovation, “Our goal is to make these tools better than everyone else – to operate faster and with higher accuracy, to move from point A to point B very fast without overshooting.” The connection between nPoint’s technology and the needs of the manufacturing industry is the future of the company. During the assigned time period, nPoint received 10 federal awards, a total of $3.7 million. Moloni says that the company’s diligence is the key to its success in getting funding. “We have taken the grants, made products, and started selling,” she explains.
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The NeuronFarm, LLC received a $75,000 Phase I grant from the Department of Education to develop e-learning content. The company has created a prototype course for training reading tutors (Train the Tutors or T3, accessible from the company website), and is currently working on further development of related applications. Mina Johnson-Glenburg, President & CEO, says, “We are also in the process of creating a distribution arm – a digital library called the CyberSilo – for delivering…content in the subject domains of literacy, science, and language arts.” The NeuronFarm has also developed HEMA (Hi-dimensional Expert Match Algorithm) that allows real-time, automatic essay scoring. Their recent grant was used for the development and testing of T3, which Johnson-Glenburg says was then selected as a demonstration for the 2003 Society for Information Technology in Education conference. Innovations must address a national problem or R&D need in order to be eligible for SBIR/STTR funding. “The T3 website addresses America’s literacy challenge,” Johnson-Glenburg explains. The company’s mission is to provide “top-quality, reusable e-learning content.” The SBIR funding has allowed them to further their business strategy and create a successful product model.

Laura Baranowski of the WI FAST SBIR Outreach Office provided an overview of SBIR/STTR at the conference. She asserted that as a state, Wisconsin is doing well in getting funding, but could be doing even better. According to Baranowski, “About one in three of our [SBIR] proposals get funding.”

In order to apply, a business must operate for profit, be American and independently-owned, and have 500 or fewer employees. Federal agencies establish grant “topics,” and small businesses apply to demonstrate feasibility (Phase I) or develop a prototype (Phase II) for innovation within the designated area. Rice argues that this is the key to a proposal’s success. He stresses that SBIR awards are very competitive and says, “Your solution has got to be innovative.”

Simulation Technology and Applied Research writes electromagnetic analysis software programs, which can then be used to improve commercial products, like cell phones. The Mequon company has received six awards from the Department of Energy, and John DeFord, President, offers the following advice to grant-hopefuls: “If you don’t have a strong reason to believe your project will be funding before you start writing the proposal, it’s probably not worth writing.”

The Outreach office (608/266/5557) is available to help businesses assess their needs and develop effective proposals.
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Caryn Murphy is a freelance writer based in Madison, Wisconsin and can be reached at caryn@wistechnology.com.

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