Venture Funding and the NIH SBIR Program (2009) / Chapter Skim
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6 Comparing Project Outcomes
6 Comparing Project Outcomes
Pages 49-60
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From page 49... ...
1An extended discussion of many of these factors can be found in the Committee's SBIR Meth odology Report. See National Research Council, An Assessment of the Small Business Innoation Research Program -- Project Methodology, Washington, DC: The National Academies Press, 2004.
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From page 50... ...
Bearing the limitations imposed by the points reviewed above in mind, we have accumulated data primarily from the 2002 NIH Phase II Recipient Survey (and updates through 2007) and the 2005 NRC Phase II Survey.3 Together, these generated 1,105 responses from 861 firms, allowing us to draw initial conclu sions from an assessment of the different outcomes from projects implemented by venture-funded and non-venture-funded firms.
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From page 51... ...
Small Business Administration Tech-Net Database; Responses -- NRC Phase II Survey and NIH Phase II Survey and updates. • Firms among the top 200 NIH Phase II award winners 1992-2002, who also received sufficient venture funding to meet the de minimis conditions.
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From page 52... ...
Several executives at venture-funded firms interviewed for the NRC study of the SBIR program at NIH pointed out that the role of SBIR changed with the addition of investment funding from venture 6 See, for example, National Research Council, An Assessment of the SBIR Program at the Institutes of Health, Charles W Wessner, ed., The National Academies Press, 2009.
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From page 53... ...
. SOURCE: NRC Phase II Survey, NIH PODS database.
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From page 54... ...
SOURCE: NRC Phase II Survey, NIH PODS database. Figure 6-2 NOTE: N=115 (venture-funded)
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From page 55... ...
Venture-funded 43 3,538,984 Not Venture-funded 415 852,251 SOURCE: NRC Phase II Survey. It would be very surprising if venture-funded firms -- which have by defini tion received some third-party funding -- did not report more instances of such funding than firms that had not received venture funding.
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From page 56... ...
In fact, the success rates for many venture firms are quite limited. Drawing on a VentureOne database, Cochrane plots a histogram of net venture capital returns on investments that "shows an extraordinary skewness of returns.
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From page 57... ...
However, the overall message from the surveys is a positive one: Firms patent results from SBIR projects at a substantial rate. 6.4 FIRM-LEVEL OUTCOMES FROM HOOVER'S SMALL BUSINESS DATABASE Partly as a cross-check on the conclusions drawn from the NRC and NIH surveys, we sought to develop an entirely different data set, based on the Hoover's Small Business Database.
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From page 58... ...
Although their sales still count as commercialization, firms with less than one million dollars in revenue cannot be viewed as achieving significant commercial success. In contrast, venture-funded firms whose revenues were reported were dis tributed far more evenly, with a concentration among firms with $10 million to $50 million in annual revenues.
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From page 59... ...
While venture capitalists are a referent group, they are not directly comparable insofar as the bulk of venture capital investments occur in the later stages of firm development. SBIR awards often occur earlier in the technology development cycle than where venture funds normally invest.
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From page 60... ...
Venture-funded firms had a much higher concentration of firms generating at least $10 million in annual revenues. In short, while SBIR projects at venture-funded firms do not reach the market as often as those without venture investment, other indicators suggest that, over time, venture-funded firms do commercialize more effectively than non-venturefunded firms.
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