WJI December 2018 Feature Sample

WIRE JOURNAL DECEMBER 2018

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R&D FUNDING Are you missing out?

OFFICIAL PUBLICATION OF THE WIRE ASSOCIATION INTERNATIONAL

FEATURE

R&D FUNDING

This feature pitches a relationship with the U.S. government that you may never have considered: your partner. If a company has a truly innovative concept but is leery of costly R&D, Uncle Sam may be able to help. Ironically, the riskier the premise, the better your chances. It’s not literally free as there are internal costs (see p. 54), but the process does work (see below), and wire and cable awards have been issued. Further, it may be feasible to access outside technology (see p. 48/50), opening up future markets. These and other aspects are presented here.

Minnesota Wire: its R&D journey from kitchen table to satellites Founded in 1968, Minnesota Wire evolved from a bulk cable manufacturer to be a technology leader in fields such as medical and defense. That success was fueled by taking advantage of federal funding (16 awards over 12 years) for R&D. Below, company Chairman/CEO Paul Wagner explains how the metamorphosis came to be for a family business that was literally created at the kitchen table.

At Minnesota Wire, we believe we’re quite unique compared to every other wire company, and frankly most small manufacturing firms. We decided back in the 1990s that innovation was essential to survive and thrive in a fast-paced economy. We weren’t going to be dictated to by the market. Instead, we reached pretty aggressively for a different future, and it was a risky stretch, to re-invent how we made electrical conductors and shields for our target markets of medical and defense technologies. We saw that these sectors were going to need vastly different electrical interconnect systems, not just variations of what had been done the same way for a century or more. In this journey, we faced, and embraced, three big challenges.

Predicting market demand. This was the first challenge, and at the time the future was not so crystal clear. Internally, we felt comfortable in our assessment that conductors had to be lighter, more robust and offer even more added value, like built-in “smart” diagnostics, radar-absorbent components and assemblies that would not corrode over time. Further, we saw that wire had always been an afterthought for devices in these target markets.

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We concluded that making them central to the application design was the way to go. We were convinced that the market was ready Paul Wagner with a for us if we could deliver.

CNT sample at work.

The technology. The second challenge was how to get there from a technology perspective. We found much of the answer largely through our ground-breaking work with carbon nanotube (CNT) material. These connectivity products were lighter, non-corrosive and largely unknown to the wire and cable industry, yet they represented a unique way to match future designs for high tech products. They could also be more than just conductors, as they could serve as shielding for the interconnect assemblies. It was exciting to be driving the technology for our own products, rather than reacting to it.

Funding. Finally, our vision was admittedly ambitious for a small, family-owned wire company in the Midwest.

SBIR/STTR: noteworthy aspects  SBIR was created by Roland Tibbetts at the National Science Foundation and signed into law in 1982 by President Ronald Reagan.  Awards are offered by the SBIR (11 agencies), and STTR (five agencies). See below.  Each year, more than $2 billion in awards are issued.  The success rate for applicants for Phase I is 15 to 20%, and for Phase II it is 30 to 50%.  To date, some 160,000 awards have been issued, and more than 70,000 patents issued.  To date, SBIR programs have awarded over $43 billion to American small businesses.  Some 450,000 engineers and scientists have taken part, one of the largest STEM talent concentrations in the world.

Types of federal funding available to small U.S. companies Each year, 11 federal departments and agencies are required to reserve a portion of their R&D funds for awards to small business. These include the departments of Agriculture; Commerce; Defense; Education, Energy, Health and Human Services (HHS), Homeland Security, Transportation, the EPA, NASA and the National Science Foundation (NSF). Each body’s websites explain their programs.

The federal government provides R&D funding primarily through two programs, both of which come under the U.S. Small Business Administration (SBA) Office of Technology. A proposal for either program must be submitted in response to an “open” research topic listed online.

The Small Business Innovation Research (SBIR) program. Candidates are limited to 500 employees, must be American-owned and independently operated, and for-profit, with the principal researcher employed by the business. A Principal Investigator (PI) must be named.

For 2018, Phase I, the start-up phase, provides awards of up to $150,000 for approximately six months for further exploring the merit or feasibility of an idea or technology. Phase II awards, up to $1,000,0000, for as many as two years, can be used to expand Phase I results. During this time, the R&D work is performed and the developer evaluates commercialization potential. Only Phase I award winners are considered for Phase II. Phase III, commercialization, is not funded, but significant Phase III dollars are

sometimes available from the government using a different contract vehicle, other than SBIR/STTR. The Small Business Technology Transfer (STTR) program. This program, which expands funding in the federal innovation R&D arena via five agencies, is similar to SBIR, but it expands the public/private sector partnership to include JV opportunities for small business and nonprofit research institutions. It does require a candidate to collaborate with a research institution in Phase I and Phase II. Unlike SBIR, the PI need not be an employee.

Each year, the departments of Defense, Energy, HHS, NASA and the NSF are required by STTR to reserve a portion of their R&D funds for award to small business/ nonprofit research institution partnerships. The agencies make STTR awards based on small business/nonprofit research institution qualification, degree of innovation, and future market potential. The STTR program is generally similar to that of SBIR, other than for Phase I award period is longer, approximately one year. As with SBIR, Phase III does not get funding. More details, including the full qualifications, can be found at www.sbir.gov.

Of note, while carbon nanotubes and high-temp superconductors account for many projects, past funded proposals have included tow wires for a submarine, lightweight wire and cable for aircraft, tungsten 3% rhenium wire, wire coatings, graphene wire, dimensionally stable composite cables, and more.

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FEATURE

We knew that self-funding the R&D was problematic, especially as there were no guarantees that the market would buy into our concept. So, we went to the greatest venture capitalist in the world: the U.S. Federal Government. The opportunity provided through the Small Business Innovation Research (SBIR) program allowed investigation and development of our CNT products.

These programs are designed to engage small business innovation for national technology needs, particularly in defense. And from what we saw, very little of it was being applied to re-invent legacy wire. We had found our dream investor. At the same time, it was also a way to give back, as our innovations, commercialized, could keep soldiers safer and make them more effective.

At that point, it was a wild ride. We hired a really smart MIT grad to start writing our proposals to win research projects for the Pentagon. It was all about systematic bidding on relevant topics and “suggesting” topics to government program managers so we could bid on contracts we had helped design. This got us on a path to where we are now. We have bid on, and won, more than $6.6 million in federal R&D contracts. With those funds, we were able to develop the capability to design, process and establish performance relative to commercial wire