Non-Dilutive Funding Secrets for Life Sciences & Biotech Startups | C21 Accelerator + Scout

Thank you so much for having me here today. Before I begin, I want to give a special thanks to Annie and Kriti and Raj for the invitation to be here with you guys at C2 Accelerate today to talk about one of my most favorite topics, which is how to get free money from the government. One great way to get free money from the government is do something called grants. Now, I specialize in a type of funding called the SBIR and STTR, and I'm sure many of you have heard of this program before, but if not, the SBIR program stands for the Small Business Innovation Research program, and the STTR stands for the Small Business Technology Transfer Programs. These are highly competitive, non-diluted funding opportunities, and in my biased opinion, one of the best ways to fund innovation in the U.S. And so these are meant to help small businesses develop and commercialize technologies, and this is sponsored by the SBA. I tell clients they expect a 10-20% success rate just because of how competitive these applications are, but there's about $4 billion allocated across 11 different agencies across the board. So a lot of these agencies have SBIR programs, like you guys know, NIH, NSF, DOE, DOD, CUCI, and so forth. Why do we have this program? And so this is spun up by the US SBA. One, the US wants to foster innovation. We want to be at the forefront of innovation, have competitive advantage across all of our— globally, right, with new technologies out there. Two, we want to promote commercializations. How can we take new ideas, new R&D research, and translate that to the commercial market? And finally, we want to advance federal research. What are some of the alignments and things that the US federal agencies are looking into, and how can we support small businesses by giving them non-dilutive funding to kind of accelerate our own efforts. The SBIR and STTR program comes in 3 different phases. First is typically Phase 1, which is a lot of people are going for this first phase. This is all about establishing feasibility. So typically startups that have some sort of early stage results that need more funding to progress in their R&D might go for a Phase 1. And the end of Phase 1 is to validate, do I have a technology that has commercial potential? And usually you can get anything from $300,000 of non-diluted funding for a project period of about 1 to 2 years. If you're lucky to get Phase You then progress to Phase 2, where you continue your R&D efforts and to take that prototype or proof of validation and translate that to something that's ready for some sort of commercialization, whether that's a pilot, getting ready for FDA approval, or even just working with a partnership to try and translate that into some sort of commercial market. So you can get anywhere from $1 million to even $2 to $2.5 million of non-dilutive funding in Phase 2 for a project period of 1 or even 2 years. And then finally, some programs, especially for the DOD, they have something called a Phase 3, where you can get matching funds or partner with some sort federal agency or contract to start translating and commercializing the technology towards the market in a usability scenario. So even though this all sounds too good to be true, there are some checkmarks we have to hit in order to qualify for an SBIR application. First, to qualify for this program, you have to be a US small business. That means the majority ownership has to be at least owned by US citizens or permanent residents. The PI must be primarily employed by the small business upon time of award. Next, these are highly innovative R&D applications. So we don't want to fund market research or anything to test out the market need. It's rather based on R&D for high-risk, high-innovative technologies. And so you also have to be small business, which they define that as company with less than 500 employees. And finally, something really important to note, even though it is strategic to go and apply for many SBIR applications, we cannot get multiple SBIR applications awarded under the same objectives. That's kind of considered double dipping, and that's also illegal. So we have some strategies and best practices to allow you to go for multiple applications without getting into trouble with the feds here. All right. And so typically for any SBIR application, here are the 4 quadrants of how I think about how do I put together a strong application. The first thing they're going to look at is your technology and your innovation. One, do I have something novel? They're looking for high-risk, highly innovative technologies, not something you're developing that's either an incremental improvement of what's already out there. It's not worth their time. Here they're also looking at your technology and your feasibility plan. Does my R&D plan make sense? And do I have a rigorous strategy to take my proof of concept and get to a stage where we can validate a commercial potential? Next, they're looking at you as the PI and your team. If you're proposing to do something in cancer research, do you have expertise on your team to help carry that out? Same thing with your facilities. If you're proposing to do animal studies, do you have access to facilities that can help you do animal studies, as well as a wet lab? If you're proposing to do chemistry research, do you