Imagine a federal government program providing billions of dollars in seed money for entrepreneurs. Imagine 11 federal agencies backing high-risk projects traditional investors shun.
The Small Business Innovation and Research program is real, and it was recently extended and expanded by Congress. Since 1983, nearly a dozen federal agencies have awarded more than $3.2 billion to support 25,000 research projects by small businesses. During fiscal 1992, $460 million worth of grants were approved, and Congress recently extended the program to 2000.
"The SBIR program was a gift of life for us," said Gene Banucci, co-founder and chief executive of Advance Technology Materials in Danbury, Conn. "We've received about 50 SBIR grants totaling about $7 million."
With SBIR money, ATM brought to market a variety of filters designed to purify gasses and other materials used to make semiconductors and solar energy devices. The Fortune 500 giant Millipore, of Bedford, Mass., signed a joint venture with tiny ATM to sell about $7 million worth of gas purifiers.
"We were a typical start-up [company] when we started with our own money in 1987," Banucci said. "We had a concept for a product and took out a second mortgage on our homes and our first-born children to get this thing going."
Today, ATM has 60 employees and annual sales approaching $10 million.
The government sets aside a small percentage of all research dollars for small businesses. Firms apply to a specific department for funding.
Although entrepreneurs applauded the program from the start, universities and federal agencies initially resisted it, said Jack Sweeney, deputy assistant administrator for innovation, research and technology at the U.S. Small Business Administration in Washington. Why? The big guys were reluctant to share research dollars with small businesses.
"Now the federal agencies find the research they are getting from these small firms is as good or better than what they had been getting before," Sweeney said. "And the commercialization these technologies has been more successful than we ever thought of in the beginning."
With the SBIR program expected to double or triple in the next few years, more small businesses will benefit, said Sam Barish, who oversees it at the Department of Energy.
Barish said the DOE provided $43 million in grants to entrepreneurs in the last fiscal year.
"The SBIR program has no politics involved -- the grants are based solely on scientific integrity," he said. In fact, he said, 40 percent of the winners are based in California and Massachusetts, a fact that bothers politicians in other states.
One of the program's stars recently signed a $37 million contract to help a Wisconsin utility turn coal into clean-burning gas.
"The technologies we've tested with SBIR funds mushroomed into 28 different technologies," said Momtaz Mansour, president of Manufacturing & Technology Conversion International, with offices in Columbia, Md., and Santa Fe Springs, Calif.
The company's pioneering waste-to-energy technologies turn the sludge left over from recycling paper into a hydrogen-rich gas at Inland Container Corp. in Ontario, Calif.
"The Department of Energy's SBIR program is the best in the country because it is very sensitive to the needs of small businesses," Mansour said. "Companies receive a portion of the cash up front, and that often spells the difference between life and death for a small business."
If your company is involved in high-technology, biotechnology, lasers, information processing, medical technology or the like, check into SBIR grants. You can get information at conferences sponsored by the National Science Foundation and the Department of Defense. The next one is April 27-29 in Minneapolis. For information, call (407) 791-0720.
The most recent SBIR Pre-Solicitation Announcement, listing research projects sought by six federal agencies, is available by writing the SBA's SBIR Program, 409 Third St. S.W., Washington, D.C. 20416, or by calling (202) 205-7777.
Here are two entrepreneurial contests worth entering:
* Avon Products Inc. is looking for five women who have overcome hardships to achieve success. The award, co-sponsored by the SBA, is designed to recognize women who has been profitably self-employed for at least five years. For an application, send a self-addressed, 9-by-12-inch envelope with 98 cents postage to: Women of Enterprise Awards, Avon Products Inc., 9 West 57th St., New York, N.Y. 10019. Deadline for applications is Jan. 25. The award will be presented in Manhattan on June 24.
* Success magazine and Regal Group Inc. is sponsoring a "Breakthrough Ideas" contest. The winning product or service will receive $1 million worth of advertising using television "infomercials" and publicity in Success magazine. For complete contest information write: Breakthrough Ideas Contest, P.O. Box 322, Huntingdon Valley, Pa. 19006. Entry deadline is Dec. 31.
(Jane Applegate is a syndicated columnist and author. Write to her through the Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.)