Why all Start-Up Biotech Companies Should Write SBIR Grants

Having been a prolific grant writer for other companies, there is a lot to learn from writing SBIR grants.  Of course there is always the financial motivation.  I mean, would you really turn down $150,000 to $250,000 of financing that you don’t have to pay back and that comes with all sorts of business assistance as well?  But besides the financial motivation there are a number of other compelling reasons to write SBIR grants.

 SBIR grants help clarify the R+D deliverables

In many cases, technology is licensed by non-scientists.  Often the actual R+D process is given very little thought.  The reality is that the R+D often takes a lot longer than one can imagine.    It’s a two-steps forward, one-step back process.  I did a grant for a company that thought they would get their test established in 6 months.  The reality was that it took 6 months just to validate a new method that they were using before they even started to do any real research for their commercialization.  SBIR grants force companies to think about and plan out their exact experiments towards the milestones and deliverables they hope to achieve.

 SBIR grants help define the R+D timeline

Naïve companies believe they will get their product/drug/test through the regulatory process in a short period of time.  Similarly it’s naïve to think that the research process will yield fruitful results in a linear fashion.  By defining and putting a research plan in writing, it often yields a more realistic expectation for accomplishment of research goals.

 The SBIR budget helps define R+D costs and HR needs

As much as I hate doing budgets, most biotech companies underestimate the amount of money they need for R+D.  The SBIR budget makes one itemize equipment and supply costs.  In many cases, the budget process helps define the exact equipment needs minimizing spending on really expensive equipment that is not integral for the company.  Everyone wants a fluorescent microscope until you have to budget $75,000 for it.  Once you realize how much some equipment really costs and its utilization, it often becomes easier to use Fee-for-service or outsourcing partners to provide these services.  Similarly, the budget process also is a much more realistic determination of start-up costs.  If one uses standard rates for fringe benefits, overhead and general and administration fees, the HR costs are often much more realistic than many “off-the-cuff” start-up costs that I have seen in business presentations.  Most importantly, SBIR grants force one to define the actual personnel needs and who is responsible for what aspect of R+D.  I am always struck by the difference between academia and companies.  There seems to be a sense of urgency in academia that I don’t see in many companies.  Go to any biotech incubator.  You’ll see more people moving hanging around the water cooler than you will in any large academic lab setting.  The point being, knowing the R+D milestones helps you define the exact number of people and skill sets to do those tasks.  No more and no Less.

 SBIR grant writing defines the technology in context of competing R+D

I wrote a grant not too long ago for a company that when I started doing a little research on Medline, I found quite a few similar products that seemed to have better efficacy and were further on in terms of research milestones.  The company ended up licensing this other technology in their field.  The point being, that it is worthwhile to know where your technology stands relative to similar technology in the field.  I would strongly advise setting up an automated keyword search in Medline to keep abreast of what others are scientists are doing in the field not just your commercial competitors.  /Writing the Background section of an SBIR grant is a good way to make sure you’re up to date with the latest research.

 The research milestones help inform the commercialization pipeline

Scientist run companies often want to work on commercializing the entire product pipeline or portfolio.  What happens is that it delays reaching commercial mile for any single part of that portfolio.  SBIR grants make one focus on a single product/technology.

 Helps define the market

Market analysis is rarely robust and in reality for most start-up biotech companies, it is likely not important for it to be tremendously robust.  However, SBIR grant topics provide great market validation.  The US Government is the biggest contractor in the world.  So if they have a specific SBIR topic where they say they want X, you can’t get better market data and analysis.  In the health-care arena, the NIH also puts out Requests for Information periodically which helps them determine what their needs are and where to allocate funds.  I have often found that searching SBIR topics, that I find very specific needs that can help a company make the decision on re-positioning or pivoting their technology.

 Provides validation of the technology

Let’s face it, everyone needs capital.  No matter how great your technology, you have to convince others how great it is.  Getting a SBIR grant is a fantastic way of validating your technology.  SBIR grants are peer-reviewed from the science and commercialization stand-point so a SBIR grant really helps mitigate risk for investors (or you should make the argument that it mitigates their risk).  Importantly, even if a grant is not funded, it’s the best way to get independent review of your business.  Remember the reviewers are not investors.  So the review often helps define areas where one needs to be stronger.  I take all of the criticism as areas where I didn’t make or communicate my point effectively.  Those are the same areas that one needs to improve on a business plan for investors

 Money

As said before, the money is not that large but then beggars can’t be choosers.  Why would you turn down an opportunity for >100K without too many strings for about an 80 hour commitment in grant writing?

If you have any SBIR questions feel free to send them my way.