What
kinds of projects does the 21st Century Fund (ÔFundÕ) support?
In part, this question is
addressed by the name of this State Fund:
Indiana 21st Century Research and Technology Fund. In creating this Fund the General
Assembly emphasized the role of scientific research and technology development
in economic development. Since its
creation in 1999, the FundÕs Boards have described the importance of the
transfer of new technologies created in the StateÕs academic sector into
commercial activity. Thus, during
its first 5 years, the Fund emphasized the establishment of partnerships
between the academic and commercial sectors. In addition to transferring technologies between sectors,
such partnerships created an environment of cooperation among academic
institutions and commercial sector actors.
Now, within the Indiana
Economic Development Corporation, the Fund has taken a nearer-term view of the
technology commercialization process.
Beyond simply having the goal of commercializing a technology in the
future, successful projects must now have near-term specific commercialization
and jobs growth goals. A brilliant
technology without clear commercialization ends, or commercial activities
involving well-established technologies, will not likely win awards from the
Fund.
The FundÕs ÔRequest for
ApplicationsÕ, in its first paragraph, indicates that proposals should involve:
Ôtechnology-based commercialization activities encompassing science/technology
creation, innovation, and transfer intended to have commercial impactsÕ. In this context, Ôtechnology-based
activitiesÕ involve creation of new technologies and their implementation in
prototypes/processes. It is
implicit that such new technologies should have the potential to induce
important changes in the broader commercial activities of the State. Simply implementing an existing
technology does not necessarily involve the innovation and creative elements
required for Fund support.
Such distinctions have been
most difficult to implement in the software arena. While the creation of unique new software, providing
capabilities not previously available, is indeed of interest to the Fund, such
software development must present intrinsic challenges and technological
(architectural, algorithmic, etc.) risks.
Thus, programming activities, involving known software languages and
methods, do not qualify for Fund support, no matter how innovative and
important the eventual use of the final software product may be. These standard programming activities
are clearly part of normal business activities; something the Fund
explicitly does not support.
The Fund supports the
proof-of-principal or validation of new technologies. This is important because it is only when a technology is
demonstrated in practice that the normal capital markets will participate in
its further commercial development.
By providing this early/seed type of support, the Fund is effectively
increasing in Indiana the number of attractive angel and venture capital
investments.
What
is a Technology-based Company?
This is defined in the
Request for Applications: ÔA
technology-based company is involved in transferring advanced technology into
products, developing technologies with the near-term intention of creating
products, or using new or advanced technologies in its design, development,
and/or manufacturing of products.Õ
The emphasis, again, is
clearly on creating or manipulating new technology in such a manner that
commercial activity, and jobs creation, ensues. Transferring and developing technologies involves something
fundamentally new. ÔUsing new or
advanced technologies in its design, development, and/or manufacturing of
productsÕ indicates the use of newly developed or recently proven technologies
as a means to substantially improve design, development, or manufacturing
processes. For example, new
advances in laser-assisted machining will have important implications for how
new material structures are designed and manufactured. Or, new types of software may make
possible activities that had been previously impossible or ineffective. In all of these cases the clear
emphasis is on new and advanced science/technology and its intrinsic further
development or utilization in new applications.
While innovative use of
existing technologies will be to a companyÕs economic benefit, and may
certainly lead to new jobs creation, this will not in general win Fund
support. The reason for the FundÕs
emphases is that from the point of view of the State the greatest benefits flow
from developing new nationally competitive science/technology
capabilities. As these enter the
mainstream of commercial activities, Indiana companies will gain and sustain
important competitive advantages.
It was clearly the creation of such new capabilities that the General
Assembly had in mind when it created the Fund.
How
strong is the emphasis on commercial results, and jobs creation?
This is now a very
significant driver of Fund award activities. Not only must the technology development plan be highly
innovative and well-reasoned, but also the intended commercial development of
that technology must be convincing.
It must be clear that if all project activities go well, significant
near- and far-term hiring will take place in Indiana. Thus, the nature of the business development plan will
strongly influence the likelihood of an award action by the Fund. Discovery of a wonderful new drug,
which is then licensed out-of-state, may create wealth in Indiana, but may have
limited jobs creation impacts. The
Fund and IEDC will carefully weigh both the ÔupsideÕ commercial scale and jobs
effects of every project under consideration.
The current RFA describes
the basic aspects a proposal should cover. Two of these are: ÔEstimate time to commercial impactÕ and ÔEstimate
job creation vs. timeÕ. These are
not idle requests for information.
It is an applicantÕs job to convincingly describe their commercial
development plans in a manner convincingly answering these two questions.
The IEDC Board, which must
recommend all awards from the Fund, thoroughly discusses each projectÕs likely
commercial and jobs impacts.
Must
I have an Academic Sector Partner?
No. While the academic sector can
contribute importantly to a technology development project, it is not essential
that you involve an academic laboratory if you can carry out the work entirely
within the commercial sector. The
Fund recognizes the importance of intensifying academic-commercial sector
interactions, and such interactions are seen as a plus, but their absence will
not inhibit an award.
Company-company alliances are another effective means for bringing important
technology development capabilities to a project.
If you utilize academic
sector partners, your case for commercial impact is strengthened if a
subcontract is utilized through which the commercial sector partner manages the
research/development context of the project, as well as the finances.
How
much Technical Detail do you require?
The level of technical
detail will to some extent depend on what you are proposing to do; however, the
most frequent failure in our technical review derives from reviewer comments
such as: Ônot enough detailÕ; Ôimportant aspects of the project are not
describedÕ; Ôhow this will be done is not describedÕ; etc. Perhaps the best advice in this regard
is to say: Òimagine that you are writing to convince someone like yourself that
the project has significant merit.
