WEBVTT 00:00:00.000 --> 00:00:01.978 [SQUEAKING] 00:00:02.046 --> 00:00:03.458 [RUSTLING] 00:00:03.525 --> 00:00:05.923 [CLICKING] 00:00:10.360 --> 00:00:12.160 STEVE DEREZINSKI: Well, welcome all 00:00:12.227 --> 00:00:16.239 for a wonderful, warm January. 00:00:16.306 --> 00:00:19.720 What better to warm yourself than by the fabulous thing 00:00:19.787 --> 00:00:22.320 of free government money? 00:00:22.387 --> 00:00:24.725 I'm Steve Derezinski. 00:00:24.792 --> 00:00:26.600 I've got a bunch of background that I'm going 00:00:26.667 --> 00:00:27.683 to go through in a second. 00:00:27.750 --> 00:00:30.840 But I wanted to give you guys a little bit of the history 00:00:30.907 --> 00:00:33.210 of this particular lecture. 00:00:33.277 --> 00:00:34.960 A couple of years ago, I looked around MIT 00:00:35.027 --> 00:00:38.520 and I said-- said, why is it that we don't have anything 00:00:38.587 --> 00:00:43.820 on really winning SBIRs and what the process is to win them, 00:00:43.887 --> 00:00:46.120 not just how to fill out forms. 00:00:46.187 --> 00:00:48.760 And it turns out that most people like provided 00:00:48.827 --> 00:00:52.760 as consulting and some people aren't really 00:00:52.827 --> 00:00:56.040 allowed to say the things that I want to tell you guys about. 00:00:56.107 --> 00:00:57.940 So I decided to just put this together. 00:00:58.007 --> 00:00:59.270 I did it last year. 00:00:59.337 --> 00:01:01.510 We had-- the ones that I know about, 00:01:01.577 --> 00:01:04.269 the three people that applied all won awards, 00:01:04.336 --> 00:01:07.130 and actually one company decided to just go and raise 00:01:07.197 --> 00:01:08.110 venture capital. 00:01:08.177 --> 00:01:10.230 And they just closed a $5 million round. 00:01:10.297 --> 00:01:14.130 So hopefully you guys will be in that same boat shortly. 00:01:14.197 --> 00:01:15.890 OK. 00:01:15.957 --> 00:01:17.350 So I'm Steve Derezinski. 00:01:17.417 --> 00:01:20.450 I've got my undergraduate in Mechanical Engineering from MIT. 00:01:20.517 --> 00:01:24.490 I was originally a roboticist, which kind of gives you 00:01:24.557 --> 00:01:27.290 a certain mental model of the world that everything 00:01:27.357 --> 00:01:28.747 works in feedback loops. 00:01:28.814 --> 00:01:30.830 And every time you're trying to control something, 00:01:30.897 --> 00:01:32.538 you always have to get the feedback on it 00:01:32.605 --> 00:01:35.370 and make it kind of correct what it didn't do. 00:01:35.437 --> 00:01:38.190 I've got a patent on the space shuttle's robotic arm. 00:01:38.257 --> 00:01:39.970 So when the space shuttle's robotic arm 00:01:40.037 --> 00:01:41.670 was trying to remove solar panels, 00:01:41.737 --> 00:01:43.390 they would vibrate like crazy. 00:01:43.457 --> 00:01:47.530 So we came up with an algorithm to move it a lot more quickly 00:01:47.597 --> 00:01:51.670 and with a lot less vibration. 00:01:51.737 --> 00:01:52.170 I 00:01:52.237 --> 00:01:55.710 Then went back to Sloan and got a Sloan Fellows degree. 00:01:55.777 --> 00:01:58.770 So I have both that kind of weird engineering viewpoint, 00:01:58.837 --> 00:02:00.563 and then also an MBA. 00:02:00.630 --> 00:02:02.730 And in between those two, I was down at Georgia Tech 00:02:02.797 --> 00:02:08.250 and I created what I call the first faculty venture studio. 00:02:08.317 --> 00:02:11.990 And yes, it was formed before the Deshpande Center at MIT. 00:02:12.057 --> 00:02:15.930 And this is basically a process that you 00:02:15.997 --> 00:02:17.330 go through the university and you 00:02:17.397 --> 00:02:19.590 look at all the technology they have, and you say, 00:02:19.657 --> 00:02:20.450 this is great. 00:02:20.517 --> 00:02:22.590 What are the commercial applications for it? 00:02:22.657 --> 00:02:24.450 Our innovation was basically bringing 00:02:24.517 --> 00:02:26.930 in fundable CEOs into the university 00:02:26.997 --> 00:02:30.550 so that they could form companies within our VentureLab. 00:02:30.617 --> 00:02:33.382 So it was like a university lab, but it was for venture creation. 00:02:33.449 --> 00:02:34.590 And that's still going today. 00:02:34.657 --> 00:02:35.673 You can look it up online. 00:02:35.740 --> 00:02:38.310 I think they've done about $2 billion worth of startups now. 00:02:38.377 --> 00:02:41.210 And today, I'm running a cofoundry in Kendall Square, 00:02:41.277 --> 00:02:45.370 forming multiple companies from that technology. 00:02:45.437 --> 00:02:48.450 But in terms of this class right now, 00:02:48.517 --> 00:02:52.210 my experience with federal contracts is about $40 million 00:02:52.277 --> 00:02:53.390 roughly-- sorry. 00:02:53.457 --> 00:02:55.780 This is the $23 million list of all the federal contracts 00:02:55.847 --> 00:02:57.180 I've done. 00:02:57.247 --> 00:02:59.660 And I will tell you that I was either the PI 00:02:59.727 --> 00:03:03.000 or the primary business person on all of these contracts. 00:03:03.067 --> 00:03:07.620 So I have interfaced with NASA, NSF, DOE, 00:03:07.687 --> 00:03:10.020 ARPA-E for all of these things, as well 00:03:10.087 --> 00:03:11.720 as DOD, which is not on the list, 00:03:11.787 --> 00:03:14.600 but I've done a ton of work that way. 00:03:14.667 --> 00:03:19.020 And over the years, I've discovered this 00:03:19.087 --> 00:03:20.803 all money is not equal, right? 00:03:20.870 --> 00:03:22.220 There's different colors of money, 00:03:22.287 --> 00:03:24.300 and there's different motivations for the funding 00:03:24.367 --> 00:03:24.865 that you get. 00:03:24.932 --> 00:03:26.740 And understanding that before you get into it 00:03:26.807 --> 00:03:27.680 is really critical. 00:03:30.900 --> 00:03:34.060 I wanted to make a specific characterization 00:03:34.127 --> 00:03:38.080 of disruptive technology. 00:03:38.147 --> 00:03:42.780 A lot of people talk about-- or I did my MBA actually 00:03:42.847 --> 00:03:46.340 on technology innovation, which was focused on thinking about, 00:03:46.407 --> 00:03:49.820 how do you commercialize incremental technology advances? 00:03:49.887 --> 00:03:52.700 And how do you commercialize radical technology advances, 00:03:52.767 --> 00:03:54.820 or disruptive technology? 00:03:54.887 --> 00:03:58.100 And the classic example, and you always 00:03:58.167 --> 00:04:00.900 see these pulled together, is if you 00:04:00.967 --> 00:04:02.762 have an incremental technology, then 00:04:02.829 --> 00:04:05.220 it's very easy to just go and talk to your customers about, 00:04:05.287 --> 00:04:06.120 what do they want? 00:04:06.187 --> 00:04:08.880 I mean, if I just took a generic customer and I said, 00:04:08.947 --> 00:04:09.760 what do you want? 00:04:09.827 --> 00:04:12.880 They would say, exactly what I have right now, but cheaper, 00:04:12.947 --> 00:04:14.360 faster, and with better quality. 00:04:14.427 --> 00:04:16.060 I mean, that's like an easy thing 00:04:16.127 --> 00:04:18.820 to sell because it doesn't disrupt their model. 00:04:18.887 --> 00:04:21.579 So commercializing incremental innovations 00:04:21.646 --> 00:04:23.120 should be fairly straightforward. 00:04:23.187 --> 00:04:25.540 What I really want to get into, and what I think the SBIR 00:04:25.607 --> 00:04:30.220 program is uniquely designed for, is disrupting crazy 00:04:30.287 --> 00:04:31.900 innovations, or-- sorry-- 00:04:31.967 --> 00:04:33.960 commercializing crazy technology, 00:04:34.027 --> 00:04:35.900 and it's uniquely positioned in funding 00:04:35.967 --> 00:04:38.860 those kinds of activities. 00:04:38.927 --> 00:04:42.983 So to this point, one of my favorite quotes from Henry Ford, 00:04:43.050 --> 00:04:44.400 "If I ask people what they wanted, 00:04:44.467 --> 00:04:45.942 they would have said a faster horse." 00:04:46.009 --> 00:04:47.680 Because they all had horses at the time. 00:04:47.747 --> 00:04:49.000 They just wanted what they had right now, 00:04:49.067 --> 00:04:50.042 just a little bit faster. 00:04:50.109 --> 00:04:51.870 They wouldn't have said, I want a vehicle 00:04:51.937 --> 00:04:54.150 that has four wheels that I have to start up every day 00:04:54.217 --> 00:04:56.750 and stick gasoline in. 00:04:56.817 --> 00:05:01.263 Along those lines, Steve Jobs, another quote I love, which is, 00:05:01.330 --> 00:05:02.930 "What we have found is that, in general, 00:05:02.997 --> 00:05:05.950 customers don't know what they want until you show it to them." 00:05:06.017 --> 00:05:08.310 So now what we're here today talking about 00:05:08.377 --> 00:05:11.070 is, great, I've got this cool technology. 00:05:11.137 --> 00:05:12.910 And I want to reduce it to a product 00:05:12.977 --> 00:05:14.630 that I can show to a customer. 00:05:14.697 --> 00:05:16.950 But where do I get that funding? 00:05:17.017 --> 00:05:21.670 Let's see. 00:05:21.737 --> 00:05:25.510 Over the years everyone's talked about the Valley of Death 00:05:25.577 --> 00:05:26.330 over the years. 00:05:26.397 --> 00:05:28.730 And I have a unique view of this. 00:05:28.797 --> 00:05:31.010 And one is that governments and universities, 00:05:31.077 --> 00:05:33.430 there's a ton of money available to do research 00:05:33.497 --> 00:05:34.650 on the next cool thing. 00:05:34.717 --> 00:05:37.830 If you have no application, but you have really cool research 00:05:37.897 --> 00:05:40.510 idea, there's a ton of money at the National Science Foundation 00:05:40.577 --> 00:05:43.310 and DOE to go discover neat things. 00:05:43.377 --> 00:05:46.470 But if you're in the university, there's a certain vector 00:05:46.537 --> 00:05:48.870 that your funds have to go in. 00:05:48.937 --> 00:05:52.670 And they have to go towards finding new interesting things, 00:05:52.737 --> 00:05:54.350 new interesting research. 00:05:54.417 --> 00:05:56.770 As soon as you start doubling down on the same money 00:05:56.837 --> 00:05:59.370 going after an application and going after commercial, 00:05:59.437 --> 00:06:02.242 that's considered not the right use of funds. 00:06:02.309 --> 00:06:03.950 You have to get different sources of fund 00:06:04.017 --> 00:06:05.930 to move it towards the commercial landscape. 00:06:05.997 --> 00:06:08.530 And then you go on the other side, in the private sector, 00:06:08.597 --> 00:06:09.830 Wall Street has a ton of money. 00:06:09.897 --> 00:06:12.350 So if you have a customer that wants to expand, 00:06:12.417 --> 00:06:14.270 or if you want to expand your operation 00:06:14.337 --> 00:06:16.370 and you've got 10 years of financials, 00:06:16.437 --> 00:06:17.930 there's a ton of sources to do that. 00:06:17.997 --> 00:06:20.350 But it's that gap in between, and how do you 00:06:20.417 --> 00:06:23.110 fund that gap in between that's the real challenge. 00:06:23.177 --> 00:06:26.210 And I know there's a bunch of solutions out there, 00:06:26.277 --> 00:06:28.130 but I've looked around at foundations, 00:06:28.197 --> 00:06:31.762 and angel investing and VCs and really, 00:06:31.829 --> 00:06:33.470 what I've come to over all of these years 00:06:33.537 --> 00:06:38.830 is that the SBIR is really the best program to fund that gap. 00:06:38.897 --> 00:06:41.102 And often, when you go and talk to end customers, 00:06:41.169 --> 00:06:42.810 they'll say, hey, this is great research. 00:06:42.877 --> 00:06:43.977 Where can I buy the product? 00:06:44.044 --> 00:06:46.110 And then you have to gulp. 00:06:46.177 --> 00:06:48.520 There's a lot of work between this paper 00:06:48.587 --> 00:06:50.280 that I just got published and actually 00:06:50.347 --> 00:06:52.560 having a product that you can play with and understand 00:06:52.627 --> 00:06:54.000 how it works. 00:06:54.067 --> 00:06:58.000 So what I found is if you talk to end customers 00:06:58.067 --> 00:07:00.640 about a disruptive technology, and you don't have it reduced 00:07:00.707 --> 00:07:02.682 to practice or don't have it reduced to something 00:07:02.749 --> 00:07:04.200 that they can use and try, you're 00:07:04.267 --> 00:07:07.733 going to just talk to a lot of customers that don't understand, 00:07:07.800 --> 00:07:09.900 or they're going to be nice to you, or other things. 00:07:09.967 --> 00:07:13.120 So that's really where the SBIR comes in, and specifically, 00:07:13.187 --> 00:07:17.020 a lot of the programs that we're going to talk about today. 00:07:17.087 --> 00:07:19.880 And the way that we look at the Kendall Square Cofoundry 00:07:19.947 --> 00:07:23.420 is by focusing on these two blue squares. 00:07:23.487 --> 00:07:26.600 I call them a technology project if it's 00:07:26.667 --> 00:07:31.000 a technology that has a lot of interesting research dimensions 00:07:31.067 --> 00:07:34.240 to it, but there's no real customer that either understands 00:07:34.307 --> 00:07:38.480 or has been engaged or really knows how to purchase it, 00:07:38.547 --> 00:07:41.880 or how to even interact with it at some stage. 00:07:41.947 --> 00:07:45.760 So in that mode, you're exploring new applications. 00:07:45.827 --> 00:07:49.520 And if you're in this mode of exploring new applications, 00:07:49.587 --> 00:07:52.800 the worst thing you can do is take recourse funding, 00:07:52.867 --> 00:07:53.860 in my opinion. 00:07:53.927 --> 00:07:56.618 And this is a little bit controversial. 00:07:56.685 --> 00:07:58.160 So right between these two-- and then 00:07:58.227 --> 00:08:00.493 on the right-hand side-- sorry-- on the right-hand side, 00:08:00.560 --> 00:08:02.560 we have company projects, which are, OK, 00:08:02.627 --> 00:08:04.160 we've got them-- we've got a demo 00:08:04.227 --> 00:08:06.540 and we've got things that people can use. 00:08:06.607 --> 00:08:08.720 And we now just need to understand 00:08:08.787 --> 00:08:12.200 how to fund them more so that we can refine them, debug 00:08:12.267 --> 00:08:15.360 them, and get them in a package that the customer really wants. 00:08:15.427 --> 00:08:18.880 But that's only after you have clear customer focus. 00:08:18.947 --> 00:08:23.040 And a lot of times, people, especially around MIT, 00:08:23.107 --> 00:08:27.360 there's a ton of funding available for equity funding. 00:08:27.427 --> 00:08:31.080 Angels and VCs, that's all recourse funding. 00:08:31.147 --> 00:08:34.240 And I want to caution you all that crossing 00:08:34.307 --> 00:08:36.200 that line when you're in this exploration mode 00:08:36.267 --> 00:08:38.679 can be a little bit crazy, because when you're 00:08:38.746 --> 00:08:41.027 in this exploration mode and you take recourse funding, 00:08:41.094 --> 00:08:42.860 it's like, I have an obligation to somebody, 00:08:42.927 --> 00:08:45.570 but I don't really know what direction I'm going yet. 00:08:45.637 --> 00:08:48.350 And keep in mind, I've been doing this for many decades, 00:08:48.417 --> 00:08:52.410 so I've seen a lot of oopses in this space. 00:08:52.477 --> 00:08:54.610 So if you're on the left side of that line, 00:08:54.677 --> 00:08:57.348 grants and nonrecourse funding, absolutely. 00:08:57.415 --> 00:08:58.890 That is the perfect source of funding 00:08:58.957 --> 00:09:00.847 to reduce things to practice. 00:09:00.914 --> 00:09:02.930 And if you're on the right side of the line, where 00:09:02.997 --> 00:09:05.070 you have customers and you've got traction, 00:09:05.137 --> 00:09:09.602 then getting recourse funding is OK. 00:09:09.669 --> 00:09:11.810 I mean, it's absolutely the way to go, and especially 00:09:11.877 --> 00:09:13.610 if you need growth capital. 00:09:13.677 --> 00:09:16.090 So I know I have a lot of-- 00:09:16.157 --> 00:09:18.890 I have invested, I have a lot of investor friends, 00:09:18.957 --> 00:09:20.430 and a lot of them say, oh no, no, 00:09:20.497 --> 00:09:22.650 we like to take technology risks. 00:09:22.717 --> 00:09:26.370 And then you realize that maybe that's not such the best idea 00:09:26.437 --> 00:09:28.210 for your technology because you still 00:09:28.277 --> 00:09:30.470 don't know what direction it needs to go in. 00:09:30.537 --> 00:09:33.470 I can tell you that they love to invest on the right-hand side, 00:09:33.537 --> 00:09:36.530 when you have customer traction and you just need to-- the pump 00:09:36.597 --> 00:09:39.410 is already going and you need to just jam 00:09:39.477 --> 00:09:43.420 more capital into that pump and keep cranking it out. 00:09:43.487 --> 00:09:47.000 As you look at all the sources of funding that are out there, 00:09:47.067 --> 00:09:51.180 what you come to is that SBIR is the best source of funding 00:09:51.247 --> 00:09:54.140 for this exact stage, being in this sort of deep technology 00:09:54.207 --> 00:09:56.880 space. 