On July 16 the state Commission On Science and Technology (CST) announced that due to drastic budget cuts, it would close its doors after 25 years. The commission was created in 1985 to promote science and technology research and business in the state, and to influence policy.
Part of what it did was provide a platform for workshops and seminars and offer financial assistance to entrepreneurs and R&D teams; and a major casualty of the closure of CST is the death of SBIR/STTR training.
The federal Small Business Innovation Research and Small Business Technology Transfer programs annually offer $2 billion to small technology companies, entrepreneurs, and early-stage research companies working with universities. The CST provided a valuable conduit to the state’s tech companies by teaching them how to get a slice of that $2 billion annual pie.
According to Randy Harmon, technology commercialization consultant for the Small Business Development Centers at Rutgers University, CST provided $50,000 annually to the SBDC to fund programs designed to teach startups the intricacies of the SBIR/STTR process. In the commission’s absence, the state EDA is the only state agency still offering help to tech startups, and its flagship program is the Edison Program.
But though Edison provides its own fortune to tech startups, those funds need to be paid back. For the new entrepreneur, Harmon says, it is far less risky to pursue grants, which the state no longer provides. “The SBIR and STTR programs are pretty much the only game in town,” Harmon says.
In the absence of the Commission On Science and Technology, SBDC two longtime corporate partners — Bridgewater-based accounting firm EisnerAmper and Roseland-based law firm Lowenstein Sandler — have stepped in to fill the void. The firms, Harmon says, have provided enough funds for “an abbreviated season” of SBIR/STTR training programs this fall (see sidebar). Harmon would not say how much money is available for the training workshops, but there will be three in the state.
Whether there will be more next year is up in the air. “I’d love it to continue,” Harmon says. “I’d also love to see the commission come back.” But given the uncertainty of budgets and the sweeping cuts of the Christie administration, Harmon can no more predict the future of SBIR/STTR training than he can the stock market.
The closing of CST also meant the loss of millions of dollars for CST’s venture funding and Fellowship programs, which have also been eliminated, Harmon says. In 2009 CST provided nearly $5 million in funding for small tech research in the state. “SBIR and STTR are consequently now more important to New Jersey entrepreneurs than ever as the best source of early-stage risk capital to fund the development of promising new technologies,” Harmon says.
At least through the fall, the combined efforts of the EDA, SBDC, and corporate sponsors will provide or be a major part of numerous events designed to connect small tech companies to training sessions and funding sources.
The SBDC will continue to offer cost-shared proposal preparation assistance services, offering up to 12 hours of assistance to SBIR/ STTR training seminar attendees at $20 to $25 per hour. Services include written critiques of draft proposals and assistance in strengthening them, and is available on a first-come-first-served basis. Coaching and guidance in drafting proposals is free.
“Regardless of how good the training is,” says Harmon, “new entrepreneurs need help with their proposals.”
In addition, the SBDC will continue to offer its Technology Commercialization Program, a free one-stop resource for financing science and technology-based businesses and commercializing new technologies. The program provides guidance on state financing programs, angel investments and venture capital, goals, and growth and development. The program helps companies identify their best prospects and assists them in preparing and strengthening the required funding proposal, business plan, or investor presentation.
Harmon is the CEO of Foundations Business Development Group in Plainfield, a consulting firm he launched in 2005 to help entrepreneurs in New Jersey. Before he became the director of technology commercialization for the New Jersey Small Business Development Centers at Rutgers, he managed the Rutgers Technology Business Incubator in New Brunswick from 1995 until 2001. He holds a bachelor’s from Cornell and an MBA from Rutgers.
The two biggest challenges that promising young growth businesses typically face during their early stages are a lack of financing and the absence of a management team, Harmon says. “The typical science or tech business is founded by one or more scientists, or technical professionals with little or no formal business training and experience. They have great technology but are often unable to turn it into a business themselves and are likely to fail without experienced business help.”
Harmon says new tech entrepreneurs often fail to realize from the start that business development and marketing expertise are a separate skill set as important to the success of their business as the technology. “Our goal is to help bridge this gap and to bring our clients to the place where they are able to access the resources necessary to build an effective business management team that will speed their development and increase their prospects for success,” he says.
Harmon’s major focus in his frequent talks, workshops, and articles is financing. “Ask a lot of successful entrepreneurs how they first got started, and they’ll tell you that they did whatever it took,” he once wrote in an article on bootstrapping. “You’ll hear scary stories about second mortgages and maxing credit cards, as well as stories about guilt financing from friends and family members.”
A common problem, Harmon says, is that inventors fall in love with their inventions and lose sight of how to successfully fund or market the product. They become enamored with the possibilities and often end up losing “a lot of good time and effort pursuing what ultimately becomes an exercise in futility,” he writes.
Knowing how to navigate the funding process, therefore, is key, and this is what Harmon wants science and tech startups to know. And it is why, despite the absence of the CST, there remains an effort to see that inventors stay on the smart path.