have access to a wet lab? Because having the resources and expertise in place is something they're going to look into to make sure you can actually carry out the proposal aims as you have laid forth in your application. Next, commercial potential. When we work with a lot of academic spinouts, this is the big one that they miss. Even though we want to fund high-risk and highly innovative technologies, we also want to frame it in a manner where we can make money at the end of the day, right? These are small business grants, and they're also looking for the return on their investments. And so that means what you would do with the lab for a peer-reviewed journal may not be the same correlating to what the commercial market and the gap that you're going after. And so when they're evaluating your proposal, are you framing your experiments in a way to get you that proof of validation? Are you proving that your technology has some sort commercial advantage in the market if you are successful. So they're looking for commercial potential, how you can win big and beat your competitors out there. And that's a really important way to frame your application or your innovation. And finally, alignment with the SBIR funding agencies. They're all looking to fund technologies in a different manner. So you can imagine NIH, they're all about healthcare. How can we better health or make new innovations to improve care? NSF might be looking for something high risk and highly innovative, something that would not only be commercializable but also can contribute to the broader good of the scientific knowledge out there. Going to defense, Do you have technology that can help us as defense warfighters get a competitive advantage in the space? So as we go along and understand what our strategy is, we want to make sure our technology, our narrative, and our proposal are aligned to whatever the agency is looking for. That's really important too. Don't forget, bottom line, don't copy and paste your SBIR to the NSF and go directly for the NIH. Always tailor your proposal to those different agencies. All right, next. So here we're talking about lots of biotech and life sciences founders. And so if I look into my crystal ball, many of you might be going for the NIH SBIR application, the NSF SBIR application, application or even federal contracts from ARPA-H. Has anyone looked into ARPA-H recently? This is a very different strategy than the two SBIR programs. Cool. All right, so we'll— I'm going to dive deeper into each of these agencies and kind of tell you the pros, the cons, and some of the differences to be aware of when you go after these non-dilutive funding opportunities. First up is the NIH SBIR program, and so this is one of the larger— the second largest funding agency in the SBIR program, all right, after the DOD. And so when we think about the NIH SBIR program, there are four different omnibus solicitations we can go after. I took out all all the words and the numbers just to make things very simple. You can go for an SBIR with a clinical trial, an SBIR without a clinical trial, an STTR without a clinical trial or with a clinical trial. The differences to determine whether you are an SBIR or an STTR is understanding who's doing the majority of the work and effort in your application. So typically for an SBIR application, if you have a partnership with an academic institution or some sort of research partnership, you can't outsource more than one-third of the efforts to that partnership. If you do so, and that's okay if you do, you might consider an STTR application instead. However, the pot of money for an SBIR is much larger compared to the STTR. So keep that in mind. So we always tell clients, try to go for the SBIR, but in some cases where if you're doing like an animal research or clinical trial, then you must depend on a research lab or hospital, it might just make sense to do an STTR. All right, now let's talk about money. The fun part here. Phase 1, you can propose a budget period of 6 to 12 months. Months and sometimes 2 years for a project period of around $314,000. This number might change depending on all the new budget allocations, so we'll keep that in mind, but that was what they reported for 2025. If you go for a Phase 2 or during the Phase 2, you can ask for a project period of 1 to 2 years and can ask up to a little more than $2 million some change for your project period. And then the NIH has something called the Fast-Track Program where instead of applying for a Phase 1, waiting to get that, carry it out, apply for a Phase 2, wait for that, and carry along, you can actually accelerate that process and have Phase 1 plus Phase 2 combined for a project period of 1 to even 3 years. So this is a really attractive track for a lot of people that have an idea what is their commercialization potential and strategy and have strong preliminary data. So, and the interesting thing, the success rate for a Phase 1 is very similar to a Fast Track. So if you're not sure, you don't have a lot of good data yet, and you're still trying to figure out what your go-to-market is, a Phase 1 is a good fit. But if you're further along, you have a little bit of a bigger team, you understand what your next 2 to 3-year goals are, a Fast Track could be something to consider. If you are a Phase 1 awardee, your chances chance of getting a Phase 2 jumps up to about 30 or 40%, which is really