00:09:56.947 --> 00:09:57.380 Yeah. 00:09:57.447 --> 00:09:59.255 So don't take recourse funding at this stage. 00:09:59.322 --> 00:10:01.922 And I'm sure you're getting lots of angels who are like, oh, no, 00:10:01.989 --> 00:10:04.260 we'll give you $100,000, oh, we'll give you $200,000. 00:10:04.327 --> 00:10:05.480 You can still take it, right? 00:10:05.547 --> 00:10:07.280 I mean, I don't have any control over you, 00:10:07.347 --> 00:10:10.900 but I don't recommend it. 00:10:10.967 --> 00:10:16.040 So perfectly designed for this. 00:10:16.107 --> 00:10:19.580 It's about $4 billion of federal funds every year. 00:10:19.647 --> 00:10:21.513 And that's expended every year. 00:10:21.580 --> 00:10:22.680 That's given out every year. 00:10:22.747 --> 00:10:25.820 So if you were to do the math on what size venture capital 00:10:25.887 --> 00:10:27.980 fund that would be, venture capitalists 00:10:28.047 --> 00:10:31.180 give out about a fifth of their total capital 00:10:31.247 --> 00:10:33.568 under management in their new funds every year. 00:10:33.635 --> 00:10:35.860 So that would be about a $20 billion equivalent venture 00:10:35.927 --> 00:10:37.540 capital fund. 00:10:37.607 --> 00:10:41.500 And the expectations are simply that you 00:10:41.567 --> 00:10:43.940 will do the good-- you will do the work. 00:10:44.007 --> 00:10:45.980 There's no expectation of getting paid back 00:10:46.047 --> 00:10:49.220 or that you'll be commercially successful or anything. 00:10:49.287 --> 00:10:51.660 And I want to point out that some equity investors do 00:10:51.727 --> 00:10:54.260 actually view winning an SBIR as a positive 00:10:54.327 --> 00:10:55.600 for their due diligence. 00:10:55.667 --> 00:10:57.780 So especially if it's-- 00:10:57.847 --> 00:10:59.740 sometimes there's a lot of DOD people 00:10:59.807 --> 00:11:02.860 that have some deep, deep technology expertise. 00:11:02.927 --> 00:11:05.020 And if they decide to fund you, then 00:11:05.087 --> 00:11:06.937 that's an indicator on the outside that says, 00:11:07.004 --> 00:11:09.020 oh, well, you must know what you're talking about, 00:11:09.087 --> 00:11:11.580 because we know these guys at the DOD, 00:11:11.647 --> 00:11:16.100 and they know if you're just not-- if you don't really have 00:11:16.167 --> 00:11:18.080 what it takes or if you do. 00:11:18.147 --> 00:11:19.280 So that's a good thing. 00:11:21.880 --> 00:11:23.780 And I wanted to go into, real quick, 00:11:23.847 --> 00:11:27.500 on the incentives of the different funding sources. 00:11:27.567 --> 00:11:30.902 Charlie Munger from Berkshire Hathaway 00:11:30.969 --> 00:11:32.360 has another favorite quote of mine. 00:11:32.427 --> 00:11:34.040 "Show me the incentives, and I'll show you the outcome." 00:11:34.107 --> 00:11:36.560 A lot of times, if you already know what the incentives are, 00:11:36.627 --> 00:11:39.150 there's no point in asking the question. 00:11:39.217 --> 00:11:42.670 So you guys probably-- 00:11:42.737 --> 00:11:44.890 I'm sure you all know about angel investors and VCs. 00:11:44.957 --> 00:11:47.430 The biggest distinction between an angel investor and a VC 00:11:47.497 --> 00:11:49.830 is an angel investor is investing their own money. 00:11:49.897 --> 00:11:52.050 So they can write a check whenever they want to. 00:11:52.117 --> 00:11:55.147 There's no-- it's like, I feel like-- you seem like a nice guy. 00:11:55.214 --> 00:11:56.730 I can I write you a check, no problem. 00:11:56.797 --> 00:12:01.230 A VC actually technically gets money from limited partners. 00:12:01.297 --> 00:12:04.390 So they have someone else up the chain that they respond to. 00:12:04.457 --> 00:12:07.775 And so what I'm going to say might sound a little crass, 00:12:07.842 --> 00:12:10.150 but it's absolutely true if you think about the structure 00:12:10.217 --> 00:12:11.250 of the relationship. 00:12:11.317 --> 00:12:14.170 So their motivation is to maximize return, 00:12:14.237 --> 00:12:17.172 get a big piece of equity, and get to a fast exit. 00:12:17.239 --> 00:12:19.630 Now, I've talked to a bunch of VCs, and they've all of them 00:12:19.697 --> 00:12:20.250 say, no, no. 00:12:20.317 --> 00:12:21.950 We're slow investors. 00:12:22.017 --> 00:12:24.890 I can tell you that that may be true, 00:12:24.957 --> 00:12:27.270 but the question really is the limited partners that 00:12:27.337 --> 00:12:29.110 have put money in them, do they actually 00:12:29.177 --> 00:12:30.750 feel that they're slow investors, too? 00:12:30.817 --> 00:12:33.375 Maybe there may be a couple out there that do actually do that. 00:12:33.442 --> 00:12:35.390 But by and large, the whole reason 00:12:35.457 --> 00:12:38.470 why limited partners like big pensions funds 00:12:38.537 --> 00:12:40.350 allocate a little bit of money for the VC 00:12:40.417 --> 00:12:42.750 is because they expect those really high returns. 00:12:42.817 --> 00:12:46.790 And the only way you get returns is that it's return versus time. 00:12:46.857 --> 00:12:48.550 So if you stretch the time out, the return 00:12:48.617 --> 00:12:50.008 has to go through the roof in order 00:12:50.075 --> 00:12:52.210 to meet the obligation of that sector. 00:12:52.277 --> 00:12:56.250 So I still stand by these two motivations of a VC. 00:12:56.317 --> 00:12:58.090 Now, let's talk about SBIR program manager. 00:12:58.157 --> 00:12:59.798 Does anybody want to take a guess at what 00:12:59.865 --> 00:13:01.130 their first motivation is? 00:13:03.970 --> 00:13:06.310 AUDIENCE: Science? 00:13:06.377 --> 00:13:07.870 STEVE DEREZINSKI: Science? 00:13:07.937 --> 00:13:09.710 AUDIENCE: Getting innovation ideas 00:13:09.777 --> 00:13:12.787 into the market [INAUDIBLE]. 00:13:12.854 --> 00:13:14.370 STEVE DEREZINSKI: That would be great. 00:13:14.437 --> 00:13:16.537 What do you think their first motivation is, though? 00:13:16.604 --> 00:13:17.470 AUDIENCE: More jobs? 00:13:17.537 --> 00:13:18.470 AUDIENCE: Creating jobs. 00:13:18.537 --> 00:13:19.370 STEVE DEREZINSKI: Creating jobs. 00:13:19.437 --> 00:13:20.745 Yeah, those are good motivations. 00:13:20.812 --> 00:13:22.950 Those are good-- anybody else? 00:13:23.017 --> 00:13:24.098 AUDIENCE: Use the fund. 00:13:24.165 --> 00:13:25.890 STEVE DEREZINSKI: Using the funds properly? 00:13:25.957 --> 00:13:26.390 Yep. 00:13:26.457 --> 00:13:27.630 Yep. 00:13:27.697 --> 00:13:30.990 I would argue that the first motivation of an SBIR program 00:13:31.057 --> 00:13:34.000 manager is to not get fired. 00:13:34.067 --> 00:13:36.340 And I say this sort of tongue in cheek, 00:13:36.407 --> 00:13:38.680 but it's important to remember when you're interfacing 00:13:38.747 --> 00:13:43.720 with them that they're not in it to do you favors and cut 00:13:43.787 --> 00:13:45.840 a deal and all that stuff. 00:13:45.907 --> 00:13:49.040 It's interesting to me to interact with both VCs, angels, 00:13:49.107 --> 00:13:50.840 and SBIR program managers because it's 00:13:50.907 --> 00:13:53.560 a very different ballgame. 00:13:53.627 --> 00:13:56.440 When you're in it, you're both in it to make a lot of money 00:13:56.507 --> 00:13:57.100 with VCs. 00:13:57.167 --> 00:13:59.300 You both want to make high returns. 00:13:59.367 --> 00:14:02.020 And with SBIR program managers, they're like-- 00:14:02.087 --> 00:14:04.253 so this is the argument for why, when you go out 00:14:04.320 --> 00:14:05.920 and you look to find all of those things 00:14:05.987 --> 00:14:08.420 about how to win an SBIR proposal, 00:14:08.487 --> 00:14:11.360 they talk about filling out the proposal correctly. 00:14:11.427 --> 00:14:13.307 And you're like, come on. 00:14:13.374 --> 00:14:14.140 I know how to fill-- 00:14:14.207 --> 00:14:16.340 I know how to read instructions and fill this out. 00:14:16.407 --> 00:14:18.865 But the reason is, because if they get a proposal, that's 00:14:18.932 --> 00:14:20.740 awesome, and there's something wrong with it, 00:14:20.807 --> 00:14:22.698 and you didn't read the instructions correctly, 00:14:22.765 --> 00:14:26.180 they can't technically go back and ask you to correct it, 00:14:26.247 --> 00:14:27.895 even if it's a minor glitch. 00:14:27.962 --> 00:14:29.020 So they have to reject you. 00:14:29.087 --> 00:14:31.478 And it's like heartbreaking to do that, because if they do, 00:14:31.545 --> 00:14:32.960 then they'll run the risk of losing 00:14:33.027 --> 00:14:34.210 their pension or other things. 00:14:34.277 --> 00:14:36.220 So that's the number one motivation. 00:14:36.287 --> 00:14:39.960 The second motivation is to not be embarrassed by their decision 00:14:40.027 --> 00:14:41.400 to fund you. 00:14:41.467 --> 00:14:43.920 And I say this also a little bit tongue in cheek, 00:14:43.987 --> 00:14:46.240 but it's really important because if you 00:14:46.307 --> 00:14:49.360 come across as a little bit flippant or not quite 00:14:49.427 --> 00:14:51.180 professional in like the use of funds, 00:14:51.247 --> 00:14:52.540 then it's going to be like, well, you know what? 00:14:52.607 --> 00:14:54.082 There's like 10 other guys behind you 00:14:54.149 --> 00:14:55.720 that I can give money away to. 00:14:55.787 --> 00:14:58.240 Why should I spend a lot of time on this guy? 00:14:58.307 --> 00:15:01.800 And then the third is to fund interesting technologies 00:15:01.867 --> 00:15:03.100 to progress their agenda. 00:15:03.167 --> 00:15:06.480 And there's probably also create jobs and everything else, too. 00:15:06.547 --> 00:15:10.125 So I wanted to lay that out so you understand when you're 00:15:10.192 --> 00:15:11.500 going through this whole process, 00:15:11.567 --> 00:15:12.960 like, why is it so bureaucratic? 00:15:13.027 --> 00:15:14.260 And why do I have to fill out all this stuff? 00:15:14.327 --> 00:15:15.885 And why do I have to fill it out again? 00:15:15.952 --> 00:15:17.680 And why is it taking so long for them 00:15:17.747 --> 00:15:19.420 to make a decision on anything? 00:15:19.487 --> 00:15:20.920 So now, now hopefully you understand 00:15:20.987 --> 00:15:24.080 a little bit of a perspective on their motivations. 00:15:24.147 --> 00:15:27.720 So this is-- 00:15:27.787 --> 00:15:29.180 I like to do a little market study. 00:15:29.247 --> 00:15:32.150 Like what are we talking about here, SBIR program? $4 billion. 00:15:32.217 --> 00:15:36.210 This is just the phase I awards from 2022. 00:15:36.277 --> 00:15:38.990 And I did look to see if there was new information available. 00:15:39.057 --> 00:15:42.330 This is the latest data we have from the federal government. 00:15:42.397 --> 00:15:46.770 And just to give you the idea of how many each agency funds, 00:15:46.837 --> 00:15:50.693 and how much they have obligated, so I said $4 billion. 00:15:50.760 --> 00:15:52.110 For those of you paying attention, 00:15:52.177 --> 00:15:57.370 this is only $838 million, but it is only phase I. 00:15:57.437 --> 00:16:00.290 And you can see here that the Department of Transportation 00:16:00.357 --> 00:16:03.470 funds 12, probably not a big program there. 00:16:03.537 --> 00:16:05.110 They have a pretty small budget. 00:16:05.177 --> 00:16:07.650 And you can see the DOD is the big beast here 00:16:07.717 --> 00:16:09.828 with the maximum amount. 00:16:09.895 --> 00:16:11.370 And also it's interesting just to see 00:16:11.437 --> 00:16:16.810 the Department of Commerce, 39 awards and 39 companies. 00:16:16.877 --> 00:16:18.030 Nobody doubled up. 00:16:18.097 --> 00:16:20.570 But some of these other ones like DOD, there's 00:16:20.637 --> 00:16:23.470 quite a few doubling up there. 00:16:23.537 --> 00:16:25.130 OK, so let's look at the phase II. 00:16:25.197 --> 00:16:26.950 Phase II numbers look pretty similar. 00:16:27.017 --> 00:16:29.650 And this is where you get the $4.4 billion total, 00:16:29.717 --> 00:16:33.290 phase I and phase II. 00:16:33.357 --> 00:16:36.130 You can see the average award size from that from 2022 00:16:36.197 --> 00:16:36.670 as well. 00:16:41.870 --> 00:16:45.210 So hopefully, all you guys saw the notice 00:16:45.277 --> 00:16:46.930 that the prerequisite was to watch 00:16:46.997 --> 00:16:51.410 that video by Ben Schrag of the National Science Foundation. 00:16:51.477 --> 00:16:53.890 If you didn't, you can go back to the calendar, the IEP 00:16:53.957 --> 00:16:55.610 calendar, and click on the link there. 00:16:55.677 --> 00:16:57.210 It's about 20 minutes long. 00:16:57.277 --> 00:17:00.690 It's perfectly-- he just goes through the basic stuff of what 00:17:00.757 --> 00:17:01.513 you got to do. 00:17:01.580 --> 00:17:02.930 He answers all the questions about 00:17:02.997 --> 00:17:05.390 the administrative process, what sites to register with, 00:17:05.457 --> 00:17:06.589 how long does it take? 00:17:06.656 --> 00:17:08.710 And how does the NSF do their applications? 00:17:08.777 --> 00:17:10.470 So as we'll talk about in a second, 00:17:10.537 --> 00:17:13.210 there's a big difference between all these agencies 00:17:13.277 --> 00:17:14.630 and their SBIR offerings. 00:17:18.089 --> 00:17:21.713 We will have next-- this is the intro class. 00:17:21.780 --> 00:17:23.130 And then on Wednesday, we're going 00:17:23.197 --> 00:17:24.329 to do the advanced class where we're 00:17:24.396 --> 00:17:27.180 going to talk about a lot more cool stuff about review process 00:17:27.247 --> 00:17:30.320 and about AI use in application process. 00:17:30.387 --> 00:17:33.000 And Ben has agreed to call in on that. 00:17:33.067 --> 00:17:36.420 So if you guys want to get your questions ready for Ben Schrag, 00:17:36.487 --> 00:17:39.200 he's been at the National Science Foundation for 12 years, 00:17:39.267 --> 00:17:42.420 I think, maybe longer. 00:17:42.487 --> 00:17:46.700 Great guy, and very open to helping out. 00:17:46.767 --> 00:17:49.400 I did send him the registration list of all you guys. 00:17:49.467 --> 00:17:51.320 There's about 70 of you that signed up. 00:17:51.387 --> 00:17:52.800 And he said, very impressive. 00:17:52.867 --> 00:17:56.580 So he's also a nice guy, too. 00:17:56.647 --> 00:17:59.800 So let's talk about the federal funding aspect of it. 00:17:59.867 --> 00:18:03.800 The point that I want to make with this federal funding-- 00:18:03.867 --> 00:18:09.460 and if you don't know, it's like 3.2% of anybody who has extra-- 00:18:09.527 --> 00:18:12.720 any agency that has an extramural R&D budget, blah, 00:18:12.787 --> 00:18:13.790 blah, blah-- 00:18:13.857 --> 00:18:14.540 it doesn't matter. 00:18:14.607 --> 00:18:15.720 As long as you look at the agencies, 00:18:15.787 --> 00:18:17.440 you see how much they've got, that's all that matters. 00:18:17.507 --> 00:18:19.420 But for you to know it's a law that 00:18:19.487 --> 00:18:22.900 was written that says it has to be 3.2% for SBIR. 00:18:22.967 --> 00:18:25.940 And then down here, it's 0.45% for anybody over a billion 00:18:26.007 --> 00:18:27.180 for STTRs. 00:18:27.247 --> 00:18:28.840 And that's the university-focused one, 00:18:28.907 --> 00:18:33.140 and I've got some more detail on that. 00:18:33.207 --> 00:18:37.300 The other thing that I want to go into is that even though 00:18:37.367 --> 00:18:41.300 it's called SBIR, and I call it SBIR because the National 00:18:41.367 --> 00:18:42.800 Science Foundation calls it SBIR, 00:18:42.867 --> 00:18:45.860 and they were the first agency to have this program, 00:18:45.927 --> 00:18:47.860 the DOD guys call it "sih-bur." 00:18:47.927 --> 00:18:51.240 So if you hear that "sih-bur," it's like they pronounce out 00:18:51.307 --> 00:18:51.740 "sih-bur." 00:18:51.807 --> 00:18:55.180 "Sih-bur" and "sit-ur" I think, STTR. 00:18:55.247 --> 00:18:58.960 And that's just an example that says, 00:18:59.027 --> 00:19:01.100 just because it has the same name doesn't mean 00:19:01.167 --> 00:19:02.440 it's the same in all agencies. 00:19:02.507 --> 00:19:04.720 In fact, it's very different across all agencies. 00:19:04.787 --> 00:19:06.340 I think the only thing that's the same 00:19:06.407 --> 00:19:08.960 is the percentage of the budget that's allocated. 00:19:09.027 --> 00:19:11.440 So whatever the DOD's extramural budget is, 00:19:11.507 --> 00:19:13.820 they got to allocate that percentage to that program. 00:19:13.887 --> 00:19:16.280 And then I think it carries the name within the DOD, 00:19:16.347 --> 00:19:18.320 but then how it's implemented is very different. 