How to Secure Grant Funding FAST for Healthcare Start-ups || MassChallenge X Scout

I'm here to talk about one of my favorite topics, which is how to get free money from the government. So first of all, what is non-dilutive? It's a great way to get money to fund your startup without giving away your equity. You have no ownership dilution, and one of the most common ways is to get it from the government through something called grants. And this is a great way to just get funding to progress your startup, and you don't— there's no repayment plan based on milestones. And these are very competitive applications. I tell clients there's a 10 to 15% shot of getting this the first time around, or just in general. And so winning I've submitted one of these SBIR applications to, there's validation that what I'm doing is making sense, and it's a great credibility badge for future investors and partners. So today we're talking about healthcare. There are 3 main agencies I typically recommend startups going for. First is the NIH SBIR program. Usually startups developing innovations in like medical devices or digital health, AI diagnostics, even medication, new treatments, pharmacologies. So the SBIR program comes in different phases. Phase 1 is about developing a proof of concept. So usually you can ask anywhere from $300K to maybe $500K of funding for a project period of 6 to 12 months. If you progress in Phase 1, you then go to Phase 2, which is taking your prototype and then pursuing more R&D developments to go towards commercialization. So you can typically get anywhere from even up to $2 million of funding for a project period up to 2 years. And then that's something called a fast track, which— where you combine Phase 1 plus Phase 2. The next one I would recommend is the NSF SBIR program. These two are different agencies with different funding mechanisms. So if you want to go for NIH, you always want to tailor your proposal to more of a healthcare need, whereas NSF is looking for that high-impact, innovative, high-risk new research area. They're looking for deep tech innovations, healthcare innovations, any research innovations in that space. Um, Phase 1 is about $300,000 for a project period of 6 to 12 months, and then you can go for Phase 2, which you can get a little bit over $1 million of funding. These NSF programs that you have to submit a project pitch, which is like a 4-question, uh, screener before you get an invitation to go for the Phase 1 application. And so in Scout, we can do this within 5 minutes if that's something of interest to And then finally, if you are further along, essentially after seed or close to Series A, some clients might go for an ARPA-H federal contract. So this is a federal contract, not a grant. So the terms and the milestone payments are a little bit different. They're looking for a high-risk breakthrough innovation, but rather we're looking at that moonshot technology. And the way I like to explain it is if you have your technology, you sprinkle some Star Trek magic onto it, and it's going to be the next best thing since sliced bread 50 years from now. So, and if you go for an ARPA-H contract, they can be multi-years, 1 to 3, even 5, from $1 to $50 million $1 million of funding. All right, so why should the SBIR program matter to you? So typically there are 6,000 Phase 1 awardees given out every single year for Phase 1s, which is equivalent to about $4 billion of awards. 20% of that funding are actually going to healthcare startups. And so this is just a great way to de-risk your early-stage hurdles, prevent dilution from venture capitalists, and position yourself to create more strategic partnerships. And so when you're identifying opportunities, and so first you want to understand what are the priorities for the NIH, the NSF, ARPA-H, or maybe even DOD. Are those mission statements and solicitations aligned to what you're looking for? You then want to match your innovation to that different levels of readiness, whether it's Phase 1 or Phase 2. You can study past winners to understand whether we'll have a competitive shot. And then finally, you want to connect with the program officers. This is a step that everyone misses that I think is probably the most crucial to get feedback. In order to do that, let me show you a couple of interesting resources here. So if we just talk about the NIH SBIR program, if you Google NIH SBIR agencies, you come up with this list of program officers different agencies that are participating in the SBIR program. So you can see there's National Institute of Aging, Allergy and Infection, Arthritis, Biomedical Engineering, etc., etc. Or submit multiple NIH applications per cycle. You want to go for different agencies, make sure you tell your proposal to the missions of the Aging Institute versus the Alcohol and the Ageism Institute because they have different mission statements. Once you create a specific aim page, which we're going to go over in a second, the next thing is to talk to a program officer, which is what this list is here. There's $4 billion allocated across all the federal agencies, across the board. NIH gets a sliver of that. So it's DOD that gets about $2 billion, and then NIH almost $1 billion, which is not too bad. Different institutes have different missions and they have different fundings and budgets for their statements. So you can imagine NCI, National Cancer Institute, has the highest budget versus maybe National Institute of Child Health and Human Development has a smaller budget. And so there's another great resource here which is called the NIH Reporter. This tells you what projects are being funded and actively per institute and center. So this is where you can find all the awarded NIH applications or R01s. So before you get started, always do your homework, figure out what institute makes the most sense for you, talk to the program officer, and see who else got awarded to see if you have a competitive shot. Standing on the peer review process, once you prepare an SBIR application and submit to the NIH, here are the 5 things that they're looking for: significance, innovation, investigators, approach, and environment. Um, this might change because they want to simplify the review process, but we'll just go over this for now. Significance— are you solving a big enough problem? Is there a big market