
America's Seed Fund: Up to $1.5M for Zero Equity - mimixco
https://seedfund.nsf.gov/
======
avsteele
As I see a number of posts negative on the NSF SBIR, so let me speak up in its
defense. I'll discuss my experience as well as address some of the criticism I
see above. I'll try and answer some follow up questions for people in the
replies if I can as well.

My company (zeroK NanoTech) probably wouldn't exist if it where not for this
program.

NSF SBIR can aid in the translation of technology that sits in the no-mans
land between basic research and commercial technology. In my case the basic
potential for our tech had been developed when I was a postdoc, but the
federal lab where I worked (NIST) wasn’t going to be able to translate it. At
the same time, there was not a great chance to obtain venture or similar
funding because the market was a bit too small.

Building off the results of our SBIR-funded research we were able to obtain
additional investment from a larger company interested in our technology.

The Phase I program is competitive, I recall about 15% of applications are
accepted, but the application here isn’t _so_ onerous, btu the funding amount
isn’t very large; this is just for ‘proof of concept ‘ work. The odds of
matriculating to Phase II and a much larger pot of money are better, about
40%. There is a decently long gap between your decision to apply and beginning
of the project, but I know the NSF is working on this. The NSF is also unique
in that you can apply with just about any kind of technology; most other SBIRs
are not anything like this.

I’ve also served on review panels for these grants. While it is the case that
some applications come from largish companies who seems to subsist on SBIRs,
the NSF makes a big effort to invest in 1st time applicants if they have a
solid plan. My ‘company’ in our first application was just myself and my
cofounder and very little other resources and we won our award. Once you are
an awardee, I found the program officers to be very helpful.

~~~
Eridrus
If this program is so good it should probably take equity or be structured as
a loan so that society can get more out of it with its funding.

~~~
orthecreedence
You should not be getting downvoted. There is nothing wrong with the
government taking equity (or at least dividends) in the companies it invests
in _that nobody else wants to_. It's taking a risk. It should get a reward.

~~~
DSingularity
We shouldn’t set profit expectations because of their future consequences on
how the program will be judged.

The financial goals of this program shouldn’t be profit — or even break even.
Any profit expectations will undermine the the way this program is evaluated.

~~~
orthecreedence
Screw the profit, give the money back to US citizens via a general social
dividend.

~~~
zymhan
We're talking about a tiny investment fund. It would be good if it just
managed to break even.

------
mNovak
Our startup is currently funded by multiple SBIRs (DOD, not NSF), and I'm
amazed at the backlash against the program here.

Sure, if you have easy access to VC, your life would probably be simpler. The
process is not easy or quick, and if you think you'll win on your first try,
keep dreaming. Each proposal cycle is like the Olympics. And spoiler, even if
you win dealing with government compliance is a huge pain, and it could easily
take 9-12 months to see the first dollar.

We're not insiders (some but not all topics have a recipient in mind), and
beyond the NSF there's heavy bias against young, small startups. But if you're
a subject matter expert and can clearly communicate a realizable benefit to
the warfighter (again, DOD), it is possible.

Doing hard tech out in the Midwest and having funding (VC is a myth here) is
an awesome thing. Without it, I'd long since be back on the job market.

------
lmeyerov
Having gone through some of this, the timelines, requirements, selection
process, etc. make the SBIR largely non-viable for a serious outsider tech
startup effort and without outside primary funding.

It's great, for example, for professors not fully committing to a venture, but
wanting to run it on the side over a prolonged time. Likewise, for a
contractor shop cranking these out every year, or a stable non-startup wanting
to get an R&D engineer covered. If you are indeed coming from inside the
system, it can be a great supplement!

But for most startup folks here, your effort would go out of business before
the successive funding rounds materialized, and there is too much risk that
they don't happen to rely on them. You can read between the lines on the
success stories reported even here. Your limited time is better spent on non-
SBIR investors & customers.

~~~
Fomite
Note that some of this is by design. For example, I'm in this category: 'It's
great, for example, for professors not fully committing to a venture, but
wanting to run it on the side over a prolonged time.'

Most startup land-friendly funding mechanisms _aren 't_ well suited for that.

------
matchagaucho
Note: I've applied for SIBR funding in the past. Huge waste of time.

 _" The catch"_ Application process takes several months

Similar to an RFP, by the time a SIBR request is written, the preferred vendor
has already been chosen.

Government agency usually gets perpetual use license of your product.

 _Pros_ : Received an actual written response (months later) with detailed
rejection reasons. Something a VC would never do.

For DoD projects and vendors with TS clearances, a SIBR contract can be
parlayed into 5-10 year deals.

~~~
tbenst
I’m a panel reviewer for NSF SBIR and the comment about a “preferred vendor
already being chosen” is absolutely not true. In fact, firms that have been
funded for years by govt grants are at a disadvantage compared to “true”
startups.

~~~
matchagaucho
IIRC to qualify for SIBR a startup must have annual revenue < $10M (?) which
excludes larger vendors.

Anyway, a better wording may be _" vendors in specific geographies with
specialized skills"_.

