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This article by Kathleen McGinn Spring was prepared for the October 30, 2002 edition of U.S. 1 Newspaper. All rights reserved.

Uncle Sam’s Money Can Attract VCs

You have a hot new hightech idea and you want to know

if you can get government money to help develop it. Go to www.sbirworld.com,

a site for the Small Business Innovation Research Program (SBIR) that

is funded by the National Science Foundation. Conduct a "key word"

search on two levels. Search on your core competencies for funding

that the government is offering now, and also for grants that were

made in the past, says Randy Harmon of the Technology Commercialization

Center. "The past is often a predictor of the future. So if an

agency once had a topic in the entrepreneur’s area, the odds are very

good the government will ask for that topic again."

SBIR funding is definitely the best source of risk capital available

to help fund the development of promising new technologies, says Harmon,

and often it leads to equity financing. Harmon has organized the second

annual SBIR conference set for Tuesday and Wednesday, November 5 and

6, at Rutgers Cook College. At the conference, entrepreneurs can get

information that can help them compete more effectively for SBIR grants

and contracts. Cost: $150 at the door for two days, $90 for Tuesday,

and $60 for Wednesday. Call 800-432-1832.

Sessions on November 5 are open to companies that are new to this

program as well as to those with some experience. It would also be

good for attorneys, accountants, and others consulting to the technology-based

businesses. Gail and Jim Greenwood of the Greenwood Consulting

Group will lead the workshops. Speakers include John Tesoriero,

executive director of the New Jersey Commission on Science and Technology,

and Michael Conti of the New Jersey Economic Development Authority,

who will discuss the state’s seed capital program. Raymond Sasso

will cover the Rutgers Interfunctional Team Consulting Program.

The agenda will include a four-step process for writing a Phase 1

program for the SBIR grants or for another program, the Small Business

Technology Transfer (SBTT) grants. Rick Weiss, president of

Witherspoon-Street-based VioCare Technologies, will present a case

study showing how his business was able to leverage SBIR funds.

The SBIR Cost Proposal program is the topic for November 6, and Patrick

Alia of Amper Politziner & Mattia is among the speakers. SBIR and

similar projects have certain cost proposal and government accounting

requirements. "If you are not well versed in these areas, you

risk losing money on your SBIR grant or contract, perhaps by being

penalized for charging the government too much, or being unable to

justify certain expenses," says Harmon. Included in this workshop

will be information on indirect costs, audits, and record keeping

requirements.

The good news is that you have a one in eight chance of landing an

SBIR Phase 1 grant. Once you get through Phase 1 you can apply for

Phase 2 and those odds are better — two in five. By that time,

you would have piqued the interest of equity investors. "Typically

the entrepreneurs focus on the technology and then on marketing and

business issues," says Harmon. "But if they also address market

and business development risk during phase 2 they can get on the radar

screens of venture capitalists and angel investors."


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