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Pages 108-169

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From page 108...
... demonstrates that the probability of obtaining research project information by survey decreases for less recently funded projects and it increased the greater the award amount.6 Nearly 40 percent of respondents in the NRC survey began Phase I efforts after 1998, partly because the number of Phase I awards increased, starting in the mid 1990s, and partly because winners from more distant years are harder to reach. 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.
From page 110...
... Directing a portion of Federal investment in R&D to small businesses was thus seen as a new means of meeting the mission needs of Federal agencies while increasing the participation of small business and thereby the proportion of innovation that would be commercially relevant.10 Congressional and Executive branch interest in the commercialization of SBIR research has increased over the life of the program. A 1992 GAO study11 focused on commercialization in the wake of Congressional expansion of the SBIR program in 1986.12 The 1992 reauthorization specifically "emphasize[d]
From page 111...
... It also fails to provide any guidance on how to evaluate the scale of commercialization, an important element in assessing the degree to which SBIR programs successfully encourage commercialization. The metrics for assessing commercialization can also be elusive,15 and it is important to understand that it is not possible to completely quantify all commercialization from a research project: • The multiple steps needed after the research has been concluded mean that a single, direct line between research inputs and commercial outputs rarely exists in practice; cutting edge research is only one contribution among many leading to a successful commercial product.
From page 112...
... and Chapter 5: The Phase III Challenge. 16 Interviews with SBIR program coordinators at DoD, NIH, NSF, and DoE.
From page 114...
... This distribution is reflected in the figure below: UNEDITED PROOFS
From page 116...
... 21 The DoD database captures commercialization data from NIH projects where the firm subsequently applied for n DoD SBIR award UNEDITED PROOFS
From page 118...
... Firms with more awards generated on average 85% more sales per project. Thus, the response bias in both NIH and NRC Phase II Recipient Surveys away form firms with multiple awards appear likely to have a significant downward impact on commercialization estimates.
From page 119...
... Thus the average sales data generated by surveys reflects average sales to date. Using some simple analytic techniques, it is possible to suggest that on average, the NIH and NRC surveys excluded approximately 50% of the total lifetime sales of the products and services generated from SBIR awards.
From page 120...
... However, they should be treated with an additional degree of caution as respondents do not necessarily have as accurate information about another company as they have about their own. 22 See Outcomes Chapter in National Research Council, An Assessment of the SBIR Program at the National Institutes of Health, Charles W
From page 122...
... About $165,000 per project came from venture capital sources. However, in those cases where venture funding was present, the amounts of funding were substantial: for the 50 responding projects with VC funding, the average per project was just under $8.3M.
From page 123...
... Focusing more closely on venture funding at NIH, initial research indicates that approximately 50 of the 200 companies that win the most Phase II awards at NIH have received some venture funding.25 This is reflected in the following figure: Figure 4-5 Distribution of Venture funding for NIH top 200 Phase II winners 35 900 800 30 700 25 600 Companies 20 500 $M 400 15 300 10 200 5 100 0 0 100M+ $50M - $5M - $1M - <$5M <$1M <$100M <$50M Companies Total investment Sources: VentureSource and other VC databases; NIH awards database. See NIH report, Venture Capital chapter Total VC investment is approximately $1.59BN in these 50 companies, a total that dwarfs the $272M NIH SBIR investment in these companies.
From page 124...
... . 4.2.5 Additional SBIR funding Aside from providing non-SBIR funds, the Federal government in many cases makes further investments via the SBIR program itself.
From page 125...
... In short, the data suggest that some companies and projects do attract a cluster of SBIR awards, but most do not. It may be, however, that this concentration of clustered awards reflects the limited number of commercial successes as well.
From page 126...
... Washington, D.C.: National Academies Press. 27 See the –Outcomes chapter in National Research Council, An Assessment of the SBIR Program at the National Institutes of Health, op.cit.
From page 127...
... Most responding companies have expanded since the date of the Phase II award: UNEDITED PROOFS
From page 128...
