Biotechnology research left a bad taste in the mouths of many companies a decade or two ago because their university research investments fostered little development. Professors were happy to accept grants and churn out reports that often concluded more research was needed. But companies need to sell products to stay alive. What happened to MEMS (micro electromechanical systems) is similar to what happened to other devices. MEMS have been around for some 20 years but only recently have served as a basis for real products.
SBIRs (Small Business Investment Research) grants and similar codevelopment arrangements are examples of how to better shape the relationship between academia and industry. Under these 25-year-old but little publicized plans, companies showing new concept products get development funding from government agencies, and universities help finalize the product plans.
The grants target small companies that lack the skills to write winning proposals, but need funds for a next-generation product. Firms qualify for funds by passing a rigorous peer review that looks for ideas which must stand out as worthy of development. SBIRs are sponsored by NSF, NIH, DOD, and other agencies. (Google SBIR for a more complete list.)
Because the goal is to commercialize a product, "the program replicates a typical development cycle in a company," says Michael Viguerie, president of Medconx Inc., Santa Clara, Calif. "The program has milestones and deliverables, and it's monitored by company R&D management." The advantage of using a university as a development center is the availability of equipment small companies could never afford, such as scanning electron microscopes and metal-sputtering systems. Universities like the arrangement because they get to publish the work.
"The first round of funding may be about $90,000, but later rounds can approach $900,000," says Marc Madou, professor of mechanical engineering at UC Irvine, Calif. When Madou was at Ohio State University, he and Viguerie helped plan the first SBIRs for a Medconx product.
To illustrate the program's potential, Val Montegrande, president of Biomems Technologies, Irvine, suggests examining the more recent track record of MEMS. "Thanks to SBIRs, MEMS technology is a starting point for several coming developments. For instance, imagine a pressure, temperature, and viscosity sensor that fits on the tip of a catheter. Thermocouples are too big. We're using an SBIR to turn a MEMS pressure sensor into an implantable medical device that should be ready in about 10 months."
Another idea headed for commercialization thanks to SBIRs is a small bio marker visible by ultrasound, X-ray, MRI, and CT scans. Most markers are visible only by CT. The new markers could be placed, for example, in the prostate gland or a mammary duct to monitor the growth or movement of a tumor, deliver a drug, or identify tissue margins to guide surgery. This would be a big improvement over the current practice of slicing out a large piece of tissue. Semiconductor manufacturing techniques could easily make 1,000 marker chips on a 6 4 in. wafer and do so inexpensively.
"The trick is to take the leap-of-faith out of the relationship between company and university," says Viguerie. One key to a successful partnership is in finding the right people for the development work. "You can't just hire any Ph.D. The secret is, you just have to know them, and then manage a direct milestone-driven project" says Viguerie. But the SBIR can be the first step to a useful relationship.
Published April 2006

Funding will always be a hot topic at companies with lots of ideas it would like to turn into products. How does your company find funding? Let us in on a couple techniques or programs you’ve found successful and you might help a few fledgling firms take off.

I have won multiple product development awards from several agencies, including NIH and the DOD through the SBIR and STTR programs and have also worked under Phase III funding, which is the commercialization aspect of the program. Generally, the Phase II projects are limited to around $200K. I have really only seen the bigger $ programs supported through the military groups. It is a great program, but it does have limitations. There are fine print items that people may miss - such as the government has royalty free rights to the technology that is developed - which, in some situations, can present a significant problem for eventual investors.

For our current product, a medical 3D reconstruction software package (www.v2software.com), we are not pursuing the SBIR program route and are instead focusing on angel support.