The Valley of Death — that inevitable phase in the life of an entrepreneurial company when the venture is spending more money than it is taking in — begins at proof-of-concept and isn't over until the company's revenues from sales cover expenses.
Depending on the industry, reaching this break-even point can take a year, or two, or 10. Without outside capital, most startup companies can't make it through.
The federal government's Small Business Innovation Research (SBIR) program is designed to help fund the Valley of Death.
Phase I of the program provides feasibility grants of up to $150,000 for six months.
Phase I companies that prove their concepts can then apply for Phase II commercialization grants of up to $1 million.
That's the magic and the challenge of SBIR grants.
A million dollars of nondilutive capital can go a long way toward seeing a promising startup through commercialization.
However, to compete for Phase II funding, entrepreneurs must first qualify for SBIR Phase I.
i2E, the Oklahoma Center for the Advancement of Science and Technology (OCAST) and other state entities have created a partnership known as the Oklahoma SBIR Collaborative Resource (OSCR) to help companies submit successful proposals for the federal grant dollars.
“The mission of OSCR is to increase both the quantity and quality of submitted proposals. This level of guidance will be a tremendous resource for our state researchers,” said Rick Rainey, venture adviser at i2E and co-director of the Collaborative Resource.
“Oklahoma needs lots more Phase I proposals. Applying for a Phase I SBIR is tougher than applying for many other grants. Great and credible ideas do not get funded because the company isn't familiar with the rigorous requirements of the SBIR process,” Rainey said.
DID YOU KNOW
In the 30 years since the SBIR program began, more than 130,000 grants totaling more than $30 billion have been awarded.