00:19:18.387 --> 00:19:21.100 And I've got a bunch of slides on that as well. 00:19:21.167 --> 00:19:23.510 So just so you don't know, it's phase I. 00:19:23.577 --> 00:19:25.750 You have to win the phase I in order to qualify 00:19:25.817 --> 00:19:28.030 to apply for the phase II. 00:19:28.097 --> 00:19:30.630 Typically, it's like a 10% to 15% 00:19:30.697 --> 00:19:32.270 success rate on winning the phase I, 00:19:32.337 --> 00:19:34.750 and then it's about a 50% success 00:19:34.817 --> 00:19:37.150 rate on winning the phase II after you've 00:19:37.217 --> 00:19:40.550 completed the work on phase I. 00:19:40.617 --> 00:19:43.170 And then commercialization. 00:19:43.237 --> 00:19:46.155 And so there's federal money at phase I, federal funding 00:19:46.222 --> 00:19:48.530 at phase II, and there's no federal funding at phase III. 00:19:48.597 --> 00:19:49.710 So a lot of people are like, what's 00:19:49.777 --> 00:19:51.090 the point of commercialization? 00:19:51.157 --> 00:19:52.465 The point of commercialization is 00:19:52.532 --> 00:19:54.190 to track the data on how you've performed 00:19:54.257 --> 00:19:57.070 so they can report back later. 00:19:57.137 --> 00:20:00.650 NSF has a similar model, and a lot of programs have this. 00:20:00.717 --> 00:20:02.990 And I just want to point out this phase IIB, which 00:20:03.057 --> 00:20:05.750 is even though I said there's no federal funding at phase III, 00:20:05.817 --> 00:20:08.310 with the exception of phase IIB, which isn't technically 00:20:08.377 --> 00:20:11.030 phase III, but it's shown here on the phase III side. 00:20:11.097 --> 00:20:13.830 It's a 2 to 1 matching of private investment. 00:20:13.897 --> 00:20:17.330 And you have to get at least $1 million of private investment. 00:20:17.397 --> 00:20:19.090 And I actually did this a few years ago, 00:20:19.157 --> 00:20:20.920 so I'm familiar with the process. 00:20:20.987 --> 00:20:24.320 And since we were just talking about nonrecourse and recourse 00:20:24.387 --> 00:20:25.020 funding. 00:20:25.087 --> 00:20:28.080 That million dollars does need to be recourse funding, 00:20:28.147 --> 00:20:31.080 because you can't do things like, hey, I'll just loan myself 00:20:31.147 --> 00:20:33.608 $1 million, get a half million dollars from the NSF 00:20:33.675 --> 00:20:35.900 to match it, and then I'll pay myself back immediately. 00:20:35.967 --> 00:20:37.900 They figured that out. 00:20:37.967 --> 00:20:40.120 So you can't play games like that. 00:20:40.187 --> 00:20:42.640 You actually have to get-- and there are letters of support 00:20:42.707 --> 00:20:44.040 that have to come from the investors that 00:20:44.107 --> 00:20:46.105 show how they actually structured the investment 00:20:46.172 --> 00:20:48.480 and put it into your company so that you can get the half 00:20:48.547 --> 00:20:49.733 a million dollar match. 00:20:49.800 --> 00:20:51.400 And it's up to a half a million dollars. 00:20:51.467 --> 00:20:55.000 So if you only get $250k, you get $125,000 of match from 00:20:55.067 --> 00:20:55.600 the phase IIB. 00:20:59.000 --> 00:21:01.200 Eligibility, for profit. 00:21:01.267 --> 00:21:04.200 You can't be a nonprofit and get SBIR. 00:21:04.267 --> 00:21:06.860 Fewer than 500 employees, owned or controlled by US citizens, 00:21:06.927 --> 00:21:09.680 and a startup or established companies are fine. 00:21:09.747 --> 00:21:10.980 That's all fine and good. 00:21:11.047 --> 00:21:13.620 That's what the law says. 00:21:13.687 --> 00:21:17.120 But let's look at who actually wins them. 00:21:17.187 --> 00:21:18.960 And this is the number of employees. 00:21:19.027 --> 00:21:22.220 This is from FY '01, and it's the DOD winners. 00:21:22.287 --> 00:21:24.080 But it's still relevant today. 00:21:24.147 --> 00:21:26.380 So occasionally, they'll fund a one-person company. 00:21:26.447 --> 00:21:29.000 So if you're one person and you have a crazy idea that you 00:21:29.067 --> 00:21:31.080 want to do, there's a chance. 00:21:31.147 --> 00:21:34.200 More than likely they, want to do 2 to 9 person company. 00:21:34.267 --> 00:21:36.243 That's kind of like the sweet spot. 00:21:36.310 --> 00:21:38.160 Somebody that does the business side, somebody 00:21:38.227 --> 00:21:40.702 that does the technology side, or maybe you're two technology 00:21:40.769 --> 00:21:43.260 nerd founders that happen to be social. 00:21:43.327 --> 00:21:44.002 Social nerds. 00:21:44.069 --> 00:21:44.960 Those are always good-- 00:21:47.760 --> 00:21:48.740 by definition. 00:21:53.440 --> 00:21:54.600 Let's see. 00:21:54.667 --> 00:21:57.640 So this is where I want to really split the SBIR program 00:21:57.707 --> 00:21:59.560 into two parts. 00:21:59.627 --> 00:22:01.360 When you start to dive into the agencies 00:22:01.427 --> 00:22:04.840 to really get the solicitations that you want to apply for, 00:22:04.907 --> 00:22:06.860 I want you to think about them in two buckets. 00:22:06.927 --> 00:22:09.000 One is market-driven agency and the other 00:22:09.067 --> 00:22:10.960 is mission-driven agency. 00:22:11.027 --> 00:22:13.960 So a market-driven agency does not have the customers 00:22:14.027 --> 00:22:16.400 internally to the agency. 00:22:16.467 --> 00:22:19.850 The marketplace is the customer. 00:22:19.917 --> 00:22:22.090 So a great example of a market-driven agency 00:22:22.157 --> 00:22:24.290 is the National Science Foundation or the Department 00:22:24.357 --> 00:22:27.990 of Energy, where they see the technology you have, 00:22:28.057 --> 00:22:31.130 they understand how great it is, but they 00:22:31.197 --> 00:22:33.825 need you to go out and sell it to somebody. 00:22:33.892 --> 00:22:36.450 That's an important distinction between a mission-driven agency 00:22:36.517 --> 00:22:37.910 like the Department of Defense. 00:22:37.977 --> 00:22:40.450 The Department of Defense is like, we're at war. 00:22:40.517 --> 00:22:41.710 We have a theater of war. 00:22:41.777 --> 00:22:44.570 We have immediate needs of super awesome batteries 00:22:44.637 --> 00:22:46.070 for our troops. 00:22:46.137 --> 00:22:47.590 And we are the customers. 00:22:47.657 --> 00:22:51.190 Well, we and all of our defense contractors are the customers. 00:22:51.257 --> 00:22:53.790 So we are going to define exactly what we want. 00:22:53.857 --> 00:22:56.250 So what you find, what this boils down to 00:22:56.317 --> 00:23:00.310 is that in a market-driven agency SBIR program, 00:23:00.377 --> 00:23:04.090 you'll get these kind of like do something in optics. 00:23:04.157 --> 00:23:06.790 Do something cool in optics that customers really love. 00:23:06.857 --> 00:23:09.338 And then you get on the DOD side of things, 00:23:09.405 --> 00:23:11.130 you get things like, we need a battery that 00:23:11.197 --> 00:23:13.297 fits in this pack, that has this kind of temperature 00:23:13.364 --> 00:23:15.430 controls on it, that it will last for this long, 00:23:15.497 --> 00:23:18.910 and only weighs this much, or is below this number of things. 00:23:18.977 --> 00:23:22.750 So it's far more specific in its offering. 00:23:22.817 --> 00:23:24.770 So it becomes a lot more challenging for you 00:23:24.837 --> 00:23:27.450 guys to match kind of whatever you're working on 00:23:27.517 --> 00:23:30.452 with the solicitations on the mission-driven side of things. 00:23:30.519 --> 00:23:31.910 The opportunity, though, of course, 00:23:31.977 --> 00:23:34.610 is if it's harder for you to match, it's harder for everybody 00:23:34.677 --> 00:23:35.150 to match. 00:23:35.217 --> 00:23:38.030 So there's probably fewer competitors in that. 00:23:38.097 --> 00:23:40.030 And in fact, I mean, if you look at the numbers, 00:23:40.097 --> 00:23:43.510 you'll see that in a very specific solicitation, 00:23:43.577 --> 00:23:47.250 if there's a broad offer-- sometimes they have these broad 00:23:47.317 --> 00:23:50.210 announcements where it's like, hey, we want to do something-- 00:23:50.277 --> 00:23:51.990 propose something really cool to us. 00:23:52.057 --> 00:23:54.135 And you find that it's a lot harder 00:23:54.202 --> 00:23:56.010 to win that because there's just so much more 00:23:56.077 --> 00:23:57.670 applications in that space. 00:23:57.737 --> 00:24:01.710 And of course, NASA is a mission-driven agency too, 00:24:01.777 --> 00:24:03.390 because trying to go to Mars, right. 00:24:03.457 --> 00:24:06.778 They're trying to get stuff up in the air. 00:24:06.845 --> 00:24:07.770 AUDIENCE: Steve. 00:24:07.837 --> 00:24:09.478 STEVE DEREZINSKI: Yo. 00:24:09.545 --> 00:24:10.435 AUDIENCE: [INAUDIBLE] 00:24:10.502 --> 00:24:11.810 STEVE DEREZINSKI: Yeah, go ahead. 00:24:11.877 --> 00:24:13.393 AUDIENCE: This is your interpretation, 00:24:13.460 --> 00:24:14.902 or is it on their website somewhere? 00:24:14.969 --> 00:24:16.860 STEVE DEREZINSKI: This is America's Seed Fund's 00:24:16.927 --> 00:24:19.120 interpretation. 00:24:19.187 --> 00:24:23.020 Yeah, that's right from the website. 00:24:23.087 --> 00:24:24.920 And this is also from the NSF website. 00:24:24.987 --> 00:24:25.420 Yes? 00:24:25.487 --> 00:24:26.940 AUDIENCE: Are we going to receive the slides? 00:24:27.007 --> 00:24:27.898 STEVE DEREZINSKI: Yeah. 00:24:27.965 --> 00:24:30.650 I'll post them to the WhatsApp group. 00:24:30.717 --> 00:24:32.900 And I apologize, I blocked out the middle section here 00:24:32.967 --> 00:24:34.400 because it's really old information. 00:24:34.467 --> 00:24:35.520 But this is really good. 00:24:35.587 --> 00:24:39.420 So the other side of it that I wanted to talk about 00:24:39.487 --> 00:24:42.020 is the contract award type. 00:24:42.087 --> 00:24:46.980 And what we've got our Cs and Gs here, Contracts and Grants. 00:24:47.047 --> 00:24:50.580 The difference between a contract and a grant 00:24:50.647 --> 00:24:53.540 is important only in that when you receive 00:24:53.607 --> 00:24:57.220 the funding as a grant, it just becomes kind of-- you 00:24:57.287 --> 00:24:59.820 wrote this scope of work, and we all 00:24:59.887 --> 00:25:02.160 agreed that this is the right thing for you to do. 00:25:02.227 --> 00:25:03.040 Here's the money. 00:25:03.107 --> 00:25:05.220 Go do your scope of work and then 00:25:05.287 --> 00:25:07.820 write us a report when you're all done. 00:25:07.887 --> 00:25:09.440 And you already have all the money, 00:25:09.507 --> 00:25:12.023 so hopefully the money was spent properly and everything else. 00:25:12.090 --> 00:25:13.960 A contract, on the other hand, is OK, 00:25:14.027 --> 00:25:16.860 we agree that this is the work that we want you to do. 00:25:16.927 --> 00:25:18.860 Why don't you go ahead and get started, and here 00:25:18.927 --> 00:25:20.960 are some milestone payments that we're going to make. 00:25:21.027 --> 00:25:23.180 Or it's a reimbursable contract, where you actually 00:25:23.247 --> 00:25:26.740 have to do the work, submit an invoice, and get paid. 00:25:26.807 --> 00:25:29.620 The reason why I make this distinction is because when 00:25:29.687 --> 00:25:32.860 you guys go to apply, when you talk about 00:25:32.927 --> 00:25:34.780 like, why does it take so long for me to get 00:25:34.847 --> 00:25:37.460 this grant approved? 00:25:37.527 --> 00:25:40.680 And it's because once they say, here's your award, 00:25:40.747 --> 00:25:43.660 here's the money, there's not a lot of recourse. 00:25:43.727 --> 00:25:45.620 So there's a lot of due diligence 00:25:45.687 --> 00:25:47.923 up front before you get to that grant point. 00:25:47.990 --> 00:25:49.340 On a contract, there's still going 00:25:49.407 --> 00:25:50.760 to be due diligence up front. 00:25:50.827 --> 00:25:54.340 But once it's engaged, it's kind of like if something happens 00:25:54.407 --> 00:25:56.980 midproject, they can easily pull the plug if they need to, 00:25:57.047 --> 00:25:59.708 and there's not so much money expended on that. 00:25:59.775 --> 00:26:01.500 So that's an important distinction as well, 00:26:01.567 --> 00:26:04.140 that you should take note of as you go through the process 00:26:04.207 --> 00:26:07.180 and decide who you want to review things. 00:26:07.247 --> 00:26:10.410 The review process for a lot of these, No surprise. 00:26:10.477 --> 00:26:12.790 If it's a mission-driven agency, it's 00:26:12.857 --> 00:26:15.270 going to have internal reviewers. 00:26:15.337 --> 00:26:17.303 And if it's a market-driven agency, 00:26:17.370 --> 00:26:18.970 they're going to get external reviewers. 00:26:19.037 --> 00:26:21.950 So that means when you apply for one that's 00:26:22.017 --> 00:26:24.350 a market-driven agency, they have to go and find 00:26:24.417 --> 00:26:26.510 reviewers that aren't conflicting your proposal, 00:26:26.577 --> 00:26:29.230 and that process takes some time. 00:26:29.297 --> 00:26:31.813 But it's also important for you to remember that it's not just 00:26:31.880 --> 00:26:34.230 going to be the program manager that's going to review it, 00:26:34.297 --> 00:26:36.410 it's going to be people who understand the industry. 00:26:36.477 --> 00:26:38.660 And you have an opportunity in the application to say, 00:26:38.727 --> 00:26:40.090 these are our direct competitors. 00:26:40.157 --> 00:26:41.930 Do not get anyone on the review panel from that. 00:26:41.997 --> 00:26:43.610 And they take that extremely seriously. 00:26:43.677 --> 00:26:46.910 So I would include that in your application 00:26:46.977 --> 00:26:49.030 if you're worried about that. 00:26:49.097 --> 00:26:51.070 And then I mentioned the research topics 00:26:51.137 --> 00:26:53.710 are Specific, S, or broad. 00:26:53.777 --> 00:26:55.790 And then whether or not they provide gap funding 00:26:55.857 --> 00:26:58.830 and whether or not the communication can be restricted, 00:26:58.897 --> 00:27:01.490 like specifically on mission, or if it's open. 00:27:01.557 --> 00:27:03.390 So kind of lines up naturally with 00:27:03.457 --> 00:27:09.110 the mission-driven/market-driven balance. 00:27:09.177 --> 00:27:11.510 Any questions on that? 00:27:11.577 --> 00:27:14.990 This is just a more updated view of the real numbers 00:27:15.057 --> 00:27:16.810 of what the agency budget is. 00:27:16.877 --> 00:27:17.750 And this is on-- 00:27:17.817 --> 00:27:21.450 I mean, sbir.gov has a lot of this information automatically, 00:27:21.517 --> 00:27:23.190 but I wanted to give you this information 00:27:23.257 --> 00:27:26.010 and then give you my experience and color on top of it. 00:27:26.077 --> 00:27:29.050 So if you want to go back and redo these slides, 00:27:29.117 --> 00:27:32.530 you can go back to the sbir.gov and get all the data from there. 00:27:37.070 --> 00:27:39.630 One of the strategies we're going to talk about on Wednesday 00:27:39.697 --> 00:27:42.670 is kind of thinking about the timing of things. 00:27:42.737 --> 00:27:46.270 So the benefit of SBIR is you don't give away 00:27:46.337 --> 00:27:48.030 any equity funding. 00:27:48.097 --> 00:27:52.870 But the challenge of SBIR is that time is a vacuum. 00:27:52.937 --> 00:27:55.463 It's like, are you guys done reviewing that yet? 00:27:55.530 --> 00:27:56.130 What's going on? 00:27:56.197 --> 00:27:58.270 There's so many things going on in the world 00:27:58.337 --> 00:27:59.650 of federal government. 00:27:59.717 --> 00:28:02.032 But this is kind of the pace they operate under. 00:28:02.099 --> 00:28:03.990 And if you don't know, the federal government's 00:28:04.057 --> 00:28:06.873 annual budget closes September 30 every year, 00:28:06.940 --> 00:28:08.540 and then a new budget starts October 1-- 00:28:08.607 --> 00:28:10.200 at least it's supposed to. 00:28:10.267 --> 00:28:12.240 And typically, a lot of these processes 00:28:12.307 --> 00:28:15.480 are driven towards making sure that all the awards are 00:28:15.547 --> 00:28:18.120 allocated by September 30. 00:28:18.187 --> 00:28:18.700 Not always. 00:28:18.767 --> 00:28:20.520 Sometimes they spill over. 00:28:20.587 --> 00:28:24.120 But if you think about how these solicitations come out, 00:28:24.187 --> 00:28:25.975 and when you want to apply for them, 00:28:26.042 --> 00:28:28.600 just keep these things in mind, because the last thing you want 00:28:28.667 --> 00:28:31.003 to do is say, oh, I'm ready to apply for that NIH grant, 00:28:31.070 --> 00:28:33.420 and like, oh, well, the window just closed like last week, 00:28:33.487 --> 00:28:35.280 so now I've got to wait another six months or something to do 00:28:35.347 --> 00:28:36.400 that. 00:28:36.467 --> 00:28:38.200 As you think about these dates, we 00:28:38.267 --> 00:28:41.060 can also talk about applying to multiple ones, 00:28:41.127 --> 00:28:43.960 so you can see how they ramp up and whether or not 00:28:44.027 --> 00:28:46.528 you want to hear from one before you apply to another one. 00:28:46.595 --> 00:28:47.820 I usually don't recommend that. 00:28:47.887 --> 00:28:51.420 I usually just recommend you just go for it. 00:28:51.487 --> 00:28:51.920 Yeah. 00:28:55.260 --> 00:28:55.760 Yep? 00:28:55.827 --> 00:28:57.320 AUDIENCE: Can you talk more about those three stages? 