The process is not as open as it appears. There is a strong bias for
specialization.

~~~
jseliger
I've found a couple of SBIR/STTR RFPs while I was responding to another
question, and the ones I've found read:

 _Has, including its affiliates, not more than 500 employees and meets the
other regulatory requirements found in 13 CFR 121._

That's from a DOE SBIR/STTR Phase I application.

~~~
ct520
hmm only less than 500 employees. Sounds legit.

------
mimixco
I just applied for this grant from the National Science Foundation and was
invited to submit a full proposal. Maybe other founders on HN would find this
helpful. Good luck!

------
lettergram
This appears to be SBIR, which has quite a few requirements. However, are
definitely worth it if you can apply for the grant.

I know in Champaign, IL (where I live) there are resources to help you submit
an SBIR grant. I opted to go down a different path after completing a training
regarding how to submit one. However, if I was working on implementing
anything bio-tech related, I'd definitely submit an SBIR grant.

------
rememberlenny
For what it's worth, I worked on improving this while at 18F.

A big problem with this program was that the funds distributed were
disproportionately allocated to coastal cities. As a result, places like
silicon valley, north east (Boston) and NY. The goal of the project revision
was to help make sure more money was going to less recognized universities and
research entities.

This is definitely worth pursuing if there are areas of research that you or
your company are exploring that have potential to go to market with a infusion
of capital.

The drawbacks, like any type of investment, are mainly the distribution cycles
of the funds. Unlike private equity, you may need to wait longer than a quick
VC seedfund to get money. If you are already burning capital, then this is
likely not the ideal investment for you.

------
boiler_up800
This program is great. Massively helpful if you have risky technology. It was
our primary funding source for the first few years.

------
ada1981
Does anyone have experience receiving funding through this sort of thing?

~~~
gibba999
It's a bit of a disaster. Government processes aren't rational; they're
bureaucratic, with specific (and complex) procedures intended to guarantee
fairness. The government receives a set of proposals, and must evaluate them
based on objective criteria. Unless you know what those are, you won't be
competitive. You basically want to be an expert grant writer; that matters
more than anything. Proposals can be rejected without being read if you, for
example, format your document incorrectly, or use the wrong way to project
expenses -- nits no VC would care about.

The result is that much of the funding goes to SBIR shops -- organizations
with no business model aside from operating from government grants. They write
proposals, and use those to fund operations. They keep going for many years
with products tailored to the SBIR process rather than to real markets.

If you want to play, my advice would be to talk to someone who has done it,
and have them review your submission. My other piece of advice is talk to the
program officer. Their job is, in part, to help you navigated the sometimes-
byzantine process.

All that said, I don't feel bad having my taxes spent there. Despite the
mismanagement, it seems to have a positive ROI for the world.

~~~
hpcjoe
I remember looking into and applying for SBIRs many years ago. My comments
reflect the programs as last I interacted with them, so they may be dated in
understanding.

There are many issues, not the least of which are the very long lead times.
From submission to decision/notifications can be 6+ months.

Another issue is the Phase I/II gap. Sure, you can get more money, but there
is another (at least) 6 month interval for that. And there is no guarantee
that you will get the Phase II. You have to show very specific positive
forward motion in Phase I to get Phase II. And Phase III, commercialization,
is similar in that you need to show a nascent market.

Back when I was looking into and applying for these, the VCs I spoke with
suggested that they were a signal, albeit not a strong signal, that there was
"something there". Not enough on its own to pull them off the couch to write a
check, but enough to keep them interested if others did.

This said, having participated in my fair share of government sponsored small
business innovation programs, and seeing the most politically connected
applicants get funded for fairly poor ideas, I'm kind of jaded about these
programs. As bad as they are VCs have the right incentive (profit) albeit in
the wrong structure IMO, to invest. The government is all about box checking
to show their effectiveness.

------
caymanjim
Do we really need this? Is there some lack of private venture capital that
this is overcoming? As a taxpayer, I'm not cool with this. I would much rather
this money be granted for research that then becomes public domain. Why should
our taxes be handed out for risky business endeavors with no direct public
benefit, when the private sector already has the means to handle this?

"But the government gives tons of handouts to existing companies" isn't a good
answer, either. Two wrongs etc.

~~~
pm90
> Do we really need this? Is there some lack of private venture capital that
> this is overcoming?

\- VC funding is a thing only in SV and a few other cities. Most cities do not
have a vibrant ecosystem that is accessible to Small Businesses

\- VC's only invest in ideas that have both a high likelihood of success and a
large payout. SBIR focuses on ideas that have a high likelihood of success
without a large payout a.k.a the vast majority of small businesses in America

> I would much rather this money be granted for research that then becomes
> public domain.

Y not both?

> Why should our taxes be handed out for risky business endeavors with no
> direct public benefit, when the private sector already has the means to
> handle this?

\- its not risky

\- private VC cannot be relied on to fund certain kinds of businesses.
American Bank loans are decidedly low-risk too (and can't be swapped for
equity)

> "But the government gives tons of handouts to existing companies" isn't a
> good answer, either. Two wrongs etc.

That is not the answer. If that was, I agree it wouldn't be a good one.

In general, grants of Capital to small ventures that have good foundations is
not a "waste of taxpayer money". The success of those businesses creates jobs,
that pay taxes, support the local economy etc. They're a waste only if you
think giving grants is literally burning a pile of money, which it is not.

