When it comes to financing technology start-ups, it’s the angel investors and venture capital firms that get most of the credit for helping grow early stage companies.


But another crucial funding source exists: It’s called the Small Business Innovation Research (SBIR) program. Known as “America’s Seed Fund,” SBIR plays an important role in helping early stage companies commercialize their ideas.


Some notable Arizona companies have taken advantage of SBIR to help bring their technologies to market.


Hydronalix, based in Sahuarita, has received national attention for its “robotic lifeguard” technology that’s being used in humanitarian missions to rescue migrants marooned on rafts off the coast of Greece. And Flagstaff-based SenesTech is helping communities manage rodent populations with its non-lethal fertility bait that limits reproduction.


These are just two examples of Arizona companies that used SBIR funding to help advance their technologies.


SBIR comes into play at the earliest stages of a company’s formation. Why? Venture capital firms and angel investors typically want market-tested technology before investing precious dollars into a company. And traditional financing, such as banks, aren’t an option because there is little collateral besides the technology itself.


That’s where SBIR funding comes into focus. Each year, 11 federal agencies contribute from their research and development budgets about $2 billion for small technology firms that have the potential for commercialization.


The first step is a “proof of concept” phase in which a company can receive about $150,000. Phase 2 is the “prototype” stage that comes with an award of about $1 million. Once companies reach these levels, they can seem very attractive to venture capitalists and angel investors.


Another benefit of SBIR funding is that companies don’t have to give up an equity stake to receive the financing. That’s a big advantage for a young company.


The process can be time-consuming and complex. That’s why the Arizona Commerce Authority has a team dedicated to help these emerging business leaders with training and technical assistance in the SBIR process. This includes workshops on proposal writing, intellectual property protection, government accounting and individual coaching sessions.


Even companies at the early stages of the process say the training is paying off.


"The SBIR Training Course … gave us the tools, and the nerve, to submit our own proposal to the USDA (United States Department of Agriculture) soon after the course ended,” said Gordon Minns, CEO and Chief Research Scientist of AgraTek, LLC., which develops water-resource management solutions.


Because of this training, AgraTek’s future could get a nice boost in the near future. 


More information on SBIR training and resources can be found here.