need and a clinical impact? Innovation— is this a high-risk innovation? Is this instead of something that's making incremental improvement. We don't want incremental improvements. We want something that is groundbreaking and would be the best thing if it were to be successful. Also, how we position the innovation is important too. There are a lot of innovations that are in very crowded marketplaces. And so are you the next AI thing out there that is competing against all the similar AI things out there? Something very different in your technology that no one else is doing? If so, that's what you want to focus on. Why is that innovative? And also, why are you guys the only people that can actually deliver this? Why can't your competitors learn what you're doing and do something similar? Do you have patents on it? Is it patentable? Is patent— perfect. So it's— that just shows protection of your IP, that you're the only people that can develop this technology. And so any way to describe the novelty of it, to use a competitive matrix of who your competitors are out there and all the key features and why do you stand out and why, if you are successful, can you have a competitive advantage to enter the market or have a better clinical impact compared to what else is out there? So if you're going back to significance, right, how do we describe the impact? I don't want to say cancer is bad. I want to make that quantitative. So the way I would think about that is, okay, that is a really big problem. Why? Is that a problem? And then you're gonna continue your narrative. And then you're gonna tell me why they don't work. And then you're justifying why there's a need for a different innovation. And so I'm positioning kind of the gaps in the clinical market before I introduce what your solution is. We need a better solution to do ABCD because if so, this would have 123 impact. Here is my innovation and this is what we're proposing to develop in this application. In that problem statement, jam-packed it with any references. That's always just gonna be a very helpful strategy to really emphasize that like pain point that you have. And so investigators is the third one. Do you have the right team members in place? If you're in this space, do you have clinical? Do you have business? Do you have, you know, technologists? And then fourth is the most difficult, in my opinion, the approach. Do I have the— a rigorous R&D plan? We're going to talk about what that means in a second. And do I have a clear path to commercialization? I want to develop this and then prove it's better than that, because you want to show there's a competitive edge in the market. So usually a lot of medical devices that I consult would propose, we want to develop this novel medical device, but then they leave out the testing component. And we propose the testing component. We want to figure out what is the gap and need in the market, because all the results that come from Phase 1 is going to set your foundation for your Phase 2. And then lastly is the environment. Do you have the right resources in place? If you propose to do a wet lab thing, do you have access to a wet lab? Do you have the expertise in place? And so these are the 5 things that are standing out in the peer review process. When writing a strong Specific Aims page, there are 3 things I would like to consider: 1, rigorous R&D plan; 2, commercial potential; and then 3, measurable outcomes and a clear success criteria. And then so again, these are some common pitfalls to avoid. Avoid. Make sure you always talk about the problem, something commercializable, and we're solving an unmet medical need. We're not just developing some fancy technology or just spitting out some cool research from a lab. 2, weak commercialization plan, an inexperienced team, or overpromising results. There are some times where in a Phase 1 people propose to develop something, test something, and they do a big clinical trial all in 6 months. Reviewers are going to call you. All right, so let's do a Specific Aims and Scope. This is a brand new way to do SBIR applications. The process sometimes takes 50 to 60 hours just to write one SBIR application, and so we developed a way to make it easier. In the old-fashioned way, when you work with a grant writer, you want to give me your pitch text, white papers, and everything. Instead of doing that, you're going to create a new project and just upload everything to Scout. So you can describe what your company is, you can put your pitch decks, your files, any information about your application to create a new project. And then, so here is a fictitious biotech company. What I'm uploading is a generic pitch deck and a simple white paper because this is what I have. And then the next thing I do is go to search grants, and I just say I want to write an SBIR Phase 1 application. And so I'm going to go here. Here's the NIH application, view details. Here's more information about the solicitation. I'm going to write a proposal. Let's go for a Phase 1. And then brings you to this page. So here we're not developing another grant writing tool, but we rather want to teach you how to do a strong application. So in Scout, we've broken the whole process up stepwise to teach you what is a step, why do you want to do it this way, what to consider before you start writing. And so here you get introduced to what is an NIH Phase 1 application. This is a grant thesis. What do you want to think about in order to structure a strong grant grant. And then if you work with one of our experts, call one-on-one with you to do like an interview to dive deep. What is the problem you're solving? What is your innovation? What are your short and long-term goals? And how do we structure the specific aims to make sure they're rigorous and that it's aligned to the agency's priorities, but also what you want to accomplish as well? And we can take that transcript, put that into a system, and create this grant thesis. And that sets the foundation of what you want to prepare in this application. And then there are a bunch of nasty company registrations that you have to go through that I'm sure you know about. So here we also have a video to kind of walk you through each step of SAM, and then you'll need the SBA company registration, which is sbr.gov. Here, we're gonna do grants.gov as