CXO

How to get free money for technology R&D

Believe it or not, some firms may be able to cover most of their R&D costs with free money from the U.S. government?s Advanced Technology Program. Read on to find out how your firm may be eligible to get a share of the handouts.


When earnings are less than stellar among many tech-sector enterprises, staffing, advertising, and research/development are often the first areas to suffer budget cutbacks.

However, thanks to a generous U.S. government subsidy, individual, for-profit companies or industry-led joint ventures may be able to continue research and development projects with free-of-charge cash injections from Uncle Sam. This article explores the Advanced Technology Program (ATP) and explains how, if eligible, your organization can apply for these subsidized funds.

About ATP
Launched in 1990 as a division of the National Institute of Standards and Technology, the ATP was developed, according to the program’s Web site, “to accelerate the development and broad dissemination of challenging, high-risk technologies that promise significant commercial payoffs and widespread benefits to the nation.”

Unlike private venture capitalists, the program does not invest in research projects with expectations of financial returns or shares in the company. Rather, the driving force behind the program is to allocate tax dollars into research projects that eventually will yield new commercial opportunities throughout the nation. As the risk associated with a project increases, so does the potential for economic benefit. The ultimate goal of the program is to keep pace with the competitive pressures from other countries around the world.

Eligibility issues
According to Solveig Singleton of the public policy organization Competitive Enterprise Institute, ATP will review approximately 417 proposals, choose 60 winners, and distribute up to $65 million among the recipients. To date, ATP has funded 468 projects, including R&D proposals from IBM, Motorola, and Texas Instruments.

Single companies
Although the size and scope of for-profit companies vying for these funds does not directly impact their eligibility, size does influence how much of the cost of the project the recipient must carry if granted the maximum $2 million fund for a three-year period.

Small to medium-size firms are exempt from covering direct costs associated with the project but must carry any and all overhead costs. Large companies—businesses with annual revenues of $3.037 billion or more—must cover at least 60 percent of the total direct project costs along with all overhead costs.

Joint ventures
If an organization plans to team up with another company to foot R&D bills, ATP will fund collaborative R&D projects as long as all partners in the venture cover 50 percent of all costs—direct and overhead.

Application processes
To be considered for ATP funding, companies must submit a detailed proposal to the committee. Similar to a business plan in format, ATP proposals must conform to standards published in ATP’s Proposal Preparation Kit. Applicants must describe a project’s technological merit and economic benefits through an executive summary, project narrative, and budget narrative. According to the ATP, the “peer review” selection committee—composed of ATP staff members —places equal emphasis on both tech-merit and economic-benefit themes.

The “four gates” for proposals
At its most basic level, the application process is divided into four “gates” or stages. During the first stage, the committee evaluates preliminary information about the economic and technological merits and, if interested, will request more detailed budget information in the second stage of the evaluation. If a proposal makes it through the third gate of the process, applicants have to defend their proposals in an oral review. When they pass through the fourth gate, applicants can cash the reward check.

Hints for success
So how have past proposals made it through the final gate to funding? According to an ATP representative, all funded projects have “successfully demonstrated the technical barriers that they wish to overcome in the marketplace with the project research.” In other words, just as a successful business plan identifies how the enterprise will overcome barriers to entry in its target market, a well-conceived ATP proposal expresses how the intended research will not only overcome but also erase technological barriers that exist in a marketplace—essentially clearing the path for future commercialization.

The ATP mentions one problem to watch out for: Many proposals fall short when it comes to providing detailed descriptions of the applicants’ plans to commercialize the outcome of the research and development. Often, proposals reach the first gate with general descriptions of the market segment that the new technology will serve. Without a thorough industry and competitive analysis, a proposal has little chance of getting past the first stage.

Finally, firms with bulging R&D budgets need not apply. If an applicant cannot demonstrate a fiscal need for government assistance, the chances of getting funded are slim.

ATP funding: Is it for your firm?
Has your organization considered ATP funding? Do you have any questions or concerns about the Program? Post a comment below and share your thoughts or send us an e-mail.

 

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