exciting. And so keep that in mind if you're a Phase 1 awardee. It's much easier to get a Phase 2 than if you're going for a Phase 1. Now, although those are the budget limits that I proposed here, there's something called a budget waiver where we can actually ask even more money than our allocated proposal budget. Has anyone heard of the NIH budget waiver before? Even though online it says the proposed budget for Phase 1 is about $314,000, there is a list of really interesting topics that the NIH really is looking for to fund. And if you talk to the program program officer and hit one of those budget criteria between the agencies, you might even— you can jack up that budget even $400,000, even $500,000 of non-diluted funding for a Phase I, which is really exciting. So if you type in NIH budget waivers, the approved statutory status, this is a PDF file online where it breaks down by all the different subagencies, and it tells you all the different topics that the agencies are looking for. And if you talk to your program officer, and we'll talk about that in a little bit, you can even ask for a proposed budget waiver, which is something that a lot of people miss, which is a really exciting step. Cool. All right, so here is the really great website that I brought up here. If you type in NIH SBIR program officers or SBIR NIH program officers, you get this list here. You have all the award components, the research contact, and the people associated that you can reach out to and talk about your project before you even apply. And so one secret that we love to do with our clients is to talk through strategy, prepare a specific aim page, and then meaning talk to a program officer. Why do we do that? The program officer has a lot of different magical powers behind the scenes. They're there to support you guys and encourage you guys to pursue SBIR applications. So if we go in prepared and engage with the program officer, we're doing a couple of different things. One, we're putting a name to a face and we're introducing you and the technology and the company to that program officer. Two, we're trying to gauge, are they excited about our idea? Is that aligned to what they're seeing? And if you have the right program officer, some of them are very, very generous with their time to advise you, you know, how to reframe your narrative and strategy to what they know might be a good winning application. Three, if they're really excited about your technology, what I found is in case you don't get a competitive score, I have seen instances where the program officer took that application and went and funded it, which is really exciting. So you want to be best friends with your program officer just because of all the things they can do behind the scenes to support you in your application. So like I mentioned, if you're thinking of going for an NIH SBIR application, write down your specific aims, think about what you want to propose, reach out to someone on that list of a program officer, maybe 2 or 3, to see what agency might be interested in funding the technology, and then have a conversation. Ask them to jump on a call, and when you go on that call, you only usually have 30 minutes. So in the 30 minutes, Ask some questions and then listen, listen, listen. See what they have to say. If they're enthusiastic, ask them if they— if you qualify for a budget waiver. And that's how you jack up the budget to see if you can even increase above the Phase I and Phase II current limits. Another great resource is something called the NIH RePORTER. So the NIH RePORTER is an updated database of all the NIH winners in the past. And this includes NIH SBIR applications, R01s, anything in that sort. So you can go through and look at different states, different active projects by institutes. See who has the most funding priorities, which is the NCI, National Cancer Institute, and then see what types of applications they've awarded in the past and kind of compare and contrast what type of projects they're interested in funding. So this is another great tool to analyze and play with before you go and submit an SBIR Phase 1 application. The next agency, which is the National Science Foundation Mega Seed Fund. Here at Scout, we love the NSF program because their goal's a little bit different. They're looking for super innovative, high-risk technologies, and they could fund anything anything outside of healthcare in addition to defense, AI, ML, energy, climate, cybersecurity, anything in that area. So which is— and I'll show you a matrix in a bit, but they're also really into biotechnology and biomedical. So if you have a proposal written for NIH, you might have some leg up for also the NSF. Not always the case, but if you have something super innovative, they could be of interest as well. And so the NSF program comes in a couple different phases. So this is a bit of a different process compared to what I demonstrated for you guys for NIH. First, we have to submit a project pitch application. This is a 4-question screener to introduce your technology. They're going to ask you what is the problem you're solving, you know, what is the commercial technology that you're solving, what are the technical hurdles that you want to overcome, what is your market, who are your customers, and who are your team. This 4-question survey and how you respond to them give them an idea to indicate whether or not