00:28:57.387 --> 00:28:58.640 STEVE DEREZINSKI: Oh yeah. 00:28:58.707 --> 00:28:59.480 Yeah. 00:28:59.547 --> 00:29:03.080 So specifically for the DOE and DOD, and some of the ones 00:29:03.147 --> 00:29:04.730 that are mission driven, they're going 00:29:04.797 --> 00:29:06.950 to have very specific topics or solicitations. 00:29:07.017 --> 00:29:10.150 I mean, topic and solicitation are kind of the same word. 00:29:10.217 --> 00:29:13.370 And they do what's called a prerelease, so the yellow 00:29:13.437 --> 00:29:15.450 and the green areas. 00:29:15.517 --> 00:29:18.490 They'll send out kind of these are the solicitations that we 00:29:18.557 --> 00:29:21.330 want to officially open on the official date 00:29:21.397 --> 00:29:24.210 when the green bar turns-- when it turns fully green. 00:29:24.277 --> 00:29:27.760 And that's to test market their solicitation ideas. 00:29:27.827 --> 00:29:30.010 Sometimes they pull them back because they realize oh, 00:29:30.077 --> 00:29:33.890 somebody else-- like I think, frankly, inside the DOD-- 00:29:33.957 --> 00:29:35.410 I don't know this for a fact, but I 00:29:35.477 --> 00:29:37.570 think what happens inside the DOD is they post solicitations, 00:29:37.637 --> 00:29:39.630 and then some other agency over here is like, 00:29:39.697 --> 00:29:41.190 hey, we already have that solved. 00:29:41.257 --> 00:29:43.830 You don't need to fund that. 00:29:43.897 --> 00:29:45.740 Because there's such a gigantic operation, 00:29:45.807 --> 00:29:47.490 they don't necessarily talk to each other. 00:29:47.557 --> 00:29:49.550 So there's all kinds of things like that. 00:29:49.617 --> 00:29:51.592 So that's why they have a presolicitation period. 00:29:51.659 --> 00:29:52.910 And then when it's open-- 00:29:52.977 --> 00:29:56.170 so I should say that when the topic is-- 00:29:56.237 --> 00:29:59.250 when it's like on prerelease, or if it's a topic release, 00:29:59.317 --> 00:30:01.730 you have the opportunity to talk to the program manager 00:30:01.797 --> 00:30:04.010 directly and talk about the solicitation a lot 00:30:04.077 --> 00:30:05.170 more freely and openly. 00:30:05.237 --> 00:30:07.870 As soon as it's locked down, they say, 00:30:07.937 --> 00:30:09.370 you can't ask me any more questions. 00:30:09.437 --> 00:30:12.210 Or any questions you ask have to be publicly posted so everybody 00:30:12.277 --> 00:30:13.433 can see all the questions. 00:30:13.500 --> 00:30:14.850 So that's kind of your opportunity 00:30:14.917 --> 00:30:17.730 to talk to them about specific issues you might have 00:30:17.797 --> 00:30:19.270 or specific opportunities. 00:30:19.337 --> 00:30:19.870 Yes, sir? 00:30:19.937 --> 00:30:24.930 AUDIENCE: [INAUDIBLE] as two different ones, 00:30:24.997 --> 00:30:28.650 would you apply-- is there a way to apply to both the R&D 00:30:28.717 --> 00:30:32.450 contracts or the other option? 00:30:32.517 --> 00:30:33.970 STEVE DEREZINSKI: Good question. 00:30:34.037 --> 00:30:36.290 All of these things are constantly changing. 00:30:36.357 --> 00:30:38.850 So I like to take the approach, especially 00:30:38.917 --> 00:30:41.130 for stuff that takes a long time, to just 00:30:41.197 --> 00:30:44.170 be aggressive, and like, apply for as many as you can 00:30:44.237 --> 00:30:45.350 and then pull them back. 00:30:45.417 --> 00:30:46.470 I know a lot of people are like, oh, 00:30:46.537 --> 00:30:48.595 that's a lot of extra work for potentially no gain. 00:30:48.662 --> 00:30:53.090 But you'd rather be in the game and then decide to not play 00:30:53.157 --> 00:30:56.090 than to just like step aside from the beginning. 00:30:56.157 --> 00:30:59.673 AUDIENCE: Is there any penalty for applying multiple? 00:30:59.740 --> 00:31:01.840 STEVE DEREZINSKI: We'll get into that in one second. 00:31:01.907 --> 00:31:04.740 There is some certain-- there's some federal laws 00:31:04.807 --> 00:31:06.500 that you have to be aware of. 00:31:06.567 --> 00:31:08.820 As I said, you don't want to go to jail, 00:31:08.887 --> 00:31:13.100 and your program manager doesn't want to lose their job. 00:31:13.167 --> 00:31:13.600 Yeah. 00:31:13.667 --> 00:31:17.100 And actually specifically to that point, 00:31:17.167 --> 00:31:21.020 eligibility-- and usually I do this talk for MIT students 00:31:21.087 --> 00:31:23.080 that are currently in school, or maybe a postdoc, 00:31:23.147 --> 00:31:25.040 so you have a current situation right now, 00:31:25.107 --> 00:31:26.582 but you're looking to start a company 00:31:26.649 --> 00:31:28.500 and you want to apply for one of these things. 00:31:28.567 --> 00:31:32.100 Eligibility is determined at the time of award, which is not 00:31:32.167 --> 00:31:33.913 the time that you submit the proposal, 00:31:33.980 --> 00:31:35.580 and it's not the time that you hear back 00:31:35.647 --> 00:31:36.680 from them on the reviewers. 00:31:36.747 --> 00:31:38.555 And it's not the time that they're asking you 00:31:38.622 --> 00:31:39.960 for due diligence questions. 00:31:40.027 --> 00:31:43.220 It is the time of award that you have to be employed, 00:31:43.287 --> 00:31:45.360 or whatever you say in your application. 00:31:45.427 --> 00:31:48.580 And it's totally fine for you to say, I'm at the university, 00:31:48.647 --> 00:31:51.180 and my plan is to start a company once I get out, 00:31:51.247 --> 00:31:53.180 and I'm applying for this, and here's the team 00:31:53.247 --> 00:31:55.620 that I've put together. 00:31:55.687 --> 00:31:56.940 That's important. 00:31:57.007 --> 00:32:00.245 The other one is the PI is not required to have a PhD or MD. 00:32:00.312 --> 00:32:01.620 A lot of people think that's true 00:32:01.687 --> 00:32:05.780 because the data shows that often the PI has a PhD 00:32:05.847 --> 00:32:09.220 or MD, because they're required to have expertise and oversee 00:32:09.287 --> 00:32:11.640 the scientific, and technically, the project. 00:32:11.707 --> 00:32:15.760 You have a statement of work, you have your R&D plan, 00:32:15.827 --> 00:32:18.400 and somebody has to oversee and manage all of that stuff. 00:32:18.467 --> 00:32:21.860 And if they're not technically kind of well 00:32:21.927 --> 00:32:24.200 known within that space that you're doing the work in, 00:32:24.267 --> 00:32:26.040 then you're not really qualified. 00:32:26.107 --> 00:32:28.640 So typically, the easiest way to do that is to have a PhD. 00:32:28.707 --> 00:32:31.560 But it's not required. 00:32:31.627 --> 00:32:33.175 So this is to your question. 00:32:33.242 --> 00:32:35.300 Applications may be submitted to different agencies 00:32:35.367 --> 00:32:37.500 for different work-- for similar work. 00:32:37.567 --> 00:32:40.940 But you cannot get an award from different agency for duplicate 00:32:41.007 --> 00:32:41.440 projects. 00:32:41.507 --> 00:32:43.920 In fact, that last bullet lands you in jail. 00:32:43.987 --> 00:32:46.580 So it doesn't really give it much-- 00:32:46.647 --> 00:32:48.420 that's really bad. 00:32:48.487 --> 00:32:51.580 When you apply to multiple different agencies 00:32:51.647 --> 00:32:54.400 for the similar stuff, it specifically asks you, 00:32:54.467 --> 00:32:56.790 have you applied to other stuff? 00:32:56.857 --> 00:33:01.230 And there's a strategy that we can talk about on Wednesday. 00:33:01.297 --> 00:33:03.710 But I will just tell you, I don't usually 00:33:03.777 --> 00:33:06.690 recommend doing that unless there's a lot of synergy, 00:33:06.757 --> 00:33:09.390 unless it totally makes sense that the NIH has 00:33:09.457 --> 00:33:12.190 this cool thing, and I need the NSF to fund some software 00:33:12.257 --> 00:33:14.070 part of this biotech. 00:33:14.137 --> 00:33:16.590 Like if you have some related technology, 00:33:16.657 --> 00:33:18.517 and you want to really be aggressive and apply 00:33:18.584 --> 00:33:20.350 for both of them to fund two different parts 00:33:20.417 --> 00:33:22.790 of the same product, that you can put things together 00:33:22.857 --> 00:33:24.470 like that. 00:33:24.537 --> 00:33:28.150 So you can totally apply the same technology 00:33:28.217 --> 00:33:29.330 to two different agencies. 00:33:29.397 --> 00:33:30.997 You have to disclose it to both of them. 00:33:31.064 --> 00:33:33.570 And once you get under award, you have to make a decision, 00:33:33.637 --> 00:33:35.790 am I going to take that one or that one? 00:33:35.857 --> 00:33:39.070 So I mean, I guess you're upping your game. 00:33:39.137 --> 00:33:42.650 If it's a 15% success, then you got two of the same thing, 00:33:42.717 --> 00:33:44.170 then maybe it's 30% success. 00:33:44.237 --> 00:33:44.972 Yes, sir? 00:33:45.039 --> 00:33:46.930 AUDIENCE: First point [INAUDIBLE] on the board. 00:33:46.997 --> 00:33:49.910 I really struggled with the answer to this. 00:33:49.977 --> 00:33:53.070 You have to have an incorporated company when 00:33:53.137 --> 00:33:54.650 you submit the application? 00:33:57.310 --> 00:34:00.390 STEVE DEREZINSKI: So if you watch Ben's video, 00:34:00.457 --> 00:34:05.070 you have to register with all of those agencies. 00:34:05.137 --> 00:34:06.630 And I think part of that registration 00:34:06.697 --> 00:34:09.090 means you have to have some kind of an entity. 00:34:09.157 --> 00:34:11.804 It can be your own sole source, Schedule C company. 00:34:11.871 --> 00:34:13.929 So you can do it under your Social Security number. 00:34:13.996 --> 00:34:15.429 AUDIENCE: That's what we're saying-- 00:34:15.496 --> 00:34:17.870 so then following up on that, you might-- 00:34:17.937 --> 00:34:21.030 for students and postdocs, how do you 00:34:21.097 --> 00:34:24.150 recommend people navigate incorporating and dealing 00:34:24.217 --> 00:34:27.389 with the conflict of interest office at institutes? 00:34:27.456 --> 00:34:29.670 Something that I've really butted 00:34:29.737 --> 00:34:31.699 heads here-- or not butted heads, 00:34:31.766 --> 00:34:33.449 but it seems really difficult to navigate. 00:34:33.516 --> 00:34:34.949 STEVE DEREZINSKI: OK, so I'm going to repeat that question, 00:34:35.016 --> 00:34:36.489 and then I'm going to not answer it. 00:34:36.556 --> 00:34:38.697 So the question was, how do you navigate the conflict 00:34:38.764 --> 00:34:39.590 of interest office? 00:34:39.657 --> 00:34:40.810 That's really challenging. 00:34:40.877 --> 00:34:43.270 And that's a subject of the lab you're in, 00:34:43.337 --> 00:34:45.815 the department that you're in. 00:34:45.882 --> 00:34:47.690 Some departments are like, hey, that's great. 00:34:47.757 --> 00:34:48.770 That's kind of what we want to do. 00:34:48.837 --> 00:34:49.969 Other ones are like, no, no, no. 00:34:50.036 --> 00:34:51.770 We have plans to commercialize that already. 00:34:51.837 --> 00:34:53.103 You can't take that on your own. 00:34:53.170 --> 00:34:56.400 So it becomes this huge, huge challenge. 00:34:56.467 --> 00:34:58.160 So I don't have a good answer to you. 00:34:58.227 --> 00:35:00.552 I think it's always difficult. We're 00:35:00.619 --> 00:35:02.760 trying to get technology commercialized here, and not 00:35:02.827 --> 00:35:04.960 deal with politics, but unfortunately, humans 00:35:05.027 --> 00:35:06.200 are involved in everything, so there's always 00:35:06.267 --> 00:35:07.075 going to be politics. 00:35:07.142 --> 00:35:08.440 Yes, sir? 00:35:08.507 --> 00:35:11.680 AUDIENCE: I would like to ask about the PI. 00:35:11.747 --> 00:35:16.440 Do you mean to be national permanent resident in the United 00:35:16.507 --> 00:35:17.400 States? 00:35:17.467 --> 00:35:20.413 Or can it be can it be under a visa? 00:35:20.480 --> 00:35:22.080 STEVE DEREZINSKI: So I'm going to answer 00:35:22.147 --> 00:35:23.620 that question in two ways. 00:35:23.687 --> 00:35:26.520 And I'm totally going to caveat it, meaning I could be wrong. 00:35:26.587 --> 00:35:30.240 But the company itself, as I mentioned in the eligibility 00:35:30.307 --> 00:35:34.120 stuff, has to be 51% owned by US citizens or permanent residents. 00:35:34.187 --> 00:35:39.520 The PI, the work needs to be done inside the United States 00:35:39.587 --> 00:35:41.020 for most agencies. 00:35:41.087 --> 00:35:43.800 And I've seen some exceptions to this sometimes, 00:35:43.867 --> 00:35:47.020 but it's been kind of weird, and I didn't really understand. 00:35:47.087 --> 00:35:49.880 Like I've got a guy who's going to be in Israel for the summer, 00:35:49.947 --> 00:35:51.320 and he wants to do some-- 00:35:51.387 --> 00:35:54.580 he's not a US citizen, but he's one of these key guys. 00:35:54.647 --> 00:35:57.200 So that's a hard question. 00:35:57.267 --> 00:36:00.440 Good, hard question, which I don't have the answer to. 00:36:00.507 --> 00:36:03.040 Yeah. 00:36:03.107 --> 00:36:05.597 So one quick thing on SBIR versus STTR, 00:36:05.664 --> 00:36:07.680 I don't want to go too far into this because we'll 00:36:07.747 --> 00:36:09.060 talk about that on Wednesday. 00:36:09.127 --> 00:36:14.880 But the SBIR permits you to have a research institution partner. 00:36:14.947 --> 00:36:18.000 And the STTR requires you to have a research institute 00:36:18.067 --> 00:36:18.800 partner. 00:36:18.867 --> 00:36:20.840 So I've done both. 00:36:20.907 --> 00:36:23.520 I can tell you that the overhead associated 00:36:23.587 --> 00:36:25.187 with engaging with the university, kind 00:36:25.254 --> 00:36:27.020 of to your point about conflict of interest, 00:36:27.087 --> 00:36:30.400 how do you resolve that, how do you get a clean license, 00:36:30.467 --> 00:36:31.660 becomes very challenging. 00:36:31.727 --> 00:36:35.140 So I know we're sitting here at MIT-- love MIT. 00:36:35.207 --> 00:36:39.940 I think if you took a $300,000 phase I and you took 30% of it, 00:36:40.007 --> 00:36:42.640 which is like $90k and you gave it to MIT, 00:36:42.707 --> 00:36:45.840 it would quickly cut down to about $45k, 00:36:45.907 --> 00:36:50.070 maybe even less for the actual researcher to do the work. 00:36:50.137 --> 00:36:53.190 So it becomes really challenging to do that, 00:36:53.257 --> 00:36:56.557 unless if you really want to engage a university, 00:36:56.624 --> 00:36:58.890 and they have some fantastic equipment or some fantastic 00:36:58.957 --> 00:37:01.550 people that you can't get access to otherwise, in which case, 00:37:01.617 --> 00:37:05.347 you can view that kind of process as table stakes. 00:37:05.414 --> 00:37:06.930 If you want to get in the game and you 00:37:06.997 --> 00:37:08.890 want to use this great equipment, then that's the-- 00:37:08.957 --> 00:37:11.432 I mean, that's the reason why we're here, because they have-- 00:37:11.499 --> 00:37:13.270 it's not cheap to run this place. 00:37:13.337 --> 00:37:16.670 So what I usually recommend people do, 00:37:16.737 --> 00:37:18.470 if you do want to engage in a university, 00:37:18.537 --> 00:37:21.130 is to apply for an SBIR, and then 00:37:21.197 --> 00:37:24.050 you can actually take 33% of the phase I 00:37:24.117 --> 00:37:26.383 and outsource it to your research institute if you want. 00:37:26.450 --> 00:37:28.425 And you can do that through consulting agreements 00:37:28.492 --> 00:37:30.610 and other things that are a little bit easier to get 00:37:30.677 --> 00:37:31.175 through. 00:37:31.242 --> 00:37:33.050 But you probably still have the same conflict 00:37:33.117 --> 00:37:35.290 of interest challenge with that one as well. 00:37:35.357 --> 00:37:37.470 The award is always made to the small business. 00:37:37.537 --> 00:37:39.130 So that's a great thing, because then 00:37:39.197 --> 00:37:41.250 that puts you in control of receiving the funds 00:37:41.317 --> 00:37:42.958 and then paying the university as opposed 00:37:43.025 --> 00:37:46.150 to begging the university to make its payments. 00:37:46.217 --> 00:37:47.700 Yes, sir? 00:37:47.767 --> 00:37:49.980 AUDIENCE: I've seen some SBIRs where 00:37:50.047 --> 00:37:52.360 there's a clear difference with the STTR. 00:37:52.427 --> 00:37:55.947 so the STTR is like 30% more. 00:37:56.014 --> 00:37:58.280 STEVE DEREZINSKI: Oh, like the award amount is 30% more? 00:37:58.347 --> 00:37:58.905 AUDIENCE: Yeah. 00:37:58.972 --> 00:38:02.180 Like you make 70% or something, and then they put in more-- 00:38:02.247 --> 00:38:03.500 30% more. 00:38:03.567 --> 00:38:06.278 But I've seen others where it's like you choose, 00:38:06.345 --> 00:38:07.320 but it's the same budget. 