Friday, September 4, 2009

Nota Bene: we judge small businesses differently

First, a disclaimer: my firm currently has an SBIR Phase I proposal under review at the NSF, submitted in early June, for which, if selected, the author of this post would serve as PI. That said, I respect the integrity of the process and trust that my comments here should have little to no bearing on the merit review of the proposal, either positively or negatively.

The NSF website prominently notes:
Consideration of proposals usually requires up to six months.
From the viewpoint of a small business seeking support for R&D, I would welcome the passage into law of §204 (3) (B) of H.R. 2965 EAS :
...a final decision on each proposal shall be rendered not later than 90 days after the date on which the solicitation closes unless the Administrator determines, on a case by case basis, that a decision may be extended from 90 days to 180 days
That's old news (though we still await the final version of the SBIR/STTR Reauthorization Act)! What caught my eye today however was a passage on the NSF website, from their instructions to the Phase I Technical/Commercial Peer Review Panel. Here it is verbatim [emphasis theirs]:
(N.B.,SBIR/STTR INTERPRETS THE NSF CRITERIA SLIGHTLY DIFFERENTLY THAN THE REST OF THE FOUNDATION BECAUSE WE ARE LOOKING AT RESEARCH THAT IS CLOSE TO PRODUCING A MARKETABLE PRODUCT (i.e., "Advanced Applied Research,") NOT BASIC RESEARCH. The science/engineering entailed in the project may be well understood; the novelty may lie in the application.)
Interesting use of the word may there. What if... let's be radical here... what if the science and engineering were cutting edge, rather than "well understood" despite its origin in a small business, rather than a university? What if the novelty lay not merely in the application, but in the approach itself? Let's just say it does. Let's just posit the possibility that a small business enterprise might be truly innovative. What then?

I'd like to think that my firm fits that latter description, because frankly it doesn't well fit the former. The science and engineering is not well understood (at least not outside my company), because it's novel. I have argued on this blog rather passionately for seed-stage funding through SBIR and perhaps other mechanisms. I admit this passion is in part self-interest. Seed funding is hard to come by.

VCs and others are aligned to invest in businesses "close to a marketable product," but not, as it turns out, in potentially transformative but yet unproven ideas. Why should NSF SBIR fill that same niche, when true seed funding is remarkably scarce? Does the cited guidance to NSF technical reviewers hint at a presumption that small businesses are not capable of scientific innovation?

The requirement is well established that SBIR applicants must justify their proposals with a strategy toward commercialization (which already distinguishes SBIR from other NSF programs). It is a requirement that we in the small business community embrace. The guidance seems to go beyond that however. It is not merely asking for commercializability, but in essence preferencing later stage efforts over early-stage R&D, but doing so merely for small businesses, asking us to compete not to a higher bar, but on another track.

How different from the stance of the DoD :
Our appropriated funds are designated for research and development. By law, we cannot spend them for anything else.
What leads to such disparity by different agencies both authorized to fund innovative research by small businesses? Let us only hope in the end that innovation leads, not guidance.

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