Inventive Local Companies Can Apply for Federal SBIR Grants

Federal grant program funds innovation at small businesses

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Ron and Lita Weidenbach's fishpond is in an old quarry on
Oahu's North Shore, where a grant from the Small Business
Innovation Research program helps them conduct research
on a new wind- and solar-powered aeration system for fish farms.
Photo: David Croxford

At first glance, Hawaii Fish Co. in Mokuleia doesn’t look like a hotbed of innovation. For more than 20 years, owner Ron Weidenbach has run a simple operation, raising tilapia in floating cages in the deep waters of an old quarry that he leases from the state. It’s a picturesque setting. Nestled against the craggy Waianae Mountains, the 4-acre fishpond resembles an alpine lake, its shores blanketed in koa haole, its still waters reflecting the clouds overhead.

The operation seems decidedly low tech: a dusty gravel road and a few ramshackle outbuildings. Because he has a short-term lease, Weidenbach can’t get a loan to make improvements, so the fishpond doesn’t even have electricity for aeration. And at harvest, someone has to swim into the chilly water and tow the cages ashore by hand.

But Weidenbach is an inveterate entrepreneur and he has elaborate plans for Hawaii Fish Co. Those plans got a boost last year when he won two research grants from the U.S. Department of Agriculture – one to develop a national marketing plan for pongee, a fish normally sold only in Chinatown, and the other to study the feasibility of a new wind- and solar-powered aeration system for fish farms. Both $90,000 grants were through the popular Small Business Innovation Research program. If his SBIR projects are successful, they could transform business for his company.

How It Works

SBIR, as the name implies, is a federal program designed to support research and innovation by small businesses. The 13 federal agencies with significant research budgets that participate in the program each set aside a minimum of 2.5 percent of their research funds for small businesses (rising to 3.2 percent over the next five years). The federal agencies range from the Department of Defense, which accounts for nearly 40 percent of all SBIR funding, to the Department of Agriculture and the National Institutes of Health, at 19 percent each, to minor players such as the Department of Transportation and Environmental Protection Agency. Every year, each agency (or sub-agency, such as DoD’s Department of the Navy or USDA’s Rural Development program) publishes a list of solicitations for technological issues it would like small businesses to address. Typically, agencies use peer review or special committees to select the winning proposals. The Small Business Technology Transfer program, or STTR, is a smaller, sister program for small firms that want to commercialize university-based research.

SBIR awards come in three phases:

• Beginning this year, Phase I awardees receive up to $150,000 for a six- to nine-month feasibility study of their innovations.

• Only companies that have successfully completed Phase I are eligible to apply for Phase II: up to $1.5 million for a two-year project to build a prototype or demonstration project.

• Phase III, which is typically unfunded, is commercialization, which is, as Weidenbach points out, the whole point of SBIR.

“Phase I is really proof of concept,” Weidenbach says. “Phase II is research and development to bring you up to the stage where private money can take you forward to commercialization.”

It’s not small change. In 2010, SBIR funding amounted to $2.5 billion. Over the past 30 years, the program has funneled at least $21 billion into small business R&D programs. About 120,000 individual awards have been made to more than 15,000 firms, generating more than 50,000 patents. At this pace, SBIR has supported the work of more than 400,000 scientists and engineers spread throughout every state in the country.

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