00:38:07.387 --> 00:38:11.240 So it's kind of like, OK, to go the SBIR route. 00:38:11.307 --> 00:38:15.260 But at the same time, I've heard that you're 00:38:15.327 --> 00:38:20.980 more likely to get awarded if you have an STTR. 00:38:21.047 --> 00:38:21.743 What's your take? 00:38:21.810 --> 00:38:22.660 STEVE DEREZINSKI: Yes. 00:38:22.727 --> 00:38:27.040 So you took the words right out of my mouth. 00:38:27.107 --> 00:38:29.780 So it is more challenging to get an STTR, but the same thing 00:38:29.847 --> 00:38:32.452 I was saying earlier, if there's more hoops to jump through, 00:38:32.519 --> 00:38:34.660 there's going to be far fewer applicants because most 00:38:34.727 --> 00:38:36.600 people are going to be like, forget this. 00:38:36.667 --> 00:38:39.420 And then, in fact, I've heard rumors 00:38:39.487 --> 00:38:42.660 that there's a lot of sources of funding 00:38:42.727 --> 00:38:45.820 that have to go into STTR, they just 00:38:45.887 --> 00:38:48.413 can't get anybody to apply for, because it's just 00:38:48.480 --> 00:38:50.080 not a lot of money and it's challenging. 00:38:50.147 --> 00:38:53.380 So it's like if one person applies for it, they'll win it. 00:38:53.447 --> 00:38:55.640 I mean, it's got to be meritorious and all that stuff. 00:38:55.707 --> 00:38:58.223 It can't be-- I'm not talking about just like putting together 00:38:58.290 --> 00:38:59.160 a napkin or anything. 00:38:59.227 --> 00:39:01.580 AUDIENCE: [INAUDIBLE] the same for phase 2 00:39:01.647 --> 00:39:03.526 or phase [INAUDIBLE]? 00:39:03.593 --> 00:39:05.526 STEVE DEREZINSKI: Well, you have to have a phase 00:39:05.593 --> 00:39:07.280 1 to get a phase 2. 00:39:07.347 --> 00:39:08.700 So however you came into phase 1-- 00:39:08.767 --> 00:39:10.540 if it's SBIR, STTR-- then that would 00:39:10.607 --> 00:39:12.240 define how you go to phase 2. 00:39:12.307 --> 00:39:13.300 AUDIENCE: Thank you. 00:39:13.367 --> 00:39:15.900 AUDIENCE: So we heard this. 00:39:15.967 --> 00:39:19.400 We are in an SBIR right now, and it's phase 1. 00:39:19.467 --> 00:39:21.400 And then it seems like we can apply for phase 2. 00:39:21.467 --> 00:39:22.660 We got the invitation. 00:39:22.727 --> 00:39:25.660 But then someone came from an institution 00:39:25.727 --> 00:39:29.787 and said, no, you have to go with the institution. 00:39:29.854 --> 00:39:32.120 And we were like, well, but this is an SBIR [INAUDIBLE]. 00:39:32.187 --> 00:39:35.580 We were not sure that we could even migrate to an STTR. 00:39:35.647 --> 00:39:37.220 It made up in a matter of budget. 00:39:37.287 --> 00:39:39.900 STEVE DEREZINSKI: Yeah, I'm not sure, I'm not sure. 00:39:39.967 --> 00:39:43.870 But, I mean, that situation, there's 00:39:43.937 --> 00:39:45.290 a lot of those situations. 00:39:45.357 --> 00:39:47.890 So you've got the SBIR program and the STTR program. 00:39:47.957 --> 00:39:49.670 And-- excuse me-- as I said, they 00:39:49.737 --> 00:39:52.030 get whittled down and converted into however 00:39:52.097 --> 00:39:53.330 the agency wants to run them. 00:39:53.397 --> 00:39:55.830 So it may be that there's a specific challenge that somebody 00:39:55.897 --> 00:39:58.288 has in a department and that they need this funding to do-- 00:39:58.355 --> 00:39:59.310 I don't know. 00:39:59.377 --> 00:40:02.030 So that may be what you're running into. 00:40:02.097 --> 00:40:07.430 So I wanted to go into the proposal submission details, 00:40:07.497 --> 00:40:10.590 how to win these things. 00:40:10.657 --> 00:40:13.930 And it's typically a 25-page proposal. 00:40:13.997 --> 00:40:17.070 They usually don't accept unsolicited proposals. 00:40:17.137 --> 00:40:19.070 And they evaluate it, number one, 00:40:19.137 --> 00:40:20.450 based on the technical merit. 00:40:20.517 --> 00:40:23.210 So you guys are going to love this if you're a technical nerd. 00:40:23.277 --> 00:40:26.350 And then, number two, on the other commercial merit 00:40:26.417 --> 00:40:29.390 and the firm's qualifications. 00:40:29.457 --> 00:40:30.630 I will say that-- 00:40:30.697 --> 00:40:31.630 I say this to all the-- 00:40:31.697 --> 00:40:34.050 I'm going to do a lecture on the nuts and bolts class too. 00:40:34.117 --> 00:40:38.550 But a lot of times, I do some mentoring at MIT for student 00:40:38.617 --> 00:40:40.430 project teams, and a lot of times, 00:40:40.497 --> 00:40:43.530 when people look at grant programs or awards, 00:40:43.597 --> 00:40:46.450 and they're like, well, we could get this award for $5,000. 00:40:46.517 --> 00:40:49.048 Yeah, but we need 300 grand to do this thing. 00:40:49.115 --> 00:40:50.590 What's the point in doing that award? 00:40:50.657 --> 00:40:52.750 If you're a team that's just getting together 00:40:52.817 --> 00:40:54.650 and you're just a bunch of individuals, 00:40:54.717 --> 00:40:58.130 if you can do something together under a cohesive unit and say, 00:40:58.197 --> 00:41:00.350 we won this award as a team, that kind of 00:41:00.417 --> 00:41:02.310 adds credibility to this next phase, which 00:41:02.377 --> 00:41:04.350 is kind of like-- we're talking about the firm's qualifications, 00:41:04.417 --> 00:41:04.870 right? 00:41:04.937 --> 00:41:06.870 Well, if you just come in with three people that 00:41:06.937 --> 00:41:08.030 just put the firm together, the firm 00:41:08.097 --> 00:41:09.363 doesn't have any qualifications. 00:41:09.430 --> 00:41:11.870 It's just three guys that decided to come together and put 00:41:11.937 --> 00:41:13.950 a name on top of our heads. 00:41:14.017 --> 00:41:16.350 So I would say I wouldn't necessarily 00:41:16.417 --> 00:41:18.010 pooh-pooh some of the smaller ones, 00:41:18.077 --> 00:41:22.550 just to give you guys a chance to put together a business. 00:41:22.617 --> 00:41:24.350 Yeah, OK, let me keep going here. 00:41:24.417 --> 00:41:27.350 So this is directly from the National Science Foundation 00:41:27.417 --> 00:41:30.447 research.gov proposal preparation process. 00:41:30.514 --> 00:41:32.030 There's a whole bunch of stuff in here 00:41:32.097 --> 00:41:34.072 that you guys can all figure out how to fill out. 00:41:34.139 --> 00:41:35.330 It's all details around it. 00:41:35.397 --> 00:41:38.310 But what I wanted to focus on was the project description, 00:41:38.377 --> 00:41:39.740 and then the letters of support. 00:41:39.807 --> 00:41:41.860 And this is specific to the National Science Foundation. 00:41:41.927 --> 00:41:43.720 These two areas are the most important things for you 00:41:43.787 --> 00:41:45.260 to spend most of your time on. 00:41:45.327 --> 00:41:48.720 Everything else, you should be able to just plug and chug. 00:41:48.787 --> 00:41:51.960 I mean, read the instructions and do it correctly, of course. 00:41:52.027 --> 00:41:54.663 So a project description is 15 pages. 00:41:54.730 --> 00:41:57.080 It has an elevator pitch, it has a commercial opportunity, 00:41:57.147 --> 00:42:01.080 company and team, a technical solution and a technical merits 00:42:01.147 --> 00:42:02.100 R&D plan. 00:42:02.167 --> 00:42:05.800 So this is for a phase I. This is the first time 00:42:05.867 --> 00:42:10.200 that an agency would fund this project or this technology. 00:42:10.267 --> 00:42:12.280 So the focus of a lot of the work 00:42:12.347 --> 00:42:14.760 needs to be on the technology solution and the technology 00:42:14.827 --> 00:42:15.865 merits R&D plan. 00:42:15.932 --> 00:42:17.240 So there's a bunch of other stuff 00:42:17.307 --> 00:42:19.198 that we put together, right-- commercialization 00:42:19.265 --> 00:42:20.600 and all kinds of ideas. 00:42:20.667 --> 00:42:24.160 At the phase 1 level, it should be a technology demonstration 00:42:24.227 --> 00:42:24.660 project. 00:42:24.727 --> 00:42:27.260 So you don't necessarily know who the customer is. 00:42:27.327 --> 00:42:28.760 You probably have some ideas, so you 00:42:28.827 --> 00:42:33.000 want to talk kind of through who could potentially use this. 00:42:33.067 --> 00:42:35.960 But you really want to focus on the technology differentiators 00:42:36.027 --> 00:42:36.780 at that phase. 00:42:39.480 --> 00:42:40.960 And then letters of support. 00:42:43.960 --> 00:42:46.560 Good letters of support are customers 00:42:46.627 --> 00:42:48.120 who would buy after phase 1. 00:42:48.187 --> 00:42:50.018 So if you can figure out how to explain 00:42:50.085 --> 00:42:52.560 what your technology does and you've got a good customer that 00:42:52.627 --> 00:42:53.768 says, that looks interesting. 00:42:53.835 --> 00:42:56.340 I would buy it if it were reduced to practice in this way. 00:42:56.407 --> 00:42:57.720 That would be great. 00:42:57.787 --> 00:42:59.860 Investors with serious interest in the outcomes. 00:42:59.927 --> 00:43:03.380 That means we read their business plan. 00:43:03.447 --> 00:43:04.900 We love what they're trying to do. 00:43:04.967 --> 00:43:07.520 We see a huge opportunity in the marketplace. 00:43:07.587 --> 00:43:10.340 But they have some significant technical challenges, 00:43:10.407 --> 00:43:11.880 and they are just the team to do it. 00:43:11.947 --> 00:43:15.080 That would be the ideal letter of support from an investor, 00:43:15.147 --> 00:43:18.480 and proving that they actually know what they're doing. 00:43:18.547 --> 00:43:20.160 And then partners who would invest 00:43:20.227 --> 00:43:21.380 after a successful outcome. 00:43:21.447 --> 00:43:24.240 So if you need a path to market and you 00:43:24.307 --> 00:43:26.000 need a serious couple of partners 00:43:26.067 --> 00:43:27.860 in order to get to that marketplace, 00:43:27.927 --> 00:43:30.240 those guys along the way saying that you talked to them 00:43:30.307 --> 00:43:31.960 is a great letter of support. 00:43:32.027 --> 00:43:34.320 So what are bad letters of support? 00:43:34.330 --> 00:43:36.830 There's way too many consultants who get paid from the fund, 00:43:36.897 --> 00:43:39.130 and it's kind of like what's the point in telling me 00:43:39.197 --> 00:43:40.430 you support this project? 00:43:40.497 --> 00:43:42.430 Of course you do, right? 00:43:42.497 --> 00:43:44.430 An investor with no knowledge of the technology. 00:43:44.497 --> 00:43:45.730 So some people are just like, yeah, you 00:43:45.797 --> 00:43:46.830 should fund these guys. 00:43:46.897 --> 00:43:48.075 They're a friend of mine. 00:43:48.142 --> 00:43:49.450 And then a senator or congressman 00:43:49.517 --> 00:43:51.890 who want to support the companies in their district. 00:43:51.957 --> 00:43:53.410 There's plenty of these. 00:43:53.477 --> 00:43:56.310 I don't recommend them, but they don't hurt. 00:43:56.377 --> 00:43:58.190 So if you want to do them, that's fine. 00:43:58.257 --> 00:44:00.190 I mean, I consider them a bad letter of support, 00:44:00.257 --> 00:44:02.890 but maybe this is Steve's opinion here. 00:44:02.957 --> 00:44:05.530 OK, questions? 00:44:05.597 --> 00:44:10.450 Oh, sorry, I had to take this spam likely or scam likely call. 00:44:10.517 --> 00:44:12.190 Questions on any of that stuff so far? 00:44:15.785 --> 00:44:16.410 AUDIENCE: Yeah. 00:44:16.477 --> 00:44:18.570 So [INAUDIBLE]. 00:44:21.890 --> 00:44:23.892 The question is [INAUDIBLE] speak Spanish? 00:44:23.959 --> 00:44:24.850 STEVE DEREZINSKI: Yeah. 00:44:24.917 --> 00:44:26.592 AUDIENCE: case 1 and then 50% case 2. 00:44:26.659 --> 00:44:27.550 STEVE DEREZINSKI: Yeah. 00:44:27.617 --> 00:44:31.090 AUDIENCE: Is that to outsource the research institute up 00:44:31.157 --> 00:44:33.252 to that point after that markup? 00:44:33.319 --> 00:44:34.210 STEVE DEREZINSKI: Yeah. 00:44:34.277 --> 00:44:35.710 So good question. 00:44:38.230 --> 00:44:40.330 So on the SBIR side of things, you 00:44:40.397 --> 00:44:43.610 can only outsource a maximum of 33% for the phase 1 00:44:43.677 --> 00:44:46.070 to an outside research institute partner. 00:44:46.137 --> 00:44:50.610 In other words, 66% of the technology and the innovation 00:44:50.677 --> 00:44:52.310 has to be with the small business firm. 00:44:52.377 --> 00:44:53.930 That's the reason why it's an SBIR. 00:44:53.997 --> 00:44:56.708 When it's an STTR, some of the technology expertise 00:44:56.775 --> 00:44:58.250 can be with a company but a lot of it 00:44:58.317 --> 00:44:59.810 is probably at the university, which 00:44:59.877 --> 00:45:04.690 is why there's a minimum 30% for the research institution. 00:45:04.757 --> 00:45:08.290 Which means the small business, it gets 70%. 00:45:08.357 --> 00:45:11.070 And then the 40%-- 00:45:11.137 --> 00:45:12.847 So there's some gap between those two. 00:45:12.914 --> 00:45:14.430 If you hit the minimums on both sides, 00:45:14.497 --> 00:45:16.310 you have some gap to fund other things. 00:45:16.377 --> 00:45:19.590 But that has to be in the budget. 00:45:19.657 --> 00:45:22.270 So a lot of times it helps with negotiation. 00:45:22.337 --> 00:45:24.750 So if you're engaged with the National Lab, for example-- 00:45:24.817 --> 00:45:28.100 I've done a bunch of work with DOE's National Labs. 00:45:28.167 --> 00:45:31.300 You kind of go through the-- you don't have 00:45:31.367 --> 00:45:32.480 to worry about negotiating. 00:45:32.547 --> 00:45:34.772 You'll just be like, well, this is defined in the SBIR. 00:45:34.839 --> 00:45:37.620 That's how much we're going to do. 00:45:37.687 --> 00:45:43.520 AUDIENCE: The STTR, the 40% is for the small business concern. 00:45:43.587 --> 00:45:46.162 Is that a maximum or is that a minimum? 00:45:46.229 --> 00:45:48.620 STEVE DEREZINSKI: That's the minimum for the small business 00:45:48.687 --> 00:45:50.825 concern, and 30% for the research institution. 00:45:50.892 --> 00:45:51.700 AUDIENCE: [INAUDIBLE] 00:45:51.767 --> 00:45:52.908 STEVE DEREZINSKI: Yeah, yeah. 00:45:52.975 --> 00:45:56.700 So the total is only 70%, and you have 30% of slop in between. 00:45:56.767 --> 00:45:58.700 So you could do 40% for the research institution 00:45:58.767 --> 00:45:59.360 if you want. 00:45:59.427 --> 00:46:00.568 Or you could do 50/50, right? 00:46:00.635 --> 00:46:04.020 That's within the range. 00:46:04.087 --> 00:46:06.500 Any other questions? 00:46:06.567 --> 00:46:10.540 AUDIENCE: I heard that, basically, there 00:46:10.607 --> 00:46:13.422 is some kind of markup for the overhead? 00:46:13.489 --> 00:46:14.380 STEVE DEREZINSKI: Yeah. 00:46:14.447 --> 00:46:15.500 AUDIENCE: Until the end? 00:46:15.567 --> 00:46:16.000 STEVE DEREZINSKI: Yeah. 00:46:16.067 --> 00:46:17.280 That's what I was saying. 00:46:17.347 --> 00:46:19.660 One of the challenges with the research institution 00:46:19.727 --> 00:46:24.600 for an STTR, if you have a $300,000 phase 1 award, 00:46:24.667 --> 00:46:27.260 130% of it goes to the research institution. 00:46:27.327 --> 00:46:28.440 That's $100,000. 00:46:28.507 --> 00:46:30.610 But then you got to multiply it by-- basically, 00:46:30.677 --> 00:46:32.860 take a half of it, and that's the amount that actually 00:46:32.927 --> 00:46:34.118 can go to do the research. 00:46:34.185 --> 00:46:36.160 The other half of it goes to overhead, typically. 00:46:36.227 --> 00:46:37.800 I mean, just rough numbers. 00:46:37.867 --> 00:46:39.880 Maybe even more than that in some places. 00:46:39.947 --> 00:46:40.460 I don't know. 00:46:40.527 --> 00:46:43.460 Does anybody know what MIT's overhead rate is? 00:46:43.527 --> 00:46:45.760 AUDIENCE: I think it's 59. 00:46:45.827 --> 00:46:47.380 STEVE DEREZINSKI: 59. 00:46:47.447 --> 00:46:49.000 OK, any other questions? 00:46:49.067 --> 00:46:49.500 Yes. 00:46:49.567 --> 00:46:50.660 AUDIENCE: You're showing the timeline 00:46:50.727 --> 00:46:51.880 of different institutes. 00:46:51.947 --> 00:46:52.838 STEVE DEREZINSKI: Yeah. 00:46:52.905 --> 00:46:56.180 AUDIENCE: If I want to choose, how many months you suggest 00:46:56.247 --> 00:46:58.300 that is minimum for the first time writing 00:46:58.367 --> 00:47:01.260 a grant for the company? 00:47:01.327 --> 00:47:03.940 STEVE DEREZINSKI: That's a good question. 00:47:04.007 --> 00:47:07.020 So if it's the first time writing a grant 00:47:07.087 --> 00:47:09.343 and you're going after a broad solicitation, 00:47:09.410 --> 00:47:10.760 I mean, you can get started on it, 00:47:10.827 --> 00:47:12.218 and it's typically like two months, 00:47:12.285 --> 00:47:14.878 I think, If you already have the technology, 00:47:14.945 --> 00:47:16.420 and you know what it is, and you want 00:47:16.487 --> 00:47:18.773 to put it in the right format for this, 00:47:18.840 --> 00:47:20.940 I think two months is about the right amount of time 00:47:21.007 --> 00:47:24.070 that people allocate for it. 00:47:24.137 --> 00:47:25.210 That's for a broad one. 00:47:25.277 --> 00:47:28.045 But if you have to go into the specific solicitation topics, 00:47:28.112 --> 00:47:29.670 then it becomes a lot more challenging, 00:47:29.737 --> 00:47:32.515 because you have to make sure that your technology matches 00:47:32.582 --> 00:47:33.890 whatever is in that solicitation. 