It takes money to make money. That adage is never so true as in the case of startup companies who have an idea, but lack the resources to research and commercialize it. What’s a startup to do? One solution is to apply for research grants.
“It’s important for small companies to make the leap from idea to product,” said Scott Keeney, president and chief executive officer of Vancouver-based nLIGHT, which manufactures high-power semiconductor diode lasers.
Keeney should know – his company was founded in 2000 with a “card table and shared office space”; they now employ more than 250 people. The Washington Technology Center helped nLIGHT make that leap.
“Having access to clean room space [at the WTC Microfabrication Lab in Seattle] was crucial,” said Keeney. nLIGHT has been awarded at least two Research Technology Development (RTD) grants, administered through the WTC.
Keeney will be part of a panel about gaining access to funding at the “Funding for Technology Entrepreneurs” seminar on Aug. 7. The seminar is a collaborative effort between the WTC and Washington State University Vancouver. Representatives from the university will also be present at the conference, providing information on how university researchers can help local technology entrepreneurs.
“The chance to work with academics at WSU is vital for our community and critical for the region,” said Keeney.
ABCs of R&D
According to Dr. Hakan Gurocak, director of WSU Vancouver’s School of Engineering and Computer Science, university researchers are eager to work with area businesses. He said that there were five ways in which this collaboration could happen:
• Undergraduates work on an industry-provided project for their senior design course in mechanical engineering, typically analyzing a product and developing a prototype.
• Students interested in a specific problem work on that during an independent study.
• Graduate students bring a problem from where they work and write their thesis on it.
• Researchers work on a project proposed by the WTC or the National Science Foundation (NSF).
• Companies pay a small fee to use the university’s Service Center, which makes equipment such as scanning electron microscopes available to companies that otherwise would not have access to such expensive equipment.
“We’re very interested in engaging with the technical community,” said Dr. Gurocak.
He estimates that WSU Vancouver has participated in 30 to 40 student projects and about ten research projects over the last six years. To help fund such collaboration, companies can turn to agencies such as the WTC, which offers several types of grants: the Small Business Innovation Research grant, the Small Business Technology Transfer grant and the Research and Technology Development grant.
Each type of grant differs as to who gets the money and has different eligibility requirements; detailed information will be presented at the August seminar. (Funding is also available from other sources, such as the NSF and the National Institute of Health.)
Winning the race
No matter which type of grant a company applies for, there are some general rules for success.
“You need a good idea, good technology, and a good relationship with the right researchers,” said Keeney.
In addition, companies need a good business plan. Suzanne Mitchell, WTC’s Eastern Washington outreach director, said, “A strategic plan that illustrates how you will develop and competitively commercialize your new concept or technology, turning research into revenue, is more important that the innovation itself.”
According to Mitchell, the business plan should include information on the competitive landscape, product positioning, market trends, management teams, and an operating plan. Don’t just concentrate on the budget though – the science behind the idea is important, too.
William Ross, former vice president of VPDiagnostics, a biomedical startup in Seattle, recounted how their first application for NIH funds was turned down because the application reviewers were looking mostly for scientific data. VPDiagnostics resubmitted the application after addressing the reviewer’s comments, and was awarded a three-year, $2.93 million grant for developing their diagnostic software.
“Resubmission can pay off,” said Ross, who will also be presenting information at the funding seminar.
Although the millions in grants can be tempting, Mitchell cautions businesses not to simply “chase money.” Instead, she advised firms to concentrate on developing a good business plan – know where the company is headed and how it will get there.
“Design the business strategy first,” said Mitchell. “Then find the appropriate money to fund each stage.”
FUNDING FOR TECHNOLOGY ENTREPRENEURS
Who: Entrepreneurs and organizations in need of funding for research into new technologies
What: Informational seminar offered by the Washington Technology Center and hosted by WSUV
Where: bull;Multimedia Classroom Building, room 1, 14204 N.E. Salmon Creek Ave., Vancouver
When: Aug. 7, 9 a.m. – 1 p.m.
Cost: Free, including lunch and parking pass with advance registration
On the web: www.watechcenter.org
HATCHING YOUR IDEA
Instead of providing funding directly, business incubators are organizations that help increase survival rates for innovative startup companies by providing services that include physical space (offices and sometimes labs), management coaching, business plan assistance, administrative services, technical support, business networking, advice on intellectual property and help in finding funding sources. Worldwide, 51 percent of incubators are nonprofit, with only 8 percent being for-profit.
There are a number of business incubators in the metro area. Lincoln Ferris, executive director of the Washington Association of Small Business Incubators, said that although they had had lengthy conversations with groups considering starting an incubator in Clark and Cowlitz counties, he knew of no existing incubators in Southwest Washington.
One unique PNW incubator is the Applied Process Engineering Laboratory (APEL), located in the Tri-Cities area. Although not exactly local, APEL can offer “affiliate client” services to businesses not physically located in Pasco, Richland or Kennewick. “Tenant clients,” located in the Tri-Cities area, have access to Pacific Northwest National Laboratory (PNNL) scientists, engineers and other professional staff and to the Pacific Northwest’s new premier molecular science laboratory, the Environmental Molecular Science Laboratory (EMSL) and staff.
The National Business Incubation Association (NBIA) estimates that in 2005, North American incubators assisted more than 27,000 start-up companies that provided full-time employment to more than 100,000 workers and generated annual revenues of more than $17 billion. According to SmallBusinessNotes.com, new incubators have been opening at the rate of about one a week since 1986. It is estimated that there are more than 8,000 startup firms housed in incubators and another 4,500 entrepreneurial ventures currently operating on their own were originally launched through incubators. In Washington State, according to the Washington Association of Small Business Incubators, there about 16 business incubators in the state, with another 14 or so currently being developed or considered.