Since accepting the position as the Director of the SBIR/STTR Programs Office at DOE in December, 2010, I have been pleased to see that there is a very talented community of small businesses that are active in the DOE SBIR and STTR programs and that interest continues to grow every year.   To continue to improve the program, we are planning to implement significant changes, beginning this year, fiscal year 2012 (FY 2012). 

 The primary motivation for these changes is to improve the commercialization outcomes for DOE’s SBIR and STTR programs and also to improve the administration of the programs.  This email will highlight some of the important changes, but I would encourage you to read the FY 2012 SBIR/STTR Funding Opportunity Announcements (FOAs) which will have more detailed information. 

 Here is a listing of the important changes that are discussed more fully below. 

• Issue two annual SBIR/STTR Phase I FOAs beginning in FY 2012

o   Early posting of topics

o   Letters of Intent required

o   Limits on the number of applications

• Increased emphasis on commercialization plans in Phase I and Phase II applications
• Increase in the STTR maximum award amounts for Phase I and Phase II

Issue two annual SBIR/STTR Phase I FOAs:  The biggest change for FY 2012 is that we will begin to issue two annual SBIR/STTR Phase I FOAs.  We will split our topics into two FOAs.  The first FOA, designated Release 1, will have topics funded from the Office of Science and will be posted in early August and close in mid-September.  The second FOA, designated Release 2, will have topics funded from the remaining DOE program offices and will be posted in early December and close in mid-January.  The primary purpose for splitting our topics into two FOAs is to enable DOE to process applications more efficiently thereby reducing the time between the close of the FOA and the start of the grant period for awardees. 

• To provide applicants with additional time to develop solutions to the opportunities presented in our topics, we will begin posting topics early on our website in advance of the FOA being posted on grants.gov.  The topics for FY 2012 Release 1 are available now and can be found here:  http://science.energy.gov/sbir/.    After the topics are available and before the FOA is posted, you may directly contact the program managers listed in the topic descriptions.  After the FOA is posted, you will be required to use FedConnect to communicate your questions about individual topics. 
• To speed up application processing we will also require Phase I applicants to submit letters of intent in advance of their full proposals.  Applicants will be asked to include a technical abstract and list of collaborators in the Letter of Intent so that DOE program managers can begin the process of identifying reviewers for your proposal.   This will enable us to begin the review process soon after the close of the FOA. 
• Finally we will impose a limit of 10 applications by a small business to each Phase I FOA. 

Increased emphasis on commercialization plans:  DOE requires that commercialization plans be submitted with both Phase I and Phase II proposals.   Although this requirement occurs very early in the development cycle, we want to insure that applicants are committed to commercializing the technologies they develop under DOE SBIR and STTR awards.  Beginning with FY 2012 FOA Release 1, Phase I applications that lack a commercialization plan will be administratively declined without review. 

 Beginning in FY10, DOE also instituted a more rigorous commercial potential review of Phase II applications.  These reviews, independent of the technical merit reviews, focus exclusively on the Phase II commercialization plans and are conducted by reviewers experienced in technology commercialization.  Beginning in FY 2012, Phase II applications with commercialization plans that are rated poorly, independent of their technical merit review scores, will not be eligible for funding.  It is therefore important that applicants provide compelling commercialization plans to support their applications.  Please note, all DOE Phase I awardees are eligible for commercialization assistance from DOE’s commercialization consultant Foresight S&T and should give serious consideration to participating in the DOE commercialization assistance program soon after award.  

 STTR award amounts:  Beginning with FY 2012 FOA Release 1, DOE will increase the maximum size of STTR award amounts to $150,000 for Phase I and $1,000,000 for Phase II.  This will make the SBIR and STTR maximum award amounts equivalent. 

 Sincerely,

 Manny Oliver

Director, SBIR/STTR Programs Office

US Department of Energy

The processes and procedures that investors need to follow to obtain the credit still need to be approved so it will be a month or so before companies and investors can start applying.  SPARK will have programs explaining the criteria and procedures, for companies and investors, in January, as soon as all the details are worked out.  Stay tuned for information about those events.

In a nutshell this credit will give qualified individual investors in qualified companies in 2011 and 2012 a 25% tax credit against their MI tax liability for each dollar (minimum $20,000) invested in a MI early stage company. The credit must be used over at least two years but can be spread over 5 years.  Maximum of $500,000 of investments are eligible for a single investor, but it is cumulative over multiple investments. 