00:47:33.957 --> 00:47:35.547 So it might take an extra month or so 00:47:35.614 --> 00:47:37.630 to make sure that it's focused on that, especially 00:47:37.697 --> 00:47:39.670 if it's your first time around. 00:47:39.737 --> 00:47:41.430 Any other questions on this one? 00:47:41.497 --> 00:47:43.230 Yes, sir. 00:47:43.297 --> 00:47:46.790 AUDIENCE: So for the letters of support, 00:47:46.857 --> 00:47:49.750 let's say that you are in a phase 1, 00:47:49.817 --> 00:47:53.590 and this specific department is actually 00:47:53.657 --> 00:47:56.670 going to buy your technology, and you 00:47:56.737 --> 00:48:02.230 want to get more resources to actually finish that project. 00:48:02.297 --> 00:48:08.070 Their letters of support would be useful for the NSF SBIR, 00:48:08.137 --> 00:48:10.670 for example that the letter of support 00:48:10.737 --> 00:48:12.830 being from the government? 00:48:12.897 --> 00:48:14.310 It's a customer at the end. 00:48:14.377 --> 00:48:16.470 That's why-- 00:48:16.537 --> 00:48:19.190 STEVE DEREZINSKI: I think it would be fine. 00:48:19.257 --> 00:48:21.460 A lot of times, a lot of these things, it's like, 00:48:21.527 --> 00:48:24.040 did you actually talk to a customer in phase 1, which 00:48:24.107 --> 00:48:25.160 is kind of unusual, right? 00:48:25.227 --> 00:48:28.480 But a lot of times that's important. 00:48:28.547 --> 00:48:33.180 If that customer is so tight that they have a conflict, 00:48:33.247 --> 00:48:34.400 then that's a concern. 00:48:34.467 --> 00:48:36.640 If they're too close to the technology, 00:48:36.707 --> 00:48:40.080 then it's like, OK, well, this is just your friend, right? 00:48:40.147 --> 00:48:43.320 I've done several where there have been prominent professors 00:48:43.387 --> 00:48:45.120 from lots of universities around that 00:48:45.187 --> 00:48:47.420 have given letters of support, not as customers 00:48:47.487 --> 00:48:50.300 but just as technology advocates to the baseline technology, 00:48:50.367 --> 00:48:51.320 which has been great. 00:48:51.387 --> 00:48:53.440 Because one of the things that you'll realize 00:48:53.507 --> 00:48:56.680 is that the reviewers, when they sit in a room, 00:48:56.747 --> 00:48:59.920 they have 20 of these proposals that they got to read through. 00:48:59.987 --> 00:49:01.520 And, really, what they do is they just 00:49:01.587 --> 00:49:03.060 go through the proposal themselves. 00:49:03.127 --> 00:49:06.073 They don't go to a website and go do extra research on stuff. 00:49:06.140 --> 00:49:08.240 And that's probably the most important thing for you 00:49:08.307 --> 00:49:13.040 to recognize is that they've got to review 20 of these things. 00:49:13.107 --> 00:49:15.520 The easiest thing in the world is to say no. 00:49:15.587 --> 00:49:17.080 So they're just looking for reasons 00:49:17.147 --> 00:49:19.540 to say no on any of these items. 00:49:19.607 --> 00:49:22.580 And if it takes extra work to go and advocate for you, 00:49:22.647 --> 00:49:23.600 they're not your friend. 00:49:23.667 --> 00:49:25.328 They're there to just do the review. 00:49:25.395 --> 00:49:27.120 So what you want to do is make it very easy 00:49:27.187 --> 00:49:29.440 for them to say yes. 00:49:29.507 --> 00:49:32.440 So if there's a bunch of letters in there that say 00:49:32.507 --> 00:49:33.740 this is great technology. 00:49:33.807 --> 00:49:36.117 I'm a well-known person in my industry 00:49:36.184 --> 00:49:38.200 and I say this is great technology-- that's great, 00:49:38.267 --> 00:49:41.027 because then they don't have to go out and talk to anybody else. 00:49:41.094 --> 00:49:42.860 They just see it right there in the package. 00:49:45.420 --> 00:49:46.840 Yes, question in the white. 00:49:46.907 --> 00:49:49.400 AUDIENCE: There is one agency of grants 00:49:49.467 --> 00:49:52.920 that you recommend us better than others? 00:49:52.987 --> 00:49:54.520 STEVE DEREZINSKI: One-- which, what-- 00:49:54.587 --> 00:49:56.200 I didn't hear that. 00:49:56.267 --> 00:50:01.360 AUDIENCE: One kind of agency of grants that you recommend 00:50:01.427 --> 00:50:03.880 us better than others? 00:50:03.947 --> 00:50:06.080 STEVE DEREZINSKI: One agency-- well, I love the NSF. 00:50:06.147 --> 00:50:07.780 So what can I say? 00:50:07.847 --> 00:50:10.360 I mean, I have some funding from the NSF. 00:50:10.427 --> 00:50:14.040 But it's really a match. 00:50:14.107 --> 00:50:16.190 I wish they would rename it SBIR. 00:50:16.257 --> 00:50:17.790 Well, I guess SBIR has the brand name. 00:50:17.857 --> 00:50:19.170 So everybody knows what that is. 00:50:19.237 --> 00:50:21.190 But within each agency, there's a lot of different things. 00:50:21.257 --> 00:50:22.732 Like, for example, I know some people 00:50:22.799 --> 00:50:24.690 that really have done a bunch of research 00:50:24.757 --> 00:50:26.170 and have a bunch of collaborators 00:50:26.237 --> 00:50:29.490 within a specific Air Force Research Lab. 00:50:29.557 --> 00:50:31.850 And so, therefore, the DOD and the solicitations 00:50:31.917 --> 00:50:33.450 that come out that match their stuff 00:50:33.517 --> 00:50:35.170 are a perfect match for those guys. 00:50:35.237 --> 00:50:36.930 So it's like why would you go to the NSF 00:50:36.997 --> 00:50:38.050 and try and convince somebody that you 00:50:38.117 --> 00:50:39.290 have something commercial when I have 00:50:39.357 --> 00:50:41.470 something that's ready-made for that solicitation? 00:50:41.537 --> 00:50:43.650 So it's really kind of a custom question. 00:50:43.717 --> 00:50:46.650 If you are like, I have a cool idea, 00:50:46.717 --> 00:50:49.242 and it's super techno nerdy, and I 00:50:49.309 --> 00:50:50.950 think there's a commercial market for it, 00:50:51.017 --> 00:50:53.310 then the NSF is designed to fund that. 00:50:53.377 --> 00:50:57.090 I mean, that's the reason why they kind of came into this. 00:50:57.157 --> 00:50:59.585 I will tell you that they do like to fund, 00:50:59.652 --> 00:51:01.210 and they actually make a preference to, 00:51:01.277 --> 00:51:03.033 first-time companies. 00:51:03.100 --> 00:51:04.450 So if it's your first-time company 00:51:04.517 --> 00:51:05.750 and you want to do first-time funding, 00:51:05.817 --> 00:51:06.870 that's kind of their sweet spot. 00:51:06.937 --> 00:51:07.912 They prefer to do that. 00:51:07.979 --> 00:51:09.870 In fact, if you go back a second or third time, 00:51:09.937 --> 00:51:12.750 it's kind of like, uh, we already got you going. 00:51:12.817 --> 00:51:15.890 Now you're supposed to be on your own. 00:51:15.957 --> 00:51:16.743 Any other questions? 00:51:16.810 --> 00:51:17.910 Otherwise, we'll keep going. 00:51:17.977 --> 00:51:18.330 Yes. 00:51:18.397 --> 00:51:18.830 Yep. 00:51:18.897 --> 00:51:22.800 AUDIENCE: If we write two grants, for example DOD and NIH, 00:51:22.867 --> 00:51:24.050 they are two different things. 00:51:24.117 --> 00:51:27.770 For NIH, we are looking at, I don't know, say, something. 00:51:27.837 --> 00:51:30.930 But same company-- of course the product at the end 00:51:30.997 --> 00:51:33.770 is the same thing, but two aspects. 00:51:33.837 --> 00:51:35.535 It can only accept one of them? 00:51:35.602 --> 00:51:36.410 STEVE DEREZINSKI: No. 00:51:38.932 --> 00:51:40.390 Thank you for asking that question. 00:51:40.457 --> 00:51:45.410 The question is, if we have two proposals that have different 00:51:45.477 --> 00:51:48.490 scope of work-- so like I'm doing software development over 00:51:48.557 --> 00:51:51.970 here, and I'm doing, I don't know, drug discovery over here, 00:51:52.037 --> 00:51:53.410 or whatever it is-- 00:51:53.477 --> 00:51:55.050 those are two different proposals. 00:51:55.117 --> 00:51:57.970 So the distinction is if I take the exact same proposal 00:51:58.037 --> 00:52:00.610 and I just change NIH to DOD over here, 00:52:00.677 --> 00:52:02.230 and I apply the same thing here. 00:52:02.297 --> 00:52:04.630 So it's the same-- doing software development here. 00:52:04.697 --> 00:52:06.810 Same person, same thing, doing software development, 00:52:06.877 --> 00:52:09.130 and innovating the technology in the same way-- that's 00:52:09.197 --> 00:52:10.322 what you can't do. 00:52:10.389 --> 00:52:11.780 And a lot of people have done that. 00:52:11.847 --> 00:52:12.800 It sort of makes sense. 00:52:12.867 --> 00:52:15.420 It's like, well, my chances of winning are 15%. 00:52:15.487 --> 00:52:18.402 Let me just invert that and submit it 00:52:18.469 --> 00:52:20.860 to six different agencies, and one of them will hit, right? 00:52:20.927 --> 00:52:23.980 You can do the math on that. 00:52:24.047 --> 00:52:25.700 So yeah. 00:52:25.767 --> 00:52:28.120 And, in fact, I think I like that as a strategy. 00:52:28.187 --> 00:52:30.740 If you have a product and it has multiple technologies that 00:52:30.807 --> 00:52:32.792 influence it, you can certainly go and find 00:52:32.859 --> 00:52:35.000 a bunch of sources of funding from different spheres. 00:52:35.067 --> 00:52:36.660 And as soon as you get your company 00:52:36.727 --> 00:52:39.777 registered and everything else and go through that process, 00:52:39.844 --> 00:52:41.360 that's kind of a big hump to get over. 00:52:41.427 --> 00:52:42.940 And once you're there, it's like-- 00:52:43.007 --> 00:52:45.648 One of the reasons why I've done a lot of federal government work 00:52:45.715 --> 00:52:48.143 is because it takes a long time to get you up 00:52:48.210 --> 00:52:49.560 over that hump in the first place. 00:52:49.627 --> 00:52:51.893 And once you're there, it's kind of like I might as well 00:52:51.960 --> 00:52:53.500 just keep figuring out who else needs 00:52:53.567 --> 00:52:55.940 my solution that can be solved. 00:52:56.007 --> 00:52:57.062 AUDIENCE: [INAUDIBLE] 00:52:57.129 --> 00:52:58.020 STEVE DEREZINSKI: Yeah. 00:52:58.087 --> 00:52:59.940 Unless anybody else has any other questions. 00:53:00.007 --> 00:53:01.780 She's already got two down. 00:53:01.847 --> 00:53:03.460 Go ahead. 00:53:03.527 --> 00:53:05.740 AUDIENCE: It's about the team. 00:53:05.807 --> 00:53:08.220 Should they be officially registered 00:53:08.287 --> 00:53:10.780 in the company as part of the employees? 00:53:10.847 --> 00:53:15.620 Because for many startups, one person quit their day job. 00:53:15.687 --> 00:53:18.040 The others support, they spend time, 00:53:18.107 --> 00:53:20.020 but officially, they are [INAUDIBLE]. 00:53:20.087 --> 00:53:21.740 So are they OK? 00:53:21.807 --> 00:53:25.475 Because of the limitations of their primary employer, 00:53:25.542 --> 00:53:27.100 they don't go officially In the system. 00:53:27.167 --> 00:53:28.580 STEVE DEREZINSKI: Right. 00:53:28.647 --> 00:53:29.760 I got you, I got you. 00:53:29.827 --> 00:53:33.460 So the distinction is-- and this goes to the budget 00:53:33.527 --> 00:53:35.280 and to the application. 00:53:35.347 --> 00:53:37.500 So the question was, if somebody is outside 00:53:37.567 --> 00:53:39.375 and they're going to come work at the company 00:53:39.442 --> 00:53:42.460 once you get funding, how do I put them into the proposal? 00:53:42.527 --> 00:53:45.900 If they are one of the key people that you need to do 00:53:45.967 --> 00:53:49.220 the technology work-- so they're a named person on the budget 00:53:49.287 --> 00:53:53.580 that says, I need, whatever, 120 hours out of this guy-- 00:53:53.647 --> 00:53:55.660 then it's a harder question, because then you 00:53:55.727 --> 00:53:57.620 have a real challenge around are they actually 00:53:57.687 --> 00:53:59.662 a full-time employee of the company or part time, 00:53:59.729 --> 00:54:02.540 depending on how much time you put in the actual proposal. 00:54:02.607 --> 00:54:07.740 Then they need to be in the company at the time of award. 00:54:07.807 --> 00:54:10.210 If they are just kind of one of these extras-- 00:54:10.277 --> 00:54:13.230 so a lot of budgets will just say computer software 00:54:13.297 --> 00:54:17.110 developers or something, or instrumentation specialists 00:54:17.177 --> 00:54:21.790 or something-- those aren't as critical to winning 00:54:21.857 --> 00:54:23.230 the proposal. 00:54:23.297 --> 00:54:25.390 Then you can leave it at the time. 00:54:25.457 --> 00:54:27.050 You can do it after award, in fact. 00:54:27.117 --> 00:54:28.170 It's not that critical. 00:54:28.237 --> 00:54:31.570 So it's really a function of whether or not-- 00:54:31.637 --> 00:54:34.132 and if you use someone's bio in your proposal, 00:54:34.199 --> 00:54:36.590 then you're saying that these people are adding to the team 00:54:36.657 --> 00:54:38.230 and adding to the credibility, and that's 00:54:38.297 --> 00:54:39.450 part of the decision process. 00:54:39.517 --> 00:54:42.330 So they have to be in the company at the time of award, 00:54:42.397 --> 00:54:44.330 because that's what they made their decision on. 00:54:44.397 --> 00:54:46.390 They're like, well, here's what they want to do. 00:54:46.457 --> 00:54:48.750 They've got this person who has this background 00:54:48.817 --> 00:54:50.250 and is perfectly matched to do that, 00:54:50.317 --> 00:54:52.830 and they've got budget allocated to make them do the work. 00:54:52.897 --> 00:54:54.123 That has to be contained in. 00:54:54.190 --> 00:54:56.790 So you have to figure out how to get them in the company at time 00:54:56.857 --> 00:54:57.770 of award, I guess. 00:55:00.310 --> 00:55:01.007 Yes. 00:55:01.074 --> 00:55:03.090 One more question, and then we got to get on here. 00:55:03.157 --> 00:55:04.710 AUDIENCE: [INAUDIBLE] 00:55:04.777 --> 00:55:06.040 STEVE DEREZINSKI: Yep. 00:55:06.107 --> 00:55:08.730 AUDIENCE: If people have written articles 00:55:08.797 --> 00:55:11.822 in magazines, things about us, which 00:55:11.889 --> 00:55:13.530 they have their own experts in the field, 00:55:13.597 --> 00:55:15.750 would it be better to use that article, 00:55:15.817 --> 00:55:17.950 or ask that person to write something specifically 00:55:18.017 --> 00:55:19.070 for the grant? 00:55:19.137 --> 00:55:21.350 STEVE DEREZINSKI: Well, so you can always put press 00:55:21.417 --> 00:55:24.887 in the proposal if you want. 00:55:24.954 --> 00:55:26.470 I'm thinking-- I mean, if you're going 00:55:26.537 --> 00:55:30.410 for a phase 1, that's usually like, you have press already? 00:55:30.477 --> 00:55:33.350 That's pretty far advanced. 00:55:33.417 --> 00:55:36.610 AUDIENCE: [INAUDIBLE] like in some of the court systems. 00:55:36.677 --> 00:55:38.950 And so people just took it on their own, right? 00:55:39.017 --> 00:55:40.715 STEVE DEREZINSKI: Yeah. 00:55:40.782 --> 00:55:42.090 I mean, you can certainly add it. 00:55:42.157 --> 00:55:45.630 But I guess what it's supposed to be 00:55:45.697 --> 00:55:48.370 for is for deep technology development that has not 00:55:48.437 --> 00:55:49.370 been commercialized yet. 00:55:49.437 --> 00:55:50.870 So if you're already commercialized, 00:55:50.937 --> 00:55:54.790 then it's like maybe we should be doing something else. 00:55:54.857 --> 00:55:55.290 All right. 00:55:55.357 --> 00:55:58.910 So this is the right way to get started on this whole process. 00:55:58.977 --> 00:56:02.350 So before you spend any money on creating 00:56:02.417 --> 00:56:04.740 a company or any administrative time, 00:56:04.807 --> 00:56:08.080 you can do a project pitch for the National Science Foundation 00:56:08.147 --> 00:56:09.538 or a quad chart for everybody else. 00:56:09.605 --> 00:56:12.163 And, actually, you can do a quad chart for the National Science 00:56:12.230 --> 00:56:13.120 Foundation too. 00:56:13.187 --> 00:56:15.150 So why do I say this? 00:56:15.217 --> 00:56:16.900 Why am I telling you to do this right now? 00:56:16.967 --> 00:56:19.520 And we're going to do this right now. 00:56:19.587 --> 00:56:21.680 Because I want you to talk to the program manager 00:56:21.747 --> 00:56:23.857 that's appropriate for your technology. 00:56:23.924 --> 00:56:26.440 And the best way to do that-- if you think about these program 00:56:26.507 --> 00:56:29.080 managers, they've got hundreds of calls and people 00:56:29.147 --> 00:56:30.768 complaining to them-- give me money. 00:56:30.835 --> 00:56:32.060 Why aren't you giving me money? 00:56:32.127 --> 00:56:33.800 I'm so great. 