ATLANTA The Southeast U.S. receives the least amount of Small Business Innovation Research (SBIR) grant funding than almost all other sectors of the country, it was revealed during a panel session at last week's conference of the Southeastern Medical Device Association (SEMDA; Norcross, Georgia), held here at the Ritz Carlton.

Pointing to a map with color-shaded areas representing where grants are most prevalent, John Edwards, CEO of Apeliotus Technologies (Atlanta) (and not to be confused with the former presidential hopeful), said the only place receiving less grant money support than the Southeast is the Midwest.

He said that Alabama, for some reason, is the lone state in the Southeast that is a booming area of activity for SBIR grants.

Edwards, who served as moderator of the discussion, also presented slides with statistics stating that the Southeast is on average at 77 per $1 million GDP in receiving SBIR grants compared to the U.S. average of 161 per $1 million GDP.

The purpose of the panel was two-fold: to first show med-tech companies in the Southeast the state of SBIR grants in this region, and to give companies a better handle on applying for the much sought-after "free money."

Nearly 11 federal departments participate in the SBIR program; five departments participate in the STTR program awarding $2 billion to small high-tech businesses. The U.S National Science Foundation administers the SBIR.GOV site on behalf of the federal government.

SBIR grant funding comes in three phases:

  • Phase I contracts are valued up to $100,000 (different at each agency) and are awarded for research efforts lasting about six months. Each project addresses a topic area identified in an agency solicitation.
    Phase I awards help determine the feasibility of a new technology, and Phase I winners are chosen competitively by an agency's technical and scientific experts.
  • Phase II contracts are awarded only to successful Phase I contract winners and are valued up to $750,000, the amount differing with each agency. Awards for Phase II contracts are based both on Phase l results and the scientific and technical merit of the Phase II proposal.
    Besides the scientific quality of the Phase II proposal, the potential of the concept for commercial applications is given careful consideration.
  • Phase III involves private sector or federal agency funding (outside of the SBIR program) to commercialize the technology.
    The panel said that in applying for each phase of the grant that med-tech companies need to ask themselves these key questions:
    • How does the innovation lead to commercialization?
    • How can you grow into a revenue generating entity?
    • And, finally, is the business sustainable?

"What do [grant awarders] want to see in an application? You want to under promise and over deliver," said Jim Stefansic, PhD, CTO of Pathfinder Therapeutics (Nashville, Tennessee). "You essentially want to be clear in your goals and realistic with what you're able to do."

Stefansic knows all about the SBIR process and how to be successful at it since, as a co-founder of Pathfinder, he helped draft the grant proposal that netted full funding for the Vanderbilt University (Nashville) spin-off company. Pathfinder develops an image-guided system for surgery, the FDA -approved SurgiSight Linasys, a global positioning system tracker for liver procedures.

"The focus of our first SBIR grant was to get the validation and verification of our core platform, which would allow the launch of several products," he said.

But while Stefansic was successful, having written several ROI grants for academic purposes when he was a professor at Vanderbilt, it's not an easy task for med-tech companies to prepare a winning SBIR grant application.

In fact, the panel pulled no punches when describing the difficulty that it would take to successfully garner such funding.

"It's not a science fair project," said Andy Jakimcius, principal consultant with Biotechnology Business Consultants (Ann Arbor, Michigan). "You really have to be up to date and knowledgeable about the technology you hope to usher forward."

The panel discouraged med-tech companies from using outside "ghostwriters," a common temptation of some companies that claim they just don't have the time to undergo the arduous undertakings of grant writing.

"You know your tech better than anyone else," Jakimcius said. "Ghostwriting isn't something you should rely on. Some companies have actually gone through the [grant writing] process and discovered that their idea really isn't fully developed and have actually withdrawn their application. That wouldn't have been possible if they had used a ghostwriter."

An attendee asked the panel if there were any circumstances where ghostwriting would be beneficial?

The panel once again emphasized that very few companies if any are able to successfully use a ghostwriter. "The scientist behind the innovation who live it — should be the ones writing it," Edwards said.

SBIRs were initiated with the passing of the Small Business Innovation Development Act in 1982, and for the purposes of the SBIR program, the term "small business" is defined as an American-owned, for-profit business with fewer than 500 employees.