Grants and the Scrappy Science Startup

For thinly funded startups, grants can be an excellent source of early funding, leverage for an angel round, and a significant non-dilutive capital infusion. Grant amounts range from low six-digit to mid-seven-digit amounts. However, grants are highly competitive, labor-intensive to write, potentially distracting, and challenging to manage. This post will discuss some of the lessons learned while running Siamab, where we won over $3m in NIH grants over a period of six years.

Types of Grants

There are many types of grants available to startups. The Small Business Innovation Research (SBIR) and its cousin, the Small Technology Transfer Innovation Research program (STTR), are US government funded programs designed to allocate a percentage of federal R&D funding (3.2% for the SBIRs) to small business research initiatives.

SBIR programs include both grants and contracts, two slightly different mechanisms for allocating grant funding. When an RFP for a grant contract is published, it is worth reviewing topic lists to see if there is a potential fit. Unsolicited submissions are also encouraged and compete for funding, though there may be a higher probability of winning if the submission focuses on a specific published topic. Contract awards have a distinct review process, reducing some of the uncertainty of external peer review.

Large research agencies, like the National Cancer Institute at NIH, offer multiple additional grant mechanisms that companies can apply for beyond the SBIR/STTR programs. The agency web sites list most of these opportunities and RFPs and are worth reviewing on a regular basis.

The NIH and other agencies regularly run regional conferences and events open to startups to meet with grant officials and learn about opportunities.

There are a wide range of additional grant opportunities offered by various governmental agencies - the DOD notably supports a broad set of research projects for diseases prevalent in their population of employees.

Many non-governmental organizations offer grants as well - some disease-focused foundations make grants, and at times, direct investments. Ex-US groups can also be a resource - for example Cancer Research UK’s Clinical Development Program supports preclinical programs through proof of concept clinical trials.

Writing Winning Grants: The Challenge of Peer Review

Writing a successful grant is challenging and takes significant time and effort. It is critical to understand in detail the requirements of the funding agency, the specifics of rules on page length, formatting, and related details. A first step is to define a set of aims (goals) for the grant. Synchronizing the funder’s goals with your corporate goals is an art form in itself, and establishing an appropriate budget to achieve the articulated objectives, taking into account complex rules (i.e. % of internal vs. outsourced effort) requires careful attention.

One potential problem that can arise in “chasing grants” comes with writing aims that meet the goals of a funder but may lead you afield from your corporate goals. If awarded, the effort level to achieve the aims can be a major distraction from strategic goals and core activities.

Many agencies have grant officers who can provide input on grant aims which can be helpful in ensuring you don’t stray too far from areas of interest to a funder. In addition, an early review can help point out structural problems in the budget and limits for certain types of activities.

Collaborating with an academic researcher who has strong grant experience can increase your chances. An academic partner can bring grant writing experience to the table and can bring complementary skills to the grant-funded activities.

If crafting the grant application is the first hurdle, the second, perhaps even more exigent, is scoring well in peer review. This process, through which your grant is meticulously evaluated by a 3-4 reviewers, can be incredibly frustrating. With good luck you could be assigned reviewers who favor your scientific approach, but with back luck you could end up with one or more who dislike your target, approach or field, which can lower your score considerably. Only 5-15% of grants receive funding, so scores must be consistently high across all reviewers.

Reading the “summary statement” can be painful, and you may find that some of the comments appear completely off-base. It can seem, at times, that reviewers do not read grant applications closely and instead bring in their own biases and prejudices. This statement, though often unpleasant, can be an excellent guide for successful resubmission, identifying areas reviewers find weak or problematic, offering steps to strengthen the proposal. The timeline here is long - from RFP to submission, review, and feedback could take 9 months; resubmission can require another 6-9 months.

Grant Consultants

Finding an academic collaborator can be a great addition; hiring a grant consultant can also offer the potential to share the workload and improve your odds. There are a number of consultants available - from the larger Freemind Group (based in Israel, but active in the US) to numerous independent consultants.

Areas grant consultants can add value to include:

- Editing, formatting and insuring the propriety of documents for submission.

- A second set of eyes to provide feedback on scientific plans, aims, and details. The consultant will likely lack detailed domain expertise so can provide a more independent review.

- “Grantsmanship” tips and experience from a seasoned consultant can be invaluable on topics like the importance of biostatistical input and the role of letters of support.

- Consultants also aid in tending to administrative details, as the actual submission of the proposal is labor intensive, complicated, and needs to be done 100% right.

Key areas where the grant consultant cannot help as much lie in the actual scientific content of the application, the definition of aims, the design of experiments, and the budget details underpinning a scientific research plan. These need to be from you and your scientific team. A good consultant can react to these, offer edits to tighten the language and provide administrative support.

Managing Grants

Once you have won your grant - with funding at your fingertips to move projects along, your team can begin working to meet the formal aims of the grant while addressing evolving business goals.

Alongside the technical & scientific work, there are a set of obligations implicit in the grant. A government staff-member is assigned for both administrative/finance topics and another is assigned to focus on the scientific content, aims, and results.

Most grants require periodic or quarterly reporting as well as final documentation. In many cases, you will setup a periodic call with the scientific liaison to review the quarterly reports. On the financial side you will submit monthly detailed invoices and detailed expenses.

Building a strong relationship with your government team is helpful both in ensuring successful completion of aims and getting paid. A longer-term benefit of "good housekeeping" with your grant organization comes in the form of grant building. Many SBIR and other government grants can build upon one another - success in a phase I grant ($200k) can enable you to win a phase II SBIR (up to $2m). A solid relationship with your NIH official can help - but you’ll still need to write strong grants and win future peer review.

Conclusions

Supporting a startup with grants is a viable path - particularly in the early days. The effort required is considerable and the process requires a long-term commitment. Grants can be an excellent complement to angel financing, and in some cases can fully fund a startup through early proof of concept studies.