00:56:33.867 --> 00:56:36.560 The quad chart is what some of my friends 00:56:36.627 --> 00:56:40.500 call a love language for the SBIR community. 00:56:40.567 --> 00:56:44.120 It's a consistent way to put your company and your technology 00:56:44.187 --> 00:56:47.640 innovation in a format that's easy for them to digest. 00:56:47.707 --> 00:56:49.520 And the reason why I want you guys to do this 00:56:49.587 --> 00:56:51.853 is because I want you to have the best success possible. 00:56:51.920 --> 00:56:53.480 So if you put it in a quad chart format 00:56:53.547 --> 00:56:56.120 and send an introductory email to the program manager that's 00:56:56.187 --> 00:56:58.840 appropriate, and you already know all this background, 00:56:58.907 --> 00:57:01.160 then they're going to say, oh, this person 00:57:01.227 --> 00:57:02.210 knows what they're doing. 00:57:02.277 --> 00:57:04.190 They're going to follow the rules. 00:57:04.257 --> 00:57:05.970 They're not going to waste my time. 00:57:06.037 --> 00:57:08.270 This sounds like somebody that I really want to fund. 00:57:08.337 --> 00:57:10.530 So I've got this quad chart here, 00:57:10.597 --> 00:57:12.030 and I understand what they're doing. 00:57:12.097 --> 00:57:15.395 And it fits in the area, and I can give them quick feedback. 00:57:15.462 --> 00:57:17.770 And they're not going to ask me a bunch of dumb questions 00:57:17.837 --> 00:57:21.650 to keep me on the phone because they're trying to be my friend. 00:57:21.717 --> 00:57:24.110 So let's do that. 00:57:24.177 --> 00:57:26.330 And once you have a call with a program manager 00:57:26.397 --> 00:57:30.570 and describe to them what's on the quad chart and the situation 00:57:30.637 --> 00:57:32.250 with the company and everything else, 00:57:32.317 --> 00:57:33.890 then you can do the administrative work 00:57:33.957 --> 00:57:37.890 and forming the company and everything else. 00:57:37.957 --> 00:57:40.650 And as Ben says in his video, there's 00:57:40.717 --> 00:57:43.290 sam.gov, research.gov, SBA.gov, and it 00:57:43.357 --> 00:57:44.710 can take 30 days to do that. 00:57:44.777 --> 00:57:47.050 So to your question about two months 00:57:47.117 --> 00:57:48.530 to write the proposal, if you don't 00:57:48.597 --> 00:57:50.113 have any of this stuff registered yet, 00:57:50.180 --> 00:57:51.550 it's another 30 days to do it. 00:57:51.617 --> 00:57:53.800 You can do that in parallel with writing the proposal. 00:57:53.867 --> 00:57:56.810 I mean, you just submit stuff, and then you just wait for it. 00:57:56.877 --> 00:57:58.270 One other comment I like to make is 00:57:58.337 --> 00:57:59.770 that if you guys are in startup mode 00:57:59.837 --> 00:58:02.290 and you're trying to decide should I raise equity 00:58:02.357 --> 00:58:05.850 or should I go for grants, one of the wonderful things 00:58:05.917 --> 00:58:08.330 about grants is that there's a deadline. 00:58:08.397 --> 00:58:10.870 So you've got to get it all done and get it submitted. 00:58:10.937 --> 00:58:13.870 And then once it's in, there's nothing you can do. 00:58:13.937 --> 00:58:15.330 I mean, you just have to sit back 00:58:15.397 --> 00:58:17.730 and wait for them to review it. 00:58:17.797 --> 00:58:19.550 Which is a wonderful thing, frankly. 00:58:19.617 --> 00:58:20.990 People are like, ah, I'm waiting. 00:58:21.057 --> 00:58:22.370 And why am I [INAUDIBLE]? 00:58:22.437 --> 00:58:22.910 No, no, no. 00:58:22.977 --> 00:58:24.990 You guys have 8,000 other things to do. 00:58:25.057 --> 00:58:25.790 You get this done. 00:58:25.857 --> 00:58:27.470 It's like a homework assignment, right? 00:58:27.537 --> 00:58:29.720 You got to submit it, get it in, and then you got to-- 00:58:29.787 --> 00:58:34.352 And, in fact, they often take a lot of comments. 00:58:34.419 --> 00:58:36.810 They often don't want to be bothered after you've submitted 00:58:36.877 --> 00:58:38.102 it, and that's like a negative. 00:58:38.169 --> 00:58:40.430 So it's beneficial in both areas. 00:58:40.497 --> 00:58:43.290 So a lot of times in companies, I'll 00:58:43.357 --> 00:58:45.990 say, why don't you guys go ahead and fill this proposal out, 00:58:46.057 --> 00:58:49.370 submit it, and then go get busy with your investor conversations 00:58:49.437 --> 00:58:50.430 and discussions. 00:58:50.497 --> 00:58:54.848 Because what I didn't say is on the SBIR side, 00:58:54.915 --> 00:58:56.890 there's a deadline, so that you can't do anything 00:58:56.957 --> 00:58:59.580 after a certain date on that particular proposal. 00:58:59.647 --> 00:59:02.360 But in the world of raising capital from investors, 00:59:02.427 --> 00:59:05.500 there is no end to the amount of meetings you could have 00:59:05.567 --> 00:59:07.700 and the amount of follow-ups you could have. 00:59:07.767 --> 00:59:10.240 So that becomes a gigantic time sink 00:59:10.307 --> 00:59:13.020 if you don't manage your time carefully. 00:59:13.087 --> 00:59:16.140 I do want to say that the solicitation-- a lot of times 00:59:16.207 --> 00:59:19.100 people will take information and they'll try and sell it to you 00:59:19.167 --> 00:59:23.120 online and say, hey, this is how this thing works. 00:59:23.187 --> 00:59:25.560 And there's all kinds of consulting companies out there. 00:59:25.627 --> 00:59:28.300 But the PDF that you download from the website, that 00:59:28.367 --> 00:59:29.240 is the solicitation. 00:59:29.307 --> 00:59:31.700 That's the official document, and that's 00:59:31.767 --> 00:59:34.232 the legal document that's the ultimate source of facts. 00:59:34.299 --> 00:59:35.940 So if you're looking for the ground truth 00:59:36.007 --> 00:59:37.700 of how should this grant be done or how 00:59:37.767 --> 00:59:40.120 should this contract be done, it should be in the solicitation. 00:59:40.187 --> 00:59:42.662 And if it's not, then you're going to ask the program manager 00:59:42.729 --> 00:59:43.660 then. 00:59:43.727 --> 00:59:48.080 So what I'd like to do now is take 10 minutes. 00:59:48.147 --> 00:59:49.900 And if you guys all have laptops, 00:59:49.967 --> 00:59:54.400 you can download this quad chart template, which is from 2018. 00:59:54.467 --> 00:59:55.900 I realize it's old. 00:59:55.967 --> 00:59:57.360 I'm going to start the timer now, 00:59:57.427 --> 00:59:58.660 and then I'm going to take questions 00:59:58.727 --> 01:00:00.520 while you guys all get busy on that stuff, 01:00:00.587 --> 01:00:01.603 and we'll wait 10 minutes. 01:00:01.670 --> 01:00:02.500 Yes, go ahead. 01:00:02.567 --> 01:00:06.420 AUDIENCE: So we sent a letter to the program manager, 01:00:06.487 --> 01:00:07.840 and he give little response. 01:00:07.907 --> 01:00:10.660 We saw that we did not provide pre-submission tailored 01:00:10.727 --> 01:00:11.240 feedback. 01:00:11.307 --> 01:00:13.020 How do you get that feedback? 01:00:13.087 --> 01:00:16.980 And feedback [INAUDIBLE] get positive feedback? 01:00:17.047 --> 01:00:20.620 We just send them detailed questions? 01:00:20.687 --> 01:00:22.420 STEVE DEREZINSKI: Oh, yeah. 01:00:22.487 --> 01:00:23.800 So we're timing. 01:00:23.867 --> 01:00:25.980 Everybody's doing their quad charts. 01:00:26.047 --> 01:00:29.460 So the point of that is once we finish this exercise 01:00:29.527 --> 01:00:31.605 and you have your first call, there's 01:00:31.672 --> 01:00:33.980 a few other steps that I'll talk about in a second, which 01:00:34.047 --> 01:00:38.180 is to go find the right guy that you need to talk to, or gal. 01:00:38.247 --> 01:00:42.880 And then what you want to get is this looks interesting. 01:00:42.947 --> 01:00:45.620 This is exactly the type of stuff we would fund. 01:00:45.687 --> 01:00:48.620 So go ahead and fill out an application for this. 01:00:48.687 --> 01:00:49.640 That would be fantastic. 01:00:49.707 --> 01:00:50.515 You may not get that. 01:00:50.582 --> 01:00:53.600 You may get, OK, it's not terrible, 01:00:53.667 --> 01:00:56.510 which is kind of you have to lean into that 01:00:56.577 --> 01:00:58.790 and realize that that's a positive. 01:00:58.857 --> 01:01:04.270 So not being told this is wrong is a good thing. 01:01:04.337 --> 01:01:07.370 And you may also get, hey, this is not the right thing. 01:01:07.437 --> 01:01:08.890 We've done this eight times already 01:01:08.957 --> 01:01:11.570 and we've never had any success for it, so don't bother. 01:01:11.637 --> 01:01:13.070 Which is fantastic, because then you 01:01:13.137 --> 01:01:14.710 don't have to waste your time, all 01:01:14.777 --> 01:01:19.350 this time trying to fill out an application and for no avail. 01:01:19.417 --> 01:01:21.283 AUDIENCE: Are they available for a call? 01:01:21.350 --> 01:01:22.950 Because from what I got from this email, 01:01:23.017 --> 01:01:25.782 it's no, we don't give any feedback. 01:01:25.849 --> 01:01:26.990 STEVE DEREZINSKI: Oh, oh, oh. 01:01:27.057 --> 01:01:29.030 So they are available for a call but they 01:01:29.097 --> 01:01:32.830 may be wary about giving you specific feedback to make 01:01:32.897 --> 01:01:34.870 your proposal more competitive. 01:01:34.937 --> 01:01:38.452 So you can ask them some questions, but a lot of times 01:01:38.519 --> 01:01:39.410 they just won't answer. 01:01:39.477 --> 01:01:41.650 And we can ask that of Ben on Wednesday, by the way. 01:01:41.717 --> 01:01:43.590 Feel free to ask him any questions you want. 01:01:43.657 --> 01:01:45.382 And you'll get the you'll get the fantastic 01:01:45.449 --> 01:01:50.110 answers, like-- excuse me-- like I'm not at liberty 01:01:50.177 --> 01:01:54.230 to discuss those things, or against certain rules, all 01:01:54.297 --> 01:01:55.040 that kind of stuff. 01:01:55.107 --> 01:01:57.290 AUDIENCE: We've heard that it's also to approach them, 01:01:57.357 --> 01:01:59.967 but we've never gotten anyone to pick up our calls. 01:02:00.034 --> 01:02:01.550 STEVE DEREZINSKI: Probably because you 01:02:01.617 --> 01:02:04.070 didn't email them a quad chart ahead of time 01:02:04.137 --> 01:02:06.650 and show them that you're awesome. 01:02:06.717 --> 01:02:08.790 So other questions on this stuff, or you guys 01:02:08.857 --> 01:02:10.210 are busy digging in? 01:02:10.277 --> 01:02:11.430 Yes. 01:02:11.497 --> 01:02:13.590 AUDIENCE: So you mentioned that they're not 01:02:13.657 --> 01:02:17.070 allowed to give feedback under certain circumstances, 01:02:17.137 --> 01:02:19.110 but it looks like they can if we just 01:02:19.177 --> 01:02:21.110 reach out to them [INAUDIBLE]. 01:02:24.350 --> 01:02:25.950 STEVE DEREZINSKI: So they can't-- 01:02:26.017 --> 01:02:28.630 I forget what the legal limitations are, 01:02:28.697 --> 01:02:30.650 but they can't kind tell you that, hey, yeah, 01:02:30.717 --> 01:02:32.110 we would totally fund this. 01:02:32.177 --> 01:02:34.310 They can tell you that there's a match, 01:02:34.377 --> 01:02:37.790 or there's a good likelihood of match. 01:02:37.857 --> 01:02:42.990 They can't give you any guidance around what to change. 01:02:43.057 --> 01:02:44.712 But, really, what you're trying to do-- 01:02:44.779 --> 01:02:46.170 and I think I have a slide on this, 01:02:46.237 --> 01:02:48.128 so I apologize for repeating it ahead of time-- 01:02:48.195 --> 01:02:50.742 is just develop a relationship with the funder. 01:02:50.809 --> 01:02:52.200 And what I want you to do is I want 01:02:52.267 --> 01:02:55.845 you to do it in the right way and in the compatible way. 01:02:55.912 --> 01:02:58.220 And I want you guys to all do your homework ahead of time 01:02:58.287 --> 01:03:00.880 so you don't ask silly questions about what the SBIR program does 01:03:00.947 --> 01:03:02.005 and all that kind of stuff. 01:03:02.072 --> 01:03:03.880 But that you're trying to get to-- you're 01:03:03.947 --> 01:03:06.600 trying to-- those top three motivations of the program 01:03:06.667 --> 01:03:07.440 manager. 01:03:07.507 --> 01:03:08.840 They won't get fired. 01:03:08.907 --> 01:03:11.140 They won't be embarrassed by funding your technology. 01:03:11.207 --> 01:03:12.560 And they'll be excited about it actually, 01:03:12.627 --> 01:03:13.768 like, oh, this is cool stuff. 01:03:13.835 --> 01:03:15.240 I mean, this is what we do. 01:03:15.307 --> 01:03:18.407 I highly doubt you'll ever get any SBIR program manager to say, 01:03:18.474 --> 01:03:19.740 well, this is really cool stuff. 01:03:19.807 --> 01:03:20.600 We should fund this. 01:03:20.667 --> 01:03:22.340 That's not in their DNA. 01:03:22.407 --> 01:03:26.623 So Hash, what's up? 01:03:26.690 --> 01:03:28.040 AUDIENCE: This fund comes directly 01:03:28.107 --> 01:03:29.560 from the federal government? 01:03:29.627 --> 01:03:32.840 So I'm just filling out sam.gov for the ID. 01:03:32.907 --> 01:03:36.073 They are asking this question. 01:03:36.140 --> 01:03:37.740 STEVE DEREZINSKI: What was the question? 01:03:37.807 --> 01:03:39.323 AUDIENCE: This fund is coming directly 01:03:39.390 --> 01:03:41.620 from the federal government? 01:03:41.687 --> 01:03:45.320 Or is it coming from federal government to some agency, 01:03:45.387 --> 01:03:47.743 and then to [INAUDIBLE]? 01:03:47.810 --> 01:03:49.660 STEVE DEREZINSKI: Well, it's a federal agency, 01:03:49.727 --> 01:03:53.880 so I guess it would be coming from the federal government? 01:03:53.947 --> 01:03:56.000 AUDIENCE: So there's a question that I'm still 01:03:56.067 --> 01:03:58.000 applying for this ID to apply directly 01:03:58.067 --> 01:03:59.680 for federal grants or loans? 01:03:59.747 --> 01:04:02.320 STEVE DEREZINSKI: Yes. 01:04:02.387 --> 01:04:04.440 AUDIENCE: So it has to be yes? 01:04:04.507 --> 01:04:06.200 STEVE DEREZINSKI: Yes. 01:04:06.267 --> 01:04:07.020 I don't know. 01:04:09.402 --> 01:04:11.360 You guys are supposed to be the smart ones that 01:04:11.427 --> 01:04:12.380 can fill stuff out properly. 01:04:12.447 --> 01:04:13.220 Any other questions on this? 01:04:13.287 --> 01:04:15.720 Otherwise, I'll chill out for a few minutes while you-- 01:04:15.787 --> 01:04:18.200 [COMPUTER DINGS] 01:04:18.267 --> 01:04:20.260 So just one quick note. 01:04:20.327 --> 01:04:23.900 If you notice, there's a company, state, name, 01:04:23.967 --> 01:04:25.520 email, phone. 01:04:25.587 --> 01:04:28.240 A lot of times people miss that on the top of the thing. 01:04:28.307 --> 01:04:29.700 [COMPUTER DINGS] 01:04:29.767 --> 01:04:30.305 Oop. 01:04:30.372 --> 01:04:31.680 Nope, we're not doing that again. 01:04:31.747 --> 01:04:33.260 OK. 01:04:33.327 --> 01:04:37.307 So that quad chart is for every technology, 01:04:37.374 --> 01:04:39.640 and that even works with the National Science Foundation 01:04:39.707 --> 01:04:41.022 as well. 01:04:41.089 --> 01:04:42.480 The National Science Foundation has 01:04:42.547 --> 01:04:45.920 a new process where you have to fill out a project pitch. 01:04:45.987 --> 01:04:48.730 And I know one person in the audience has done this already. 01:04:48.797 --> 01:04:51.230 And what you'll notice is that the technology innovation, 01:04:51.297 --> 01:04:53.813 the technology objectives, the market opportunity, the company 01:04:53.880 --> 01:04:58.210 team is very similar to the quad chart, just in paragraph format. 01:04:58.277 --> 01:05:01.250 And I think because the NSF is so broad 01:05:01.317 --> 01:05:06.250 and has so much leverage to fund a lot of things, 01:05:06.317 --> 01:05:08.330 that they decided to put this process up front 01:05:08.397 --> 01:05:10.122 to make sure people didn't waste their time 01:05:10.189 --> 01:05:12.410 and they didn't waste their time finding reviewers. 01:05:12.477 --> 01:05:15.850 So you have to submit a project pitch to them first, 01:05:15.917 --> 01:05:18.630 and you have to select kind of what area it goes in. 01:05:18.697 --> 01:05:24.010 And until you get a "encouraged to apply" response from them, 01:05:24.077 --> 01:05:25.630 you can't fill out a phase 1. 01:05:25.697 --> 01:05:29.610 So this is a necessary step in the overall process. 01:05:29.677 --> 01:05:31.470 And these instructions are on that website, 01:05:31.537 --> 01:05:33.550 so you can take a look at that as well. 01:05:37.890 --> 01:05:40.690 So what I want you to do after that is 01:05:40.757 --> 01:05:42.810 find the agency, the solicitation, dates, 01:05:42.877 --> 01:05:44.370 and contact information, and prepare 01:05:44.437 --> 01:05:48.010 for a one-on-one call with the specific program manager. 01:05:48.077 --> 01:05:50.310 So to find the agency, you can go here. 01:05:50.377 --> 01:05:52.293 I mean, sbir.gov has all this stuff, 01:05:52.360 --> 01:05:54.210 but you can actually search for all the awards 01:05:54.277 --> 01:05:56.570 that were funded previously and find something that's 01:05:56.637 --> 01:05:58.592 similar to your technology. 