they're interested in inviting you to submit a full Phase 1 application. If you're lucky and get that approval, you can then submit a full Phase 1 application, which is where the fun really begins. And this is where you prepare a 15-page product description, which consists of a technical proposal plus commercialization plan, a really small one, and a bunch of supporting documents, facilities and resources, budget and budgetification. You have to go to a portal called SciENcv to do your biosketches, your current pending support, and all that fun stuff. And then once you hit the submit button, this review process takes roughly 5 to 6 months. So this is probably one of the longer review cycles based on the other agencies out there. This is NSF program and how to submit an application. Also, unlike the NIH program, we have to go through the project pitch, you have to go through the Phase 1 before we advance to Phase 2. They are playing around with the Fast Track program, but there's no like a direct Phase 2 application for the NSF. So this is all the really interesting technologies that they're interested in funding. And so if you're doing like some sort of biomedical technology but your innovative nature is really in the material or really in the manufacturing process, maybe that's what we want to focus on for an NSF application. And so take a look at what they have here, what they're interested in funding. If you put your cursor over one of these boxes, you can see the subtopic areas that they have done in Another cool thing, if you go and click on View All Awardees, you have this database, NIH, of all of the previously awarded SBIRs. Now in a contract, for these non-diluted funding opportunities, you're engaging and working with the government a couple of different ways. And so there are more reporting requirements, there might be more red tape, and there might be more collaboration either with you, your group, or with the institution. So depending on what type of contracts there are out there, that's something we can, we can talk about. But federal contracts are also a great way to tap into the $3, $5, $10, $25 million non-diluted funding. That lead to funding opportunities. But this is a different game compared to the SBIR. We can talk about the differences more as well. So let's talk about ARPA-H. ARPA-H is a brand new federal agency that's only a couple years old, and so I like to describe it as if this is the cousin of the NIH program and also the DARPA program. So they're a DARPA framework where you have program officers figuring out, you know, what technologies and startups are out there to support their current mission and criteria. So there's actually no study for these applications, and it really comes down to your relationship with the program officer, which is really interesting and different. So when I advise a client to go for an ARPA-H application, I'm looking for something that's a moonshot, something that's really out of this world. So I think of something that is kind of high risk and innovative, but it's feasible and doable as something for an SBIR program. I want to take that, put some Star Trek magic to that, and then that's going to be my moonshot ARPA-H application. So usually clients are startups that are a little bit further along, maybe late seed, Series A, have a proof of concept, and have multiple partnerships aligned could be in a good stage for an ARPA-H application. Those that are in early stages still can absolutely apply. So when we talk about contracts, there's a couple different vehicles that we can talk more about in a bit. Just know there's something called other transactions and something called cooperative agreements. Other transactions that are contracts have more flexibility in terms of your deliverables and milestones versus a cooperative agreement where you're kind of engaging with the government for as a similar involvement, but there's more back and forth and kind of reporting and different deliverables in that manner. So when you look FRO contracts. Usually these are the two main vehicles that they, uh, present to you, and this is something you can discuss with the program officer as to which one makes the most sense for you guys. Let's see, and so for ARPA-H, I'm really excited that things are starting to live up again and they are putting more solicitations out, which is really exciting. And so usually they do have something called innovative opening, uh, submission openings, or ISO, or broad agency announcements, or BAAs. Typically when they put out a call saying, hey, we have this new program with funding, we're looking for technology that does ABCD things, they encourage applicants submit a solution summary, which is kind of like a concept paper or like an introduction, anywhere from 3 to 5 pages to introduce what your technology is, what would you propose to do before they give you the thumbs up and then you have to hit the ground running to put together a full application. And sometimes they give you only 45 days to do so. So that's— and so right now the most— the two recent programs that are out is something called THRIVE and GIVE. So if you go to the RBAH website, you're going to see different programs come out periodically throughout the year, and they're going to be really specific compared to an open topic like the omnibus NIH SBIR program, for example. So for THRIVE, their goal is to look for