What would you want to
know?Ó In Fund technical review,
you are addressing experts. You
are not selling your idea to a lay audience or to a group of ÔgeneralistsÕ. If you do not provide the detail
necessary to win positive comments by persons who know your field, you will not
likely win an award from the Fund.
On the other hand, it is also important to note that it is possible to
seriously and concisely describe a complex project without providing tedious
protocol-like details, which any expert would implicitly expect you to
undertake.
Another way to think of the
issue of proposal detail, is from the point of view of clarity. You must organize your thoughts
logically and express them forcefully and clearly. Your proposal should open with clear statements describing
what you intend to do and why.
This will set the context for the remainder of the discussion, and will
prevent our reviewers from ÔguessingÕ what your objective is going to be.
What
is the Time-Frame of Review?
Generally, from the time we
begin review of a proposal to action by the IEDC/IEDC Board about three months
will have passed. If the project
fails during technical review, you will hear in from one to four weeks, in
general. But, we have limited
ability to ÔforceÕ reviewers to respond.
This can lead to prolonged waits, particularly if we feel that a
particular reviewerÕs comments are essential to our decision-making process.
Following technical review,
the IEDC undertakes an intensive exploration of the business development/jobs
creation/Indiana benefits aspects of the project in preparation for IEDC Board
discussion and action. This
frequently leads to questions for applicants or for involvement of additional
reviewers, often in this case involving members of the targeted Ôuser communityÕ
or ÔmarketÕ.
Do
I Need to Include a Business Plan?
It is helpful if you do. As the review turns from technical
issues to business development issues, the presence of a business plan is very
helpful. The existence of such a
plan is also an important indicator of your commercialization focus.
In general, the Business
Plan contains insufficient technical detail to take the place of a separate Ôtechnical
proposalÕ.
How
are Award Agreements developed?
Award agreements define the
respective responsibilities of the IEDC/21 Fund and the awardee. They define expectations related to the
execution of the project, and provide flexible guidelines allowing for the
dynamic nature of technology development and commercialization activities. These aspects are common to most projects. In addition, there are required State
of Indiana stipulations.
Awards generally contain
unique conditions, which are defined during discussion between the awardee and
the IEDC/21 Fund. Almost all
awards include a requirement for repayment if your business moves outside of
Indiana during a specified time period.
What
is the Purpose of Initial Discussions with Fund Staff?
Before you spend valuable
time developing a proposal to the Fund, it is essential to determine that your
intended project will be a good fit to the FundÕs objectives. This is most simply determined either
through a discussion with Fund staff or by submitting a focused Ôwhite paperÕ. Furthermore, since Fund staff has managed
the review of over 800 proposals, they are in a good position to anticipate
review issues and suggest improvements of proposal drafts. The net result of such
interactions with Fund staff is optimization of the use of your proposal
development time, and minimizing the possibility of your being declined as a
result of matters that could have been anticipated.
Do
You Have a Format for Budgets?
No. Again, clarity is the essence. It is important to relate and justify
the budget in terms of technology development goals, and the impacts of those
technical milestones on the development of your commercial objectives. Items of equipment, and essential
personnel should be justified specifically. Overhead costs cannot be paid by the Fund. Our enabling legislation specifies that
the Fund expects companies and other institutions involved in projects to share
in project costs. It is important
that you characterize past expenses leading the project to its current stage,
and expenses involved in the execution of the proposed activities that will be
paid by the Fund and by the awardee(s).
Show how you would like Funds to be provided (this has typically been
quarterly). You should tie funding
to technical milestones as far as possible.
Project requests have ranged
from about $40,000 to $5,000,000.
Assuming a logical project plan, you should ask for support that is
appropriate to the execution of that plan. The Fund will push back significantly at and above the
$2,000,000 level. The funds for a
project are set-aside at the time of award, and do not ÔrevertÕ. Thus, you should ask for a project
period consistent with what you are attempting to do. However, bear in mind the relatively near-term nature of
many of the FundÕs objectives. If
you request a 5 year period, questions will be asked about the nature of your
commercial impact, why it will develop over such a prolonged time period, and
how certain you can be of the technology and market, etc. so far into the
future. You should bear in mind
such trade-offs when considering the structure of your proposal, particularly
the technology development trajectory.
In developing the RFA we
underestimated the time it would take to develop a simple web review system
which can accommodate our no-deadline, no-format process, and which differs
significantly from our past Òround xÓ submission/review process. While such a system will eventually be
implemented (probably during winter 2006/2007), unless you read otherwise on
our web page, please submit materials via e-mail (to kkoehler@21fund.org, or kstreepy@21fund.org) or by normal mail or express services.
How
is confidentiality protected?
We understand that
intellectual property is the foundation upon which most technology-based
companies are built. The 21 FundÕs
enabling legislation provides for the confidentiality of proposal materials and
communications with applicants and reviewers. The staff of the Indiana 21st Century Fund is
able to sign confidentiality/non-disclosure agreements with our
applicants. In addition, we have
our reviewers sign agreements with the 21 Fund covering non-disclosure and
conflicts of interest. There are
other possible ways in which we can further accommodate applicant concerns, but
ultimately an applicant has to reveal technical details to 21 Fund staff and
reviewers. Since its inception in
1999, the 21 Fund has carried out thousands of reviews, and there has never
been any suspicion raised about the confidentiality of our review process.