... Overall, survey respondents reported gains o 57,808 full time equivalent employees, with the top 5 respondents accounting for 18.4% of the overall net gain. Table 4-4 Employment at Phase II respondent companies, at the time of award and currently At time of award Currently Employees Responses % Employees Responses % 73 4.3 39 2.3 0 0 609 35.9 357 20.6 1-5 1-5 273 16.1 274 15.8 6-10 6-10 257 15.1 282 16.3 11-20 11-20 207 12.2 165 9.5 21-50 21-50 144 8.5 349 20.2 51-100 51-100 135 8.0 263 15.2 >100 >100 Total 1698 100 Total 1729 100 Source: NRC Phase II survey UNEDITED PROOFS
From page 129...
... 29 See Neurocrine case study, NIH Report UNEDITED PROOFS
From page 130...
... 30 NRC Survey, q.12 UNEDITED PROOFS
From page 132...
... In contract, the nonprocurement agencies – NIH, NSF, and, to a great extent, DoE – see support for mission much more broadly: for NIH, for example, support for mission can be construed as anything as improves medical knowledge or public health. 4.3.1 Procedural alignment of SBIR programs and agency mission A procedural assessment reviews the steps taken by each agency program to ensure that the design and procedures of their SBIR program are aligned with the needs of the agency.
From page 133...
... In doing so, they are specifically delimiting areas of technical interest to the agency. This is prima fascia confirmation that the SBIR programs support agency mission: unless there is evidence that agencies are generating topics that are not aligned with the agency mission – and our analysis and interviews with staff and awardees found no trace of this – the use of topics and solicitations indicates that agencies are working to ensure that awards are aligned with the stated scientific and technical needs of the agency.
From page 135...
... Area specialists are regularly encouraged to ensure that their wider research agendas are reflected in their selection of SBIR topics for publication. Overall, agencies appear to be well aware that the topic/solicitation process is the primary mechanism through which the SBIR program is aligned with the agency's S&T objectives and its overall agency missions.
From page 136...
... Below, we provide a brief summary of agency approaches to identifying and measuring ways in which the SBIR program supports the agency mission. 32 http://www.energy.gov/about/index.htm 33 More details about each agency's selection procedures can be found in the individual agency volumes.
From page 137...
... The NIH SBIR program has also led the way at NIH in developing metrics through the implementation of a recipient survey, with the first survey being deployed in late 2003. In this survey, the agency has sought to identify the populations targeted by SBIR projects.
From page 138...
... 4.3.2.2 DoD The DoD SBIR program's primary goal is the provision of technologies that can be integrated into the acquisitions stream for weapons systems and other DoD needs. In effect, that acquisition stream defines, for operational purposes, agency needs, and the extent to which SBIR is in fact part of the acquisition process has become an important indicator of support for agency mission.
From page 139...
... So, even when no acquisition occurs, SBIR can still provide valuable support for the agency mission in terms of information on technological dead-ends, promising technological options, or use results from the award itself. Still, even with these multiple functions, as participants at the NRC's Phase III Symposium affirmed, Phase III and acquisitions are regarded by DoD as the core focus of the SBIR program, and the key indicator for measuring success in supporting agency mission.
From page 142...
... Nonetheless, there are barriers and difficulties that tend to reduce the number and amount of Phase III contracts counted in the DD350 tracking forms. • The demonstration effect of the Navy program and growing awareness of SBIR's potential has increased senior management awareness of SBIR's contributions to the Defense mission.38 37 See National Research Council, An Assessment of the SBIR Program at the Department of Defense, Charles W
From page 143...
... 4.3.2.3 DOE DOE has to a considerable extent relied on process and procedures to ensure that its mission is being supported by the SBIR program. The agency has developed topic and award selection procedures that ensure the primary driver of the program will be R&D managers within the agency, rather than either external peer reviewers or SBIR program managers.
From page 144...
... is an independent federal agency created by Congress in 1950 "to promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense…" Source: NSF web site www.nsf.gov/about UNEDITED PROOFS
From page 145...
... , who are in charge of the research areas within which SBIR awards are made. The survey sought to measure the quality of the research from the perspective of technical staff who managed both SBIR and non-SBIR programs.
From page 146...