technologies, platform technologies to accelerate precision genetic medicines and anything that has a single prevention for treatment of disease at that level. And then GIVE, they're looking for cutting-edge production technologies to push forward manufacturing of these high-quality medicines. And so as you see, both of them first require a solution summary and a full proposal application. So in case your technologies is aligned to the THRIVE program, the solution summary is due in a couple of days, so make sure you get on that as soon as possible. Again, it's only like a couple of days. Couple of pages, but you don't miss the mark there. People ask me, how much do I propose? This is where it gets fun. We can get anywhere up to even $25 or $50 million of funding and propose that amount. Our clients have raised over $25 million of these types of applications, so we can definitely help you figure out what the best strategy is for you guys. So if you go for ARPA-H, again, this is a brand new, uh, agency. Some of the projects they have funded are a little bit different compared to like an SBIR program. So if you go and search up here, you can see $41 million for robotic systems mobility. You can see $28 million from— for a different general health therapy. They like these acronyms, so we usually like to put some fun names to get that commercialization feel for these applications. And you can see some of these are all universities, but some are also biotech companies as well. So this is another really attractive way to get non-dilutive funding. The applicants that are very competitive, they form a coalition of different partnerships. So some startups have partnerships with universities, research hospitals, to strengthen the rigor of their approach for these applications to make sure we have that moonshot-y feel. And you can also be a foreign entity to also participate in this as well. So there's a lot of foundations and stuff here, and there's also some startups that have also won this as the prime. So I am one of the co-founders and the CEO of Scout, and here we are developing AI platform to help founders find grants, write the grants, and then with our team win the grants. I myself have been in the space for about 10 years, and many guys have who have done applications understand it's very frustrating to— for a couple reasons in this space. One, it's really hard to find 1. Grants. Has anyone scoured a database and spent hours on Grants.gov trying to find grants for their startup? How frustrating is it, right? Like, keyword searches don't work, Grants.gov have outdated resources, so it's really difficult, especially since everything is siloed. 2. Once you find a grant, even with an SBIR, it can take up to 200 hours to put together one application, especially something super competitive. And then 3. Once you get this awarded, there are a bunch of red tape, compliance, post-award management systems that you have to have in place in order to make sure you still get the payments allocated throughout the award. So there's a lot of issues right now. And so we're developing a platform solution where our platform can leverage AI to help you guys get funding 20 times faster and at 30% of the cost. Instead of doing that, you can upload all your materials into Scout, and we use this like customized AI matching where we try to understand the narrative that you have, the solicitations that are out there, and we're finding a nice fit of what solicitations out there. And this is across all federal database, not just SBIRs. So our, um, AI grant matching system have thousands of databases. We're almost there to release federal contracts in addition to grants, foundational and state, and also RFPs. Two, once you find a grant, our first beachhead is the SBIR program. We have accelerated grant writing out there. And so again, same thing, when you write an SBIR application, work with someone, uh, in a legacy company like a consultant, you have to tell me everything what you're doing, I gotta go read your materials, come back to you, answer a bunch of questions, and then kind of go away and give you a crappy first draft within 10 days. Instead of doing that, we can upload your system, do an intense one-on-one call with you, and we've written full technical applications within the first same day, which is really exciting. And so we found that our processes has saved our your time by at least 70%. And then finally, ongoing award compliance. We also have tools once you're awarded to help you with all the steps and the deadlines and all the requirements to make sure you are compliant throughout your post-award application. Again, we have about 500 people today since launching earlier this year that's in Scout, and they love Scout for a couple of different reasons. One, it allows them to have a 10x win rate because we're combining AI with our team of experts to accelerate the process. We're trying to package all the best practices from decades of knowledge into a platform delivered at scale for you. You guys. Two, you can do 20 times faster. I usually take about a month to put together one project description, but now we can do it within a day, which is really exciting, saving you weeks at a time. And finally, 30 times more affordable. I don't know if you guys have worked with a grant writer. It's really expensive. And so we're trying to reduce that cost so that we can deliver these