~~~
jayalpha
"\- its not risky"

It is super risky and we had this discussion before on HN. SBIR grants are
often given for "blue sky" projects. You could say that is the definition of
"risk".

~~~
pm90
A statement like that, without linking to any of said conversations on SBIR
grants, provides very little value to the discussion. If you could link to
said threads that would be lovely.

~~~
jayalpha
My post:
[https://news.ycombinator.com/item?id=17995933](https://news.ycombinator.com/item?id=17995933)

A guy who agreed with me:
[https://news.ycombinator.com/item?id=17997184](https://news.ycombinator.com/item?id=17997184)

Matthew Weinberg, former Special Advisor to the SBA's Office of Investment and
Innovation, disagrees with you. With respect to the SBIR program, he said:

"It’s fundamentally astounding that the federal government—not private venture
capital firms or banks—is the entity backing these moonshot investments that
end up changing the world[1]."

~~~
jakelazaroff
That quote comes from this Fundera blog post [1], which speaks _positively_
about the SBIR program:

 _> If your small business focuses on developing scientific or technological
breakthroughs, we’ll tell you exactly how to get the SBIR funds you need to
change the world._

Given that, I would assume Matthew Weinberg _agrees_ with GP, and means
"astounding" with a positive connotation.

[1] [https://www.fundera.com/blog/sbir-
program/](https://www.fundera.com/blog/sbir-program/)

------
danielmorozoff
We are funded by the nsf sbir and I must say if it wasn’t for this mechanism
our company would not exist. Effectively it funds reach science that can have
translational applications. The value of the sbir is to get you to mvp ( phase
I) and scale out to prove traction in phase II

Effectively it provides capital when vcs aren’t willing to either because
you’re too early from rev numbers or they just lack the alignment on
vision/market or some other reason

------
late2part
I believe that ThousandEyes, a very successful Bay Area start up now funded by
tier 1 Sandhill Road folks was initially funded with this or something
similar.

------
eruci
Is there anything like this for non-US residents?

~~~
lokimedes
Other countries have similar funding available. For instance the Danish
Innovation fund:
[https://innovationsfonden.dk/en](https://innovationsfonden.dk/en)

------
bsder
The biggest problem with these grants is that GE (and other big companies)
have entire divisions dedicated to opening a "startup", writing the
application, getting the money, and then folding the company back into the
parent.

They are a shotgun while you, at best, are a rifle. Success probabilities are
corresponding.

------
amacbride
I’ve written and participated in a number of (successful and unsuccessful)
Phase I&II SBIR & STTR grants via the NIH; can anyone who has done both NIH
and NSF grants speak to any substantive differences between the two agencies?

~~~
drewda
I only have first hand experience with NIH SBIR/STTRs, but I have heard good
things from acquaintances with NSF funding. Sounds like NSF has put more
resources into startup resources and mentorship, like its i-Corps program.
I've also heard that NSF program officers are more open to NSF SBIR PIs
pivoting their projects along the way, in order to suss out product-market
fit. (Note that my impressions may be some years out of date.)

------
dosy
an effect I've noticed on this forum is that people come out against something
just for the sake of making an argument. I've done it. so to get a gauge on a
true measure of sentiment you need to correct for that effect. my guess is
about 80% of the negative bluster is argument based and not sentiment based.
meaning that if you could measure the same people's true feelings on the
matter in another context when removed from the motivation to argue I think
you'd see at least 80% reduction in negative sentiment on any topic. the
medium of this forum is just polarizing but don't be swayed by that. The truth
is much closer to the center on many issues I think.

~~~
quickthrower2
For the record I’m neutral on this topic.

------
shmooth
At least no room for corruption

------
FakeComments
Any US citizen interested in zero equity seed money from the US government
should investigate SBIR (of which this is the NSF component), a program
overseen by the Small Business Administration, but run through the
departments. (You end up paying in other ways — but you should be aware of it
as an option.)

Every US government research program must provide 3% of its R&D to small
businesses, with the goal of seeding American innovation outside of major
conglomerates.

Personally, I view results driven government seed money as a viable answer to
many questions the US faces — but it requires we pull together behind a vision
of free people engaged in small commerce, something the US left wing seems to
vehemently oppose.

I’m a capitalist, though: I believe the best way to cause human flourishing is
expansive commerce coupled with individual freedoms, and suggest anyone
disputing the social value of that show me a system that’s uplifted as many
minorities out of poverty as, say, McDonalds franchising.

~~~
omarchowdhury
> uplifted as many minorities out of poverty as, say, McDonalds franchising.

I appreciate your overall message, but I believe that one would need to have
non-poverty level assets to even be considered to open a McDonald's franchise.
Odd example.