01:05:58.659 --> 01:06:00.550 And then search for the agency that has funded. 01:06:00.617 --> 01:06:02.530 And then within that agency, you find 01:06:02.597 --> 01:06:05.470 if there's an open solicitation, the dates and deadlines, 01:06:05.537 --> 01:06:08.010 and find the official PDF of that and the specific topic 01:06:08.077 --> 01:06:09.330 for your technology. 01:06:09.397 --> 01:06:13.490 And I'm talking about mission-focused ones now. 01:06:13.557 --> 01:06:15.930 I know the broad-based ones, the market-focused ones, 01:06:15.997 --> 01:06:17.930 will have very broad ones, so it's fairly easy 01:06:17.997 --> 01:06:19.610 to just read through their solicitation 01:06:19.677 --> 01:06:22.770 and find where your technology would fit. 01:06:22.837 --> 01:06:25.330 For the DOD ones that have a thousand 01:06:25.397 --> 01:06:27.130 different solicitations, you'd have 01:06:27.197 --> 01:06:30.190 to go through and find at the lower level, 01:06:30.257 --> 01:06:32.730 and then find the contact name of the person that's 01:06:32.797 --> 01:06:34.272 going to fund that topic. 01:06:34.339 --> 01:06:35.730 And that's the person that you want 01:06:35.797 --> 01:06:39.710 to email your quad chart to and set up a call with. 01:06:39.777 --> 01:06:42.770 Because that's the person that wrote the solicitation, 01:06:42.837 --> 01:06:45.872 got a bunch of people to input on what should the solicitation 01:06:45.939 --> 01:06:47.580 be, and they're going to be the ones that 01:06:47.647 --> 01:06:50.800 are going to convene a review panel and look at your proposal. 01:06:50.867 --> 01:06:52.260 So that's the person that you want 01:06:52.327 --> 01:06:54.840 to really be in contact with. 01:06:58.140 --> 01:07:00.020 And, of course, if there isn't actually 01:07:00.087 --> 01:07:02.740 a person on that solicitation, which sometimes there 01:07:02.807 --> 01:07:05.365 isn't, they usually have a general SBIR contact 01:07:05.432 --> 01:07:07.240 that you can say, hey, this is my technology. 01:07:07.307 --> 01:07:08.700 I'm interested in this topic. 01:07:08.767 --> 01:07:12.700 Who should I speak with at the firm? 01:07:12.767 --> 01:07:17.160 And, of course, just using standard good sales process, 01:07:17.227 --> 01:07:19.595 you send an email, and you follow up after a few days, 01:07:19.662 --> 01:07:21.720 and then you follow up after a few days after that. 01:07:21.787 --> 01:07:25.400 And then you send another follow-up email and stuff. 01:07:25.467 --> 01:07:27.460 So this all brings us to the homework, 01:07:27.527 --> 01:07:31.880 that you guys maybe are already done on, on Wednesday. 01:07:31.947 --> 01:07:34.520 Or you can even send it in to me ahead of time. 01:07:34.587 --> 01:07:37.687 There may be an extra prize if you send it ahead of time. 01:07:37.754 --> 01:07:40.020 You should already be familiar with the one-on-one stuff 01:07:40.087 --> 01:07:42.870 from that video and from this talk. 01:07:42.937 --> 01:07:45.630 But I want you to list all the agencies and the topics that 01:07:45.697 --> 01:07:47.390 potentially could fund your technology, 01:07:47.457 --> 01:07:49.122 and then research other technologies that 01:07:49.189 --> 01:07:49.830 are funded there. 01:07:49.897 --> 01:07:53.790 Have your complete quad chart done, and then prepare 01:07:53.857 --> 01:07:55.010 questions for your call. 01:07:55.077 --> 01:07:57.550 So what I would recommend your call 01:07:57.617 --> 01:08:00.270 have is just general feedback of fit for your technology 01:08:00.337 --> 01:08:01.510 with their agency. 01:08:01.577 --> 01:08:04.030 So making sure there isn't some weird, 01:08:04.097 --> 01:08:06.890 oh, you didn't know about this other thing. 01:08:06.957 --> 01:08:09.510 We don't actually fund that technology. 01:08:09.577 --> 01:08:11.830 A fast no is a great thing in this world, 01:08:11.897 --> 01:08:14.150 because there's all kinds of money out there, 01:08:14.217 --> 01:08:17.830 and you want to really find where you should focus at. 01:08:17.897 --> 01:08:20.511 Building a relationship with the future funder. 01:08:20.578 --> 01:08:22.469 And then you want to ask questions and find out 01:08:22.536 --> 01:08:23.610 others you should talk to. 01:08:23.677 --> 01:08:26.990 So that's the last question that you want to ask them. 01:08:27.057 --> 01:08:29.950 And often they'll say, no, I'm pretty much 01:08:30.017 --> 01:08:31.630 the only person, which is fine. 01:08:31.697 --> 01:08:32.413 You can say that. 01:08:32.480 --> 01:08:34.830 But they might say, you should really talk to this person, 01:08:34.897 --> 01:08:37.790 or you should really talk to this other person. 01:08:37.857 --> 01:08:41.469 This is the advanced tip, is that those people are probably 01:08:41.536 --> 01:08:43.370 also on the review panel for your proposal. 01:08:43.437 --> 01:08:44.757 So when you say, oh, that's nice. 01:08:44.824 --> 01:08:46.090 Yeah, I should talk to them too. 01:08:46.157 --> 01:08:48.510 Yeah, they don't have any money, so why should I talk to them? 01:08:48.577 --> 01:08:50.510 They can't tell you they're on the review panel, 01:08:50.577 --> 01:08:51.929 but more than likely they will be. 01:08:51.996 --> 01:08:53.846 Or there's some partner that you should really 01:08:53.913 --> 01:08:55.886 talk to that they want to get their opinion of. 01:08:55.953 --> 01:08:57.969 So they may not officially be on the review panel, 01:08:58.036 --> 01:09:00.550 but if you get to that point, you definitely 01:09:00.617 --> 01:09:03.230 want to engage all the people around that any of those people 01:09:03.297 --> 01:09:03.849 mentioned. 01:09:03.916 --> 01:09:06.115 So I did mess this up one time when 01:09:06.182 --> 01:09:08.490 somebody was like, you should really talk to this person. 01:09:08.557 --> 01:09:10.448 And I was like, eh, I don't have time for that. 01:09:10.515 --> 01:09:12.510 And then we didn't get funded, and I'm like, oh, 01:09:12.577 --> 01:09:14.670 because that was the key person that 01:09:14.737 --> 01:09:17.990 was going to weigh in on our proposal to say yes or no. 01:09:18.057 --> 01:09:18.670 Dang it. 01:09:23.550 --> 01:09:26.309 So that's the homework for Wednesday. 01:09:26.376 --> 01:09:29.110 On Wednesday, we're going to talk about all 01:09:29.177 --> 01:09:32.349 of the wonderful AI tools that make this whole process 01:09:32.416 --> 01:09:33.410 way easy. 01:09:33.477 --> 01:09:37.980 And if you want to submit your material to me early, 01:09:38.047 --> 01:09:41.000 I might give you access to some of those cool tools 01:09:41.067 --> 01:09:43.460 up front before we get too far down the pathway. 01:09:43.527 --> 01:09:47.559 So just as an incentive there. 01:09:47.626 --> 01:09:48.620 Questions on this? 01:09:51.520 --> 01:09:52.020 No? 01:09:52.087 --> 01:09:53.220 Everything is crystal clear? 01:09:57.960 --> 01:09:59.160 Yes. 01:09:59.227 --> 01:10:05.620 AUDIENCE: Do we send the homework to this email address? 01:10:05.687 --> 01:10:07.200 STEVE DEREZINSKI: Yes, send it to me. 01:10:11.787 --> 01:10:15.400 I have a million emails. 01:10:15.467 --> 01:10:17.720 Questions on any of that stuff? 01:10:17.787 --> 01:10:22.640 We're almost done here, guys, so please bring up the questions. 01:10:22.707 --> 01:10:23.620 Everything's good? 01:10:23.687 --> 01:10:25.000 Ready to rock and roll? 01:10:25.067 --> 01:10:28.000 Anxious to get AI to help you do all this stuff? 01:10:28.067 --> 01:10:30.920 [AUDIENCE LAUGHS] 01:10:30.987 --> 01:10:34.028 Well, I will say one thing, which is that-- 01:10:34.095 --> 01:10:35.820 and I'll probably repeat this on Wednesday, 01:10:35.887 --> 01:10:37.153 so maybe I shouldn't say it now. 01:10:37.220 --> 01:10:38.800 But, anyways, I'll say it anyway. 01:10:38.867 --> 01:10:43.680 What I found is that AI gets you from an F to a B. 01:10:43.747 --> 01:10:45.920 And then it really takes humans to get you from a B 01:10:45.987 --> 01:10:48.480 to an A, A-plus, where you actually get funded, 01:10:48.547 --> 01:10:50.040 where funding level is A. 01:10:50.107 --> 01:10:53.472 So, no, you can't have AIs just go and get you-- go get me 01:10:53.539 --> 01:10:54.180 a bunch of money. 01:10:54.247 --> 01:10:56.720 That's fantasyland. 01:10:56.787 --> 01:10:58.760 And I would highly recommend that you guys ask 01:10:58.827 --> 01:11:02.420 Ben that question when he gets on the call on Wednesday, 01:11:02.487 --> 01:11:06.800 like do you encourage AI usage? 01:11:06.867 --> 01:11:09.740 I mean, ultimately, it's people funding people. 01:11:09.807 --> 01:11:15.000 And people can still tell that it's an AI behind the scenes, 01:11:15.067 --> 01:11:16.940 especially if you have a phone call with them. 01:11:17.007 --> 01:11:18.360 They're going to know that you're not an AI. 01:11:18.427 --> 01:11:19.140 You're a human. 01:11:19.207 --> 01:11:22.460 And then this is the agenda. 01:11:22.527 --> 01:11:24.640 We'll go over timing and calendar management, 01:11:24.707 --> 01:11:26.480 and applying while in school. 01:11:26.547 --> 01:11:28.540 I do want to talk about a budget example, 01:11:28.607 --> 01:11:31.440 because a lot of times the budget is 01:11:31.507 --> 01:11:34.090 important in the review process. 01:11:34.157 --> 01:11:36.383 That's a sanity check about here's 01:11:36.450 --> 01:11:37.550 what you're proposing to do. 01:11:37.617 --> 01:11:38.675 Here's the cool technology. 01:11:38.742 --> 01:11:40.010 Here's the market opportunity. 01:11:40.077 --> 01:11:42.590 Here's the team that you have working on it. 01:11:42.657 --> 01:11:46.690 And then why are you giving all this money to that guy? 01:11:46.757 --> 01:11:48.410 Forget it. 01:11:48.477 --> 01:11:50.413 Obviously, you had it all lined up 01:11:50.480 --> 01:11:52.830 but your budget doesn't match with what your intention is. 01:11:52.897 --> 01:11:55.910 So as long as you've got a good plan and it's like, oh, well, 01:11:55.977 --> 01:11:57.912 clearly the key technology guy needs 01:11:57.979 --> 01:11:59.370 to get the bulk of the budget, then 01:11:59.437 --> 01:12:00.953 that makes all the sense in the world. 01:12:01.020 --> 01:12:02.537 So we'll talk about that. 01:12:02.604 --> 01:12:04.370 And then we'll talk about the review process 01:12:04.437 --> 01:12:06.010 in a little more detail. 01:12:06.077 --> 01:12:08.630 And then I've got a whole bunch of generative AI stuff. 01:12:08.697 --> 01:12:11.130 And then the last, I think, half hour of the class, 01:12:11.197 --> 01:12:13.310 we'll have a chance to chat with Ben on the call. 01:12:13.377 --> 01:12:15.043 So questions on that? 01:12:15.110 --> 01:12:16.210 AUDIENCE: One more question. 01:12:16.277 --> 01:12:20.890 So [INAUDIBLE] from phase 1 to phase 2, 01:12:20.957 --> 01:12:25.330 I've heard that there's some audit that takes place, 01:12:25.397 --> 01:12:26.573 and you have to have some. 01:12:26.640 --> 01:12:27.490 STEVE DEREZINSKI: Yes. 01:12:27.557 --> 01:12:29.450 AUDIENCE: Can you talk a little bit about how that happens 01:12:29.517 --> 01:12:30.810 and what you have to have. 01:12:30.877 --> 01:12:31.330 STEVE DEREZINSKI: Sure. 01:12:31.397 --> 01:12:33.247 I mean, we'll talk about it more on Wednesday, 01:12:33.314 --> 01:12:37.370 but there's something called a C-A-A-R, a CAAR. 01:12:37.437 --> 01:12:40.045 I think it's like Audit and Accounting. 01:12:40.112 --> 01:12:41.170 I'll just cut to the chase. 01:12:41.237 --> 01:12:43.050 There's a whole bunch of stuff. 01:12:43.117 --> 01:12:46.130 The hardest part that everybody in your shoes has to deal with 01:12:46.197 --> 01:12:50.070 is that if you are spending the government's money, 01:12:50.137 --> 01:12:52.423 you have to show that you're allocating it correctly. 01:12:52.490 --> 01:12:54.590 How do you show that you're allocating it correctly? 01:12:54.657 --> 01:12:56.373 I'm paying for people's time. 01:12:56.440 --> 01:12:58.790 How do I show that I'm paying for people's time correctly? 01:12:58.857 --> 01:13:02.010 I'm keeping time cards. 01:13:02.077 --> 01:13:05.210 So if you have a proper time cards keeping system 01:13:05.277 --> 01:13:07.602 in your accounting system, and you're allocating it 01:13:07.669 --> 01:13:09.310 to the right people for the right amount, 01:13:09.377 --> 01:13:12.070 and you have proof of that, and you have sign off on that, 01:13:12.137 --> 01:13:13.570 then you pass the CAAR. 01:13:13.637 --> 01:13:15.710 So that's just for phase 2 now. 01:13:15.777 --> 01:13:17.690 So this is you've already got the phase 1, 01:13:17.757 --> 01:13:21.210 and you're trying to-- you basically apply for phase 2. 01:13:21.277 --> 01:13:23.190 You go through the review process. 01:13:23.257 --> 01:13:25.108 You get like, hey, we want to fund this, 01:13:25.175 --> 01:13:27.650 but you have to go through the due diligence checklist, which 01:13:27.717 --> 01:13:30.500 means are you a real company? 01:13:30.567 --> 01:13:32.200 What's your accounting system? 01:13:32.267 --> 01:13:35.200 What's your financial prospects and all that good stuff? 01:13:35.267 --> 01:13:36.580 And can you manage this fund? 01:13:36.647 --> 01:13:38.020 Because it's a million bucks. 01:13:38.087 --> 01:13:40.200 It's not just a few hundred thousand bucks. 01:13:40.267 --> 01:13:42.093 So it's a lot more money and a lot more time. 01:13:42.160 --> 01:13:44.260 So they want to run you through a lot more diligence 01:13:44.327 --> 01:13:47.400 at that phase to make sure you're OK to get the funding. 01:13:47.467 --> 01:13:50.420 And the DOD is even harder. 01:13:50.487 --> 01:13:52.175 There's a whole-- 01:13:52.242 --> 01:13:53.300 I forget what it's called-- 01:13:53.367 --> 01:13:54.940 DFAS or something like that, that makes you 01:13:55.007 --> 01:13:56.815 go through a whole bunch of audits and stuff. 01:13:56.882 --> 01:13:59.253 I've done it, It's why I'm grabbing my head, 01:13:59.320 --> 01:14:00.920 because I'm getting headaches right now. 01:14:00.987 --> 01:14:02.878 So let's break, unless there's other questions. 01:14:02.945 --> 01:14:03.820 Any other questions? 01:14:03.887 --> 01:14:05.220 Yes. 01:14:05.287 --> 01:14:07.100 AUDIENCE: What about accelerated track, 01:14:07.167 --> 01:14:09.460 that you can solve with phase 1 and 2, at least 01:14:09.527 --> 01:14:11.980 for NIH [INAUDIBLE] and others? 01:14:12.047 --> 01:14:13.060 STEVE DEREZINSKI: Yes. 01:14:13.127 --> 01:14:16.260 AUDIENCE: Do you recommend such thing? 01:14:16.327 --> 01:14:19.783 STEVE DEREZINSKI: So the fast track usually is a lot more 01:14:19.850 --> 01:14:21.200 popular, because everybody's like, 01:14:21.267 --> 01:14:23.033 why am I wasting my time with this $100,000, 01:14:23.100 --> 01:14:24.992 and then I get a chance to get a million bucks? 01:14:25.059 --> 01:14:26.372 Why can't I do it all at once? 01:14:26.439 --> 01:14:28.080 That means that there's more applications 01:14:28.147 --> 01:14:30.820 and there's a lower chance of success. 01:14:30.887 --> 01:14:33.683 That is exactly what a conversation with the program 01:14:33.750 --> 01:14:34.600 manager would be like. 01:14:34.667 --> 01:14:36.820 Hey, we're thinking about applying for phase 1. 01:14:36.887 --> 01:14:38.660 We're not sure about SBIR, STTR. 01:14:38.727 --> 01:14:41.240 We're also thinking about fast track. 01:14:41.307 --> 01:14:42.760 Where would this be best fit? 01:14:42.827 --> 01:14:44.740 And, usually, fast track, it means 01:14:44.807 --> 01:14:47.500 that you've already got the commercial partners lined up 01:14:47.567 --> 01:14:48.740 for phase 2. 01:14:48.807 --> 01:14:51.280 So it's like I'm ready to go to phase 2, 01:14:51.347 --> 01:14:53.600 so I want to jam all this stuff together. 01:14:53.667 --> 01:14:56.820 And you have to be totally kick-ass to do the fast track 01:14:56.887 --> 01:14:57.320 stuff. 01:14:57.387 --> 01:14:59.620 So there's a lot of examples where people are just 01:14:59.687 --> 01:15:02.020 like they're perfectly aligned with the solicitation that 01:15:02.087 --> 01:15:02.320 came out. 01:15:02.387 --> 01:15:04.940 So it's like, we don't want to waste our time doing a phase 1 01:15:05.007 --> 01:15:05.440 and phase 2. 01:15:05.507 --> 01:15:06.720 We want to just go at it. 01:15:06.787 --> 01:15:10.460 And those are great candidates for fast track. 01:15:10.527 --> 01:15:11.900 Other questions? 01:15:11.967 --> 01:15:13.980 Doot doo doo doo doo. 01:15:14.047 --> 01:15:15.780 All right, guys, thank you. 01:15:15.847 --> 01:15:17.950 I'll see you Wednesday.