high-value services at scale. So similar what I mentioned too, old-fashioned way, you usually have to give Stacy Chin all your materials, right? We have to learn what you're doing, find what's happening, go and type things up. And give you your first draft, and there's just a lot of back and forth in terms of editing. We find that the best way we give you value is the strategy, the content, and kind of the beef of the narrative. So we want to make sure you also spend your time on that instead of typing up the words as you see fit. But also too, we're also looking at high-quality outputs that are aligned to reviewers and what they're looking for. So our team has raised over $500 million of funding to date. We've been in the space for at least over a decade, and we have subject matter expertise in healthcare and biotech, life science, sciences, defense, AI/ML, cybersecurity, you name it, we have someone in there as well. And so we're here to want to guide you through the process, not just only running the application, but also educating you guys the best practices of how to win and secure these applications. And so we have a lot of excellent partnerships like with Yale Ventures, MassChallenge, Techstars, Mass General Brigham, and OCRI. We have some lots of happy clients that have used our services and our platform. And with that, I want to thank you guys again for joining us today at this Lunch and Learn, and I wanted to join the Accelerate Group for the invitation today. Happy to answer any questions. On a macro level, you can see a lot changes happening in climate, for example, right? And they're cutting a lot of funding, they're backing a lot of funding in climate energy sector. We are seeing similar things in healthcare, and unfortunately things with like DEI initiatives, for example, we're seeing a lot of funds getting cut back in that area. In terms of your proposal strategy, we are encouraging just changing the language a bit just to be more aligned to the agency. So it depends on what you're working on and kind of some language that you are— we are using. We're also studying kind of what the scope and changes are with the agency, kind of align it to what they're looking for. And more changes I'm sure will happen too, so we can keep an eye on, on those, those funding situations. DOD is really interesting because NIH SBIR programs are grants. Although NIH SBIR programs also have contracts, they are more welcoming and allowing startup founders to engage with them to give advice because these are grants. DOD is a little bit different. DOD are contracts, and so when you talk to a program officer, they are there to still help you, but I found they can't say too much because it's a contract from the government. For these SBIR contracts, those that have been successful from my experience with DOD SBIR program or the CIPR program either came from defense background or they also have an in to understand the pain points, you know, top to bottom and have a solution that can be specifically tailored towards defense. And so yes, we do encourage people to talk to DOD program officers for sure. Yeah, so this is, okay, so this, let's go over DOD since we have some topics here. So this is the DSIP, the Defense SBIR/STTR Innovation Portal. Again, these are SBIR contracts. So like you mentioned, they're very specific. So if you go into solicitation information, topics and topics, Q&A, you can see all the different topics available. So this is the most well-funded SBIR program across all the agency. Where there's almost $2 billion allocated across the board. So you have the DOD SBIR program, but the DOD has different sub-agencies. So like you say, you have Army, you have CBD, you have Air Force. Air Force has the Air Force and then AFWERX, Space Works, and then you have like MDA and so forth. Each of those sectors have their own DOD SBIR program and also funding priority. And so what you apply for the Army might be a different scope and for the MDA, the Missile Defense Agency, or different for AFWERX and so forth. The Navy is an interesting one where a lot of of these applications and these funding priorities are tailored to a particular innovation that they're looking for, or like a particular company. We still encourage people to go for it because they're still out there, they're still looking for a biz. And even though they found one solution out there that might be a good fit for them, by putting out a call out there, there could be others that might be a better fit. DoD topics get released the first Wednesday of every month. So sometimes you have more Army, sometimes you have more Navy, sometimes you have more CDB, AFWERX, etc., etc. So it's a little bit of a different game for DoD. Happy to chat more about that as well. But this is where your scribble it should be for the application. Another important, uh, note, you see there's two different links here. This solicitation instructions is kind of the main solicitation and rules for the DOD, but when you prepare your application, you want to go for the component instructions because you're not submitting to the DOD, you submit to these different components, and they all have different requirements, different required documents to sign, and different solicitation and topic areas. So this is where you want to really read and understand before you go for an application, and we have all this templated out in Scout