Federal grants fuel innovative solutions

Researchers in Northern Colorado and the Boulder Valley often come up with big ideas they feel could make a big difference. But it takes money, patience and time to see it through, and most potential investors have the money but not the patience and time.

The answer frequently comes in the form of SBIR or STTR grants.

Eleven federal agencies — including the National Center for Atmospheric Research, National Renewable Energy Laboratory, National Institutes of Health, the National Science Foundation, the Department of Defense, the National Institute of Standards and Technology and NASA — offer Small Business Innovation Research (SBIR) grants, and five of those also participate in STTR, the Small Business Technology Transfer program.

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Thanks to those grants, Loveland-based aerospace company Opterus R&D Inc. is developing better designs for satellite-borne retractable booms and solar arrays, Longmont-based LumenAstra Inc. is developing a way to measure a body’s core temperature without using a painful sensor needle, and Lafayette-based Boulder Nonlinear Systems is perfecting a beam linked to 3-D mapping to safely steer self-driving vehicles.

Louisville-based Solid Power has used the boost it got from the grant programs not only to perfect its solid-state electric-vehicle batteries but also to lure partners Ford Motor Co. and BMW Group, land a $135 million Series B investment round led by Ford, BMW and Volta Energy Technologies, merge with Decarbonization Plus Acquisition Corp., and prepare to go public on the Nasdaq exchange this fall.

Solid Power, a spinoff from the University of Colorado Boulder’s College of Engineering, was awarded more than 10 SBIR and STTR grants of more than $10 million total.

CU Boulder has recognized SBIR and STTR grants as such a critical funding source that it created a Center for Translational Research a little over a year ago. The center provides the university’s researchers with resources and coaching to help them write and submit competitive SBIR and STTR grant proposals.

The advantages for early-stage development are that the grants are non-dilutive and carry little risk.

“Non-dilutive” means that a company’s founders aren’t losing any equity because the funding agency isn’t taking any when its grant is accepted. That differs from s private-venture investment, in which the investors do take equity in exchange for helping fund research and development.

Thomas Murphey, who founded Opterus in 2015, said STTR and SBIR grants his company has won have allowed it to “put R&D dollars toward product development without giving up any equity in the business. That’s pretty incredible. We’ve been able to get a few of these awards, and we’re bootstrapped in the sense that I’m the sole owner, we don’t have any debt or any other stakeholders. We’re proceeding with development and commercialization of three to four product lines, so that’s pretty cool.”

In an interview with the Boulder Daily Camera, Brynmor Rees, the University of Colorado Boulder’s assistant vice chancellor for research and innovation and managing director for Venture Partners at CU Boulder, described the risk mitigation.

“If a company is going to be commercializing something that is novel, disruptive, usually a new technology, there’s high risk, needing a lot of research and development to show that it can function in a relevant environment,” he said. “The grants remove the technical risk that is really inherent in bringing disruptive technology to the market.”

According to the recent Boulder Innovation Venture 2.0 report, prepared for the Boulder Chamber, innovators in the Boulder Metropolitan Statistical Area lured $256,022,595 in SBIR and STTR grant funding in fiscal years 2014 through 2018, the last for which complete totals are available. That amounts to about $796 per person living in Boulder County, a per capita rate substantially higher than in other technology hubs such as California’s Silicon Valley; Boston-Cambridge, Massachusetts; Ann Arbor, Michigan; or Bryan-College Station, Texas. For the city of Boulder alone, which lured $175,404,660 in grants for the period, the per capita rate was even higher, $1,634 per person.

The highly competitive grant programs encourage research by small U.S. businesses with the aim of putting innovative, profitable products on the market. The STTR program also requires small businesses to collaborate with nonprofit research institutions such as CU Boulder, Colorado State University and the Colorado School of Mines.

Both awards go directly to a company, but under STTR a company must subcontract to a research university. Under SBIR, the principal investigator has to be at least 51% employed at the company.

The grants are broken into three “phases.” Phase 1 is meant to establish the technical merit, feasibility and commercial potential of the proposed R&D efforts and to determine the quality of performance of the small business receiving the grant. Phase II pays to continue the research started under Phase 1, and Phase III helps awardees pursue commercialization.

At Opterus, Murphey said, “we were just notified of a Phase II grant with the Air Force for a small satellite solar array that we’re working on. We just finished up a Phase II with NASA for a much larger solar array that we developed under SBIR dollars.”

Opterus has received two STTR and nearly a dozen SBIR grants, Murphey said. “That sounds like a lot,” he added, “but when you talk about developing a new boom or a new solar array, to make them really happen they’re $5 million to $10 million efforts. So these SBIR efforts chip away at it, but you also have to get other funding because developing spacecraft components is very expensive.”

Several CU Boulder spinoff companies have leveraged the grants. For instance, Aspero Medical is commercializing a novel endoscope technology that prevents slippage and can reduce failed endoscopies. Artimus Robotics developed a soft, flexible robotic actuator, transitioning from a robot made from hard metal or plastic components to one that moves more like an octopus. And LumenAstra has five research students working on its project in a CU lab.

After a grant is received, an auditing process makes sure the recipients are using the funds for the project that’s being funded.

Murphey gives the grants lots of credit for Opterus’ growth. “We have 15 employees,” he said, “and we’re looking for a chief engineer and a senior engineer.”

Opterus’ manufacturing happens in more than 9,000 square feet in a former Hewlett-Packard facility in Loveland that became the Rocky Mountain Center for Innovation and Technology and is now the Forge Campus. 

“We incorporated in New York as part of an accelerator there, but they weren’t too transformative for us,” Murphey said, “so one that’s been much more helpful is The Warehouse in Loveland, which is at the Forge Campus as well. Loveland is a good spot in Northern Colorado because we get access to Boulder County stuff as well as Larimer County stuff. We have good connections with both CU and CSU.”

What advice would Murphey give to anyone applying for an SBIR or STTR grant? The toughest part is watching for grants the federal agencies are offering.

“You really have to try to find the customer who has the solicitation process out there, and really figure out what they want,” he said. “Typically, in the solicitation, it’s not clear. You read it and it’s one page and you’re like, ‘I don’t get it. What are you really asking for?’ So you have to be able to reach out to those government groups that are trying to develop those technologies.

“They’re all about ‘tech pushes’ — the technology developers trying to push their technologies up into commercial systems,” he said. “So you have to figure out what those groups are trying to do. Reaching out and talking to them is the hardest to do. If you can figure that out, now you have a basis for making something they actually want.”