... 4.4 Support for small, women-owned, and disadvantaged businesses 4.4.1 Support for women- and minority-owned firms Support for women and disadvantaged persons is one of the four primary Congressional objectives for the SBIR program. Unfortunately, there are significant concerns regarding the collection of data related to the participation of women- and minority-owned firms in UNEDITED PROOFS
From page 152...
... Linear (Woman-owned firms) 6 4 2 0 83 85 87 89 91 93 95 97 99 01 03 05 19 19 19 19 19 19 19 19 19 20 20 20 Source: NASA awards database UNEDITED PROOFS
From page 153...
... 6 4 2 0 83 85 87 89 91 93 95 97 99 01 03 19 19 19 19 19 19 19 19 19 20 20 Source: NASA awards database The absence of detailed applications data for women- and minority-owned businesses means that we currently are not able to determine whether these positive trends are the result of a faster increase in these firm's number of proposals than other small businesses, improved success rates, or a combination of both. 4.4.2 Small business support At one level, the SBIR program obviously provides support for small business, in that it gives funding only to businesses with no more than 500 employees – the SBA definition of a small business.
From page 154...
... Increasing amounts – and shares – of small business research funding are available outside the SBIR program. 4.4.3 Project level impacts One way of measuring SBIR's impact is to ask awardees whether their projects would have been implemented without SBIR program funding.
From page 155...
... This section describes, using both data and case studies, how these five different kinds of companies 40 NRC Phase II Survey, q.15 UNEDITED PROOFS
From page 156...
... 42 See Cramer, Reid, "Patterns of Firm Participation in the Small Business Innovation Research Program in Southwestern and Mountain States," in National Research Council, SBIR: An Assessment of the Department of Defense Fast Track Initiative, Washington, D.C.: National Academies Press, 2000.
From page 157...
... 44 See Sociometrics Case Study, NIH report, for a more detailed review of SBIR at this company UNEDITED PROOFS
From page 158...
... Radiation Monitoring Devices, for example, has been cited at as "mill" by critics but not only produces critically important products for DoD (such as rapid deployment armor for Humvees, now in use in Iraq) , it only generates 16% of company revenues from SBIR.45 The last point has more general application: reliance on SBIR awards tends to declines as the size of the company grows, and most companies that survive do grow.
From page 161...
... Language Weaver: "…the STTR/SBIR from NSF created Language Weaver and what we are today. Without that we would have shelved the technology." MicroStrain, Inc.: The company found the NSF SBIR program's "more open topics" particularly helpful in the early stages when the company was building capacity.
From page 162...
... NIH awardees, for example, account for only 7% of entries in the database UNEDITED PROOFS
From page 163...
... The first question can be answered, at least in aggregate. As noted, data from the DoD commercialization database indicates that the largest award winners are in fact – on average – stronger commercializers than firms with few awards: UNEDITED PROOFS
From page 165...
... For example, Radiation Monitoring Devices responded to needs in Iraq by developing and the manufacturing add-on armor for Humvees after it became clear that these vehicles were highly vulnerable to guerilla attacks. All these points suggest that while there have been companies that depend on SBIR as their primary source of revenue for a considerable period of time, and there are some who fail to develop commercial results, such behavior is limited and does not constitute a significant impediment to SBIR program goals.
From page 166...
... 4.5.3 The incidence of new entrants Just as analysis of multiple winners provides a view of award concentration, analysis of new entrants provides a view of award dispersion. The data unequivocally show that the agency SBIR programs are open to significant numbers of new entrants.
From page 167...
... . Given that previously funded companies have already passed a quality screen, it is not surprising that the share of awards going to previously unfunded companies is lower: UNEDITED PROOFS
From page 168...
... 4.5.3.3 Department of Defense At Defense, the data appear to show similar award patterns. According to the SBIR program office at DoD, 37% of FY2005 Phase I awards went to companies that had not previously won an SBIR from DoD.
From page 169...
... Michael Squillante, Vice-President for Research at Radiation Monitoring Devices Inc., points out that there may be benefits from the development and diffusion of knowledge that are not reflected in any quantitative metric: UNEDITED PROOFS


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