Supporting Homegrown Innovation (Michael Singleton Commentary)

Michael Singleton

Science fiction is full of unkempt, lab coat-clad geniuses toiling away in a basement or laboratory, inventing super secret formulas to take over the world.

In reality, innovative research with world-changing implications happens every day in our universities and private companies. But what good is the best research discovery, technology or innovation if it never leaves the lab?

Commercialization is simply the process of taking technology from the lab and making it into something that changes lives; commercialization happens at the intersection of innovation and business.

Technology startups and commercialization are getting more attention in Arkansas.

Even as new initiatives stimulate entrepreneurship and innovation, we need to use existing resources. Two often unsung heroes of the entrepreneurial ecosystem are Small Business Innovation Research (SBIR) and its companion, Small Business Technology Transfer (STTR).

Specifically designed for high-risk projects with commercialization potential, SBIR and STTR are proven federal programs offering small companies opportunities to engage in research and development that addresses specific needs. Since their inception, the programs have accounted for more than $38 billion in investment for cutting-edge technologies, $100 million in Arkansas alone.

Funding is one of the greatest barriers to commercialization for small companies and startups, especially in a small state like Arkansas. SBIR/STTR-funded projects are typically so early stage that they are unlikely to attract private investment.

Because SBIR/STTR funding is non-dilutive, innovators can prove out their concept or engage in further research, testing and product development while preserving the firm’s ability to attract angel and venture dollars.

Roland Tibbetts, former senior program officer at the National Science Foundation and father of the SBIR program, summed up SBIR’s value this way: “SBIR bets on the ideas of innovative small tech firms, often in emerging areas because there is less established competition in new areas. Small firms go after the gold ring of breakthroughs with considerable passion and are willing to work long and hard to achieve it. Federal economic policy ought to recognize the value of this and why this initial government financing at the idea stage is so critical to innovation.”

Competitively awarding a portion of their research and development budgets to small businesses, 11 federal agencies participate in SBIR. Together, the agencies awarded nearly $2.5 billion in fiscal year 2012, with just over $11 million going to Arkansas companies.

The programs’ goal is to move products from the lab to the marketplace, and they have an impressive stable of success stories. Companies including iRobot, Da Vinci Surgical Systems and Qualcomm all used SBIR/STTR funds for early-stage research and development.

Arkansas researchers benefit, too, including Tito Viswanathan of Synanomet LLC, developer of a nanomaterial-based water purification technology. Synanomet, winner of SBIR Phase I and II awards from the Environmental Protection Agency, recently licensed its technology to a leading environmental engineering firm.

“Without SBIR funding, Synanomet would not be in the position that it is today,” said Viswanathan, company CEO and chief scientific officer.

While local participation in the program has grown, many potential applicants find the programs’ highly competitive application process arduous, cumbersome and overly bureaucratic. Charged with oversight and implementation of SBIR/STTR, the Small Business Administration is using the Federal and State Technology (FAST) partnership to address applicant concerns.

As one of only 22 FAST programs in the country, the Arkansas Small Business & Technology Development Center offers one-on-one, customized assistance to applicants from the state.

Other Arkansas-based companies, such as Arkansas Power Electronics International and SFC Fluidics, have used SBIR dollars to bring new products to market. Increasing the state’s share of SBIR/STTR funding will lead to even more homegrown innovation and commercialization.

Michael Singleton is the Arkansas SBIR liaison and assistant state director of the Arkansas Small Business & Technology Development Center at the University of Arkansas at Little Rock.