well. And then CAGE code, it's optional. And then eRA Commons is the big one. And then we go into the specific aims. So we take that grant thesis along with your other materials like your pitch deck and white paper. You can even tell it to generate a focus. So say maybe I want to focus on pediatrics here, or a different indication, or a type of opioid, for example. And then all you got to do is create— generate content, and then you rinse and repeat. What's going on behind the scenes, right? I don't think you can ChatGPT your application. That's just not how applications or proposals. I think there's more complexity to that from my experience. We are taking your materials and we're sending it to really complex LLMs that are trying to extract the right information from your materials. And then we have extensive prompting from SBIR experts that are past reviewers, PhDs, PIs, so that we have that really highly rigorous output. So our team has raised over $500 million of funding of federal grant applications. And so we're kind of taking all those best practices for those decades of knowledge and trying to figure out how do you deliver this at scale through a platform. It can save our grant writers time by at least 70% of their efforts, which is exciting. This is like, uh, just a way to develop the first draft very quickly, um, and you literally just go through. Once you're done, you can hit export. It'll export everything that pretty like compliant way, 5.5-inch margins area, or font size 11, make sure you're compliant. But once you're done with specific aims, this is what a draft should look like. So here's the one-page specific aims draft. So once it's a challenge, technical need, proposal solutions, preliminary data, project aims, and development plan. Notice that the project aims, you want them to be very specific, we have to be very quantitative. We want to pretty much tell the NIH this is what we want to do with funding, like step by step, and then all we need is the money down the road. And so that's how you develop a proposal in Scout. Typically for a Direct-to-Phase-II or a Fast-Track, you're going for either like the $2 or $2.5 million applications. That requires a 12-page research strategy and a 12-page commercialization plan along with all the supporting documents. So it's a pretty big proposal, but with Scout we can make it much easier. We can put together a brainstorming strategy. What are our specific aims? You do that one-page specific aims and then shop it around to the program officers. They're going to tell you this agency may not be a fit for you, try that agency. They might say this is something of interest to us, let's jump on a phone call. They might give you advice. And then if you get their blessing, we start the application process. And that stuff is important because sometimes if you end up getting like a score, it's kind of in the gray zone. I've seen proposals where the program officer just loved the application and actually awarded them. So typically we tell clients, give us at least a month to prepare a strong application. We can do it sooner, right? Depending on the, um, the writing should not take that long because of Scout. What takes the longest time is do you have letters of support? Do you know the budget? Can you give me the information from here? Right. That's where that takes the longest time, the project management side of this. Once you hit the submit button, it will go through a review process and that takes about 3 to 4 months. If you submit for the September 5th deadline, you might not get a score until like late November. And so even if you get a good score, you undergo a couple of months of due diligence because then the agency needs to discuss which applicants they would like to fund. And with this current federal environment, we're learning that there are quite a few delays. And so actually the SBIR program is going to— it gets renewed every 3 years and this is the 3rd year it's getting renewed. If this bill passes in September, the percentage budgets for SBIRs, they're going to double from 3.2% to like 7%. So actually, even though there are funding cuts in research, SBIR program for small businesses, it still looks like it's going strong and seems like everyone's getting like good feedback and people on both sides are bullish on this. But of course, you know, we won't know until that renewal date comes through, which we hear pretty soon. I usually tell clients, try both, right? Do both, like especially for this crazy environment. Everything's very unpredictable, even though the SBIR program, you know, have the SBIR program and raising through non-dilutive has a longer time frame. It's pretty sweet if you get 300, 600K of non-dilutive, right? And a lot of people actually finish their proposal aims actually because of that long time frame. They're like, hey, I'm done. So you can either jump on Phase 2 sooner, but there's always more R&D you can do to either get more precise or get more data points just to make you a stronger candidate for Phase 2. So you always take the next step and take the funding and kind of progress your developments there, which is another reason why it's really important to have a good relationship with your program officer, just by you cast a wider net and try to capture too many things, you don't want to give off the impression to reviewers that I'm not focused. So those are definitely two different applications in my opinion. $300K from 6 to 12 months is not that much, it's not too long and not too much money. So we just need something scrappy to figure out why do you need this? What are you trying to prove out by having this app? And if that works out, then we're going to deploy it potentially even with like, you can even partner with a hospital system for a Phase 2 and then just do like a clinical trial there with that. Yeah. So in other words, can I reimburse myself for the work I've done with the money? And the answer unfortunately is no. But there are some cases where if you have started the work, they might reimburse you 90 days of notice of award deadline. But that's just dependent on the agency, your program officer, whether that's allowable. But I've seen some cases where that might happen. But typically they want to see R&D work being done, expenses being pulled down and used towards the R&D work.