Part 5: a. Seed Funding
1. Early Stages: Raise seed funding including SBIR or STTR funding through the U.S. government.
Federal funding opportunities for small businesses, such as the SBIR and STTR programs, are great ways to receive seed funds. These funds for businesses research and development are among the largest sources of early-stage financing in the U.S. They lead to innovative commercial products by creating a basis for larger, later sources of funding. To obtain funding, scientists at small, U.S., for-profit businesses meeting specified requirements write proposals and submit them for review in a competitive process.
- SBIR/STTR money is not a loan. No repayment is required.
- The government has 0% equity in your business, so you still own 100% of your company (non-dilutive funding).
The National Institute of Health (NIH) and the National Science Foundation (NSF) provide most of the life sciences and biomedical funding. Other agencies providing some SBIR/STTR funding to biotech/biomedical companies to meet their specific interests include:
- Department of Defense (DOD)
- Environmental Protection Agency (EPA)
- Department of Energy
- Defense Advanced Research Projects Agency (DARPA)
- Biological Advanced Research and Development Authority (BARDA)
Learn some terminology and acronyms used for learning about topics NIH agencies are interested in for SBIR/STTRs:
RFP and RFA
RFP: Request for proposals (Contracts)
RFA: Request for applications (Grants)
A document describing SBIR funding opportunities for businesses to do research on topics that meet the mission of NIH, CDC, and FDA agencies.
Funding Opportunity Announcements. These documents announce that a Federal agency will award a Discretionary Award. The FOAs are typically competitive.
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SBIR Numbers Challenge
Tips on Seed Money:
- Align your research with U.S. government funding agencies (especially SBIR) and industry.
- When applying for an SBIR grant, build a relationship with your program director. They are there to help you!
- It always costs more to finish a project than you think.