Federal Fund Valuable Tool for Small-Biz Innovators

By Nancy Kaffer

In 1989, Heidi Jacobus was a grad student with a part-time job in the University of Michigan library system. Asked to index proposals to the federal government’s Small Business Innovation Research program, Jacobus, whose academic work centered on a field called ergonomic cognition, saw an opportunity.

Jacobus’ own proposal was accepted and she received a $50,000, six-month U.S. Department of Defense contract to develop technology used in airplane cockpits, followed by a two-year, $500,000 contract.

Twenty years later, Jacobus is the CEO of Ann Arbor-based Cybernet Systems, the company she built around those early SBIR grants.

Her success, Jacobus said, could be replicated by any company with innovative work and the ability to submit a SBIR proposal.

The SBIR program is a federal fund, this year worth $2.5 billion, set aside for 11 federal agencies to allocate to tech-oriented small-business owners. The program publishes a list of solicitations for which business owners may write proposals.

“It’s a federal set-aside,” said Lisa Kurek, managing partner of Ann Arbor-based Biotechnology Business Consultants. “It’s mandated to set aside the budget to fund programs. The agencies don’t have the discretion to not spend the money in small business.”

Kurek’s firm helps small-business owners apply for SBIR funding, through grants or contracts, under a contract with the Michigan Economic Development Corp.

“We’ve been doing training through the MEDC for almost eight years,” Kurek said. “By no means do we help everyone in Michigan, but we get them funded at about two times the national average.”

Many small-business owners choose to do their own paperwork, and others seek assistance from companies like Kurek’s.

In 2007, 99 of 551 proposals were funded, about 18 percent, according to the Ohio-based State Science and Technology Institute, a nonprofit that tracks such statistics. The national average is 17.2 percent, Kurek said.

Neighboring states fared about the same, with 19 percent of Illinois’ proposals receiving awards and 17 percent of Ohio’s. Wisconsin has a 23.3 percent approval rate, according to SSTI.

Kurek said some business owners are discouraged by the proposal process, about 25 pages long. Jacobus likens the level of difficulty to an advanced term paper, noting that it’s not a fill-in-the-blank style form, but said most people should be able to handle it.

“The problem for small businesses is, if you’re unfamiliar with how to read the solicitation or how to write a proposal, you may write a proposal that is uncompetitive,” Kurek said.

That’s where her company comes in.

“You’re not going to get a hit if you don’t get up to the plate,” Kurek said. “You have to know the baseball game is going on and that you can get up to bat. Improving those odds takes coaching just like in baseball so you can get two, three or four hits at a time.”

The biggest mistakes applicants make, she said, is not reading instructions and not allowing enough time to complete the proposal.

Jacobus said that resources are there for innovative businesspeople who are interested in seeking the funding.

“The “I’ is for “innovation,’ so you need to be doing something innovative,” she said. “But there are a lot of topics that could be put out there, and there are a lot of companies in Michigan that don’t even know they’re doing something innovative that could give it a whirl.”

The SBIR program can be a valuable tool to build the high-tech business community, Jacobus said.

“You have customer validation in defense proposals, that this company’s ideas are in fact marketable, and you have found a potential customer who has reviewed your proposal and is wiling to put money behind to develop,” she said. “See how it’s a perfect new business situation for economic development?”

Ideally, she said, the state should offer matching grants to SBIR awardees.

“Michigan has a small program like this, they will match $15,000 of a $100,000 proposal,” she said. “Some states have seen SBIR as a huge economic-development tool.”

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