Wyoming Business Tips for May 21

A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.

By Kelly Haigler Cornish, program manager, Wyoming SBIR/STTR Initiative

“I have a product idea and need money to pay for research and development. Where can I find funding?” Mandy, Riverton

Great question. Unfortunately, research and development (R&D) activity is risky, as there is no guarantee that your idea will become a viable product. Due to this risk, a bank is unlikely to loan money to a fledgling or startup company. Additionally, if your innovation is early stage and there is no feasibility study or prototype to support it, your company will have difficulty attracting seed funding from other sources (venture or angel funds). So, where can you look for funding? One possibility may be the federal government.

The federal government tries to solve some of our nation’s most significant problems, and it looks to small businesses to help provide solutions. Since 1982, when President Ronald Reagan signed the first legislation creating the Small Business Innovation Research (SBIR) program, the federal government supports small business R&D. Ten years later, the Small Business Technology Transfer (STTR) program started. The STTR program promotes the transfer of intellectual property and technical knowledge from our nation’s nonprofit research entities -- usually, a university or a national lab.

The key here is that there needs to be some unknown on whether or not your product will work, as SBIR/STTR supports scientific discovery. What that means is, if you know your product will work, it won’t qualify for funding, because SBIR and STTR don’t pay for straight product development. The first phase of funding is typically a feasibility or proof of commercial concept.

Currently, 11 federal agencies participate in the SBIR program, with the five largest also offering STTR funding. We encourage small businesses to start their search for federal research money at the five agencies that account for over 97 percent of the SBIR and STTR funds. These agencies include Department of Defense (DOD); Department of Health and Human Services (HHS), which includes the National Institutes of Health (NIH); Department of Energy (DOE); National Science Foundation (NSF); and National Aeronautics and Space Administration (NASA).

NASA and DOD are contract agencies with very specific research topics. DOE is a granting agency, but it tends to have specific areas of interests that are more narrowly defined. Other agencies are grant agencies (HHS, NSF, DOE) with broad areas of interest. It is easier for a small business to fit your product idea into a grant agency, so check there first.

Once you have looked at the five largest, take a few moments to review the broad topics at the Department of Agriculture (USDA); due to Wyoming’s rural nature and USDA’s mission, it also is a great place to look for funding. It is important for a small business to understand the mission of each agency and learn the similarities and differences among them.

You can learn more about these and other SBIR opportunities that might be a fit for your innovative product idea by visiting the Wyoming SBIR/STTR Initiative website, www.uwyo.edu/sbir.

A blog version of this article and an opportunity to post comments are available at www.wyomingsbdc.org/blog1/.

The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, email wsbdc@uwyo.edu, or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.