Stay tuned for more.

Preregistration is required.  You can do that hear www.beringea.com/officehours.php

Here is where the Office Hours tour will take place:

•    Farmington Hills – January 11, 2011
•    Midland – January 25, 2011
•    Kalamazoo – February 8, 2011
•    Troy – February 23, 2011
•    Ann Arbor – March 8, 2011
•    Grand Rapids – March 29, 2011
•    Detroit – April 12, 2011
•    Lansing – May 11, 2011
•    Traverse City – July 8, 2011
•    Marquette July 19, 2011
•    Petoskey – August TBD, 2011

Maryland Congressman Chris Van Hollen has joined Congresswoman Betty McCollum (D-MN), Congressman C.A. Dutch Ruppersberger (D-MD), Congresswoman Allyson Schwartz (D-PA), and Congressman Jared Polis (D-CO) in introducing the Innovative Technologies Investment Incentive Act of 2010 (H.R. 5767).  The proposal is for the federal government to give angel investors a 25% tax credit for investments made in start-ups that receive SBIR grants.  How cool is that?  This would help achieve the ultimate SBIR purpose which is to get the R&D it funds into the private sector for commercialization, which is where that piece belongs and provides the greatest chance for success.  It also gets private capital onto Main Street, not Wall Street.  What an incentive for the individual.  It’s a better return than Goldman Sachs can give them, a 25% immediate gain.  Yes you still have 75% at risk but how is that stock purchase pre- 2009 of BP, Microsoft, Citigroup or GE working for you?   And it beats a 15, 20 or 25% capital gains tax.  It beats a 0% capital gains tax (like that will ever happen).

More good news.  Michigan is on the heals of approving a 25% angel tax credit too, joining three other great lakes states (Ohio, Illinois and Wisconsin) in providing such an incentive for angel investors.  Stay tuned for that.  I’ll let you know when it happens and an interesting opportunity SPARK will be offering.

Furthermore the legislation would allow states for the first time to set their own regulations on security laws.  What a nightmare that would be given that most innovative, high-growth, high-need start-ups raise money from people in more than one state.  Also it would add yet another bit of red tape for the entrepreneur to have to learn about and maneuver through.  Don’t we make it hard enough for entrepreneurs to work through all the rules and regulations already at the start-up phase?  How difficult do we want to make it to start a business?  Come on, these are the very people we’ve agreed will drive new employment and diversify our economy.

Write your senators and ask them not to support this portion of Senator Dodd’s bill.

The disappointing part of the list is that all investors, except #25, invest in IT companies only.  IT of course covers a lot of industry subsectors like software, mobile apps, gaming, computing, internet, etc.  But I didn’t see alternative energy, materials, robotics, security or bio tech on anyones list.  #25 invests in medical devices.

Nonetheless it’s good to see angels willing to put their names and records out there for people to see.  Hopefully this will encourage more people to make investments in our future.

It talks about angel investing and the need for more angels in Michigan.  They highlight two important people in this space, Rick Galdi and Terry Cross.  Great testimonials from these guys.  The reporter did a good job contacting several people involved with the angel community who know the importance of developing a strong angel base of investors to really help our entrepreneurs get this economy going again. 

Other pieces in the article talk about the proposed new state tax credit and Ann Arbor SPARK’s experimental educational program.  This topic is getting some momentum.  If you know of someone who is interested in learning more about being an angel have them call me.

This issue is mostly about entrepreneurism in the state.  It’s very encouraging.  We’re in good company with communities all around the state.  Included in the publication are articles about the new incubator in East Lansing and a new initiative in Boyne City.  There is also a short article on a previous story about Houghton/Hancock SmartZone.  There’s a lot of good stuff going on in Michigan.

This is not my normal blog subject matter but it was prompted by this blog http://www.huffingtonpost.com/jeff-bocan/five-one-way-tickets-to-m_b_296000.html by Jeff Bocan.  Although our stories are different we at SPARK are hearing from more and more people like Jeff who are coming back to Michigan because it’s a great place to live, and great opportunity abounds.   Now is a great time and Michigan is a great place to be an entrepreneur.