By guest authors Irina Patterson and Candice Arnold
Irina: Could you give me a quick overview of your funding initiatives?
Joe: The core programs that I oversee are primarily direct business investments for products and services, process innovation, and research and development.
I will go from the smallest to the largest. First, we offer small grants, up to $5,000, to companies. All of our investments must have a one-to-one co-investment.
So, when I say we offer grants for $5,000, that presumes there’s at least $5,000 coming in to match our co-investment.
We also offer $5,000 grants aimed at helping companies obtain and prepare proposals for federal programs: SBIR (small business innovative research) and STTR (small business technology transfer) grants. It is no small task to put in applications and be competitive, so we offer companies assistance and cash matching to bring in external resources that conduct work to secure federal funding through SBIR.
Going up the scale of funding amounts, we have a program called Seed Grants, and those are $12,500 grants that are offered six times a year on a deadline basis.
Those are for early stage research and development or market investigation opportunities where companies – anywhere from inventors in garages all the way up to a list of going concerns – can come in and get assistance to investigate new products and services that lead to a market.
These grants can fund activities like business planning, intellectual property investigation, field trials, prototype testing, and building prototypes.
The next level of funding we provide is up to $500,000. These are not grants; they’re called development awards. A development award is a contingent debt vehicle where we will co-fund research and development activities, usually in companies that work with products that need capital to move or need to accelerate their journey to market.
So, a $500,000 award under this program would, obviously, be at least a $1 million project. Once the company commercializes – this is on a milestone basis – that company has three years to pay back the funding in full at no interest.
If they hold a balance at the end of the three years following commercialization, there’s a 30% increase in the balance, and they have four years at 10% [interest] after that. So, it becomes more like a traditional loan.
The other program we have is accessible only to people who have won that previous award for investment.
So, once these companies have a development award, they start getting closer to the market, and we’re able to work with them to become more investable, some go on to seek equity.
We are able to help them fill in part of that gap as they go out to the equity markets, and we tag along and put in up to $125,000 per investment, alongside other investors, to help fill any gaps in equity or convertible debt they may be taking.
That’s called the Accelerated Commercialization Fund. Under the Business Innovations Programs, those are our core cash investments.
We also support a small team of expert consultants in business, accounting, and market research. Those consultants are dedicated, sometimes up to a certain amount of hours, and are paid by MTI. This is called the Technical Assistance Program.
That team helps companies navigate the federal award process, again for SBIR. They will help prepare proposals, give feedback, help companies find federal small-business innovative research funding opportunities, and guide them through the funding and preparation process.
Those are the core business innovation programs, aside from small amounts of matching funds that we can give to companies that do secure awards. So, once you get an SBIR award from the federal government, we can do small matching amounts of about $10,000 – and those are grants – to help with commercialization. That is the primary focus of the part of the MTI business that I oversee.