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SBIR Pulse Edition 1 - Real Stories and Impacts from America's Startup Seed Fund
Welcome to SBIR Pulse, a new monthly feature about the Small Business Innovation Research and the Small Business Technology Transfer programs, otherwise referred to as America’s Seed Fund.
SBIR Pulse provides interviews with individuals from the different corners of the high-tech start-up ecosystem. This ecosystem includes business experts, investors, government and political leaders, and of course – entrepreneurs themselves. The interviews provide readers with perspectives on how SBIR is impacting small businesses, driving innovation, and leading to technological solutions that improve local economies while addressing national priorities. The interviews also inform readers about the SBIR program and its many specific programs and initiatives.
We hope you enjoy the inaugural issue of SBIR Pulse. Stay tuned for another in February and throughout 2015.
SBIR Pulse – Interview #1: Javier Saade
Javier Saade is the Associate Administrator for the Office of Investment and Innovation at the Small Business Administration. In his role, Javier oversees both the SBIR and STTR programs across the federal government.
SBIR Pulse: Can you tell us a little bit about your own background as an entrepreneur?
JS:Exceptfor the current White House appointment, my 20+ year career has been in the private sector, and I have professional experience as an investor, executive manager, strategic consultant and entrepreneurial leader. I co-founded three companies in three different industries (media & entertainment, alternative energy, and branding agency) and have been an investment professional at an emerging and frontier market private equity focused firm (GEM Group), a macro hedge fund (Bridgewater Associates), and a venture capital firm (Paradigm Ventures LP). My foundational career years were spent at McKinsey & Company, Booz | Allen | Hamilton and Abbott Laboratories. Just before joining the administration I advised an impact investing firm and a family office, Pacific Community Ventures and Aspen Grove Capital respectively.
But let me go back to where I started my career, Abbott Labs. There I worked as a manufacturing manager and engineer, not as a researcher, but I interacted with the R&D team all of the time because we had to take their inventions and scale them from beakers to 10,000 gallon vessels; very interesting and challenging. In those jobs I held at Abbott, my main responsibilities revolved around materials planning and manufacturing everything from diagnostic tests and reagents to pharmaceutical products. At McKinsey and Booz Allen many of my clients were innovation-driven companies across different industries that included agricultural technology, information technology, biotechnology, and aeronautics.
So I have been around technology in different settings and in different capacities. But as an entrepreneur, the pathways to capital formation I followed in my entrepreneurial ventures were, as far as they can be, pretty traditional and did not involve government grants or contracts of any sort. What they did involve was self-funding, friends and family and traditional venture capital investment.
SBIR Pulse:When did you first learn about the SBIR program? What was your reaction?
JS: I had heard about the program, and its sister program the STTR, which stands for Small Business Technology Transfer, before, but it was not until I was in serious consideration to lead it that I REALLY learned about it. My reaction can best be described as “wow, wow, wow!”
SBIR Pulse: What made you decide to take your current job at SBA in leading the SBIR program?
JS: Getting the opportunity to use my private experience and perspective for the benefit of our country and public good is something that somewhat happened serendipitously, but when it happened, I really wanted to contribute and jumped at the chance. Let me describe the programs I lead to you and you will see why I am so excited to come to work every day.
As the US Small Business Administration’s Associate Administrator, I lead the Office of Investment and Innovation (“OII”). OII houses the Small Business Investment Company (SBIC), Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs along with SBA’s Innovation Initiatives.
The SBIR and STTR programs, as you know, collectively entail the government's largest innovation effort focused on small business, effectively making the collective ~$2.5B/year the largest pool of seed funding in the world. It is America’s Seed Fund. Since inception, ~150k grants totaling ~$40B have been awarded to small firms that participate in federally funded R&D via 11 agencies and 100's of research institutions. In addition to expanding the frontiers of human knowledge, a key end goal of the programs is to commercialize the resulting inventions. The programs touch, catalyze and seed the creation of STEM-driven innovations in industries critical to the nation's long-term competitiveness and growth - from nanotech to education technology to robotics to mobile communications to genetic therapies to clean energy to advanced weapons to space exploration.
The breadth of the programs’ reach is mind boggling and the companies whose birth happened in part because of the SBIR and STTR capital infusions include Genentech, Qualcomm, and iRobot among many others.
SBIC is a growth capital program. As opposed to grants, the money is invested into companies by professional private sector investors. SBICs manage about $23.5 billion of assets spread across ~290 private-public partnerships comprised of private equity, venture capital, and structured lending funds. With authorization to invest $4 billion annually, the program operates at a zero-subsidy cost to the American taxpayer. Since 1958, SBICs overall have capitalized almost 170,000 American small businesses with about $75 billion. Companies that received early capital infusions from SBICs include Tesla, Apple, Fed Ex, and Intel. The legacy and continued results of the programs are astounding.
The Innovation Initiatives I lead support entrepreneurs and their dynamic ecosystems and include StartUp University, Crowdfunding education, and the $2.5m Growth Accelerator Contest. Key multiagency collaborations I lead on behalf of SBA include USPTO Fast-Track, Advanced Manufacturing, SEC JOBS Act Education, Emerging Asset Managers, Rural Investing, Social Innovation and the Competitiveness Council.
Furthermore, I regularly work with the White House’s Innovation Cohort, Business Council, Domestic Policy Council, Office of Science and Technology Policy and National Economic Council on issues that directly affect high growth small businesses across the country. Most recently, the US Securities and Exchange Commission’s Chairwoman, Mari Jo White, appointed me to hold a seat on the SEC's Advisory Committee on Small & Emerging Companies on behalf of the SBA for its current term.
It is truly a privilege and a very dynamic set of programs, constituents, and challenges.
SBIR Pulse: You coined the term “America’s Seed Fund” as a way to describe what SBIR is all about. Can you tell us what you mean by that?
JS: Capital formation is a milestone-driven process for companies, especially those driven by technology and science. The first step towards a proof of concept requires “seed money”. Seed money is exactly what it sounds like, the first infusion of capital to make an idea go from a napkin to reality. SBIR and STTR are essentially seed funds that can be accessed by all ingenious American small businesses, and should be. The government’s role in heavy science-driven discoveries is to de-risk those cliffs, and that is exactly what the programs do.
To get to an eventual prototype and commercialized product, there is a road that starts with seeding and feeding the idea, hence “America’s Seed Fund”.
SBIR Pulse: Over the next 5 years, where do you see the SBIR program going?
My hope is that it grows, both in dollars and in companies benefiting. This has to do with how much the United States spends on research and development. The reason our country is, by far, the most innovative and the most advanced place on earth, is not chance. The reason is the systems and infrastructure that allow amazing entrepreneurs flourish and inventions to take root. For that you need serious investments, and America, from an overall perspective, is a serious investor. From climate concerns to obesity and everything in between, advances require investment and brains – the SBIR and STTR programs help bridge that.
Sometimes agencies see the programs as a “tax” because the scale of the grants made is small in comparison to their overall budgets. But they know that the impact is huge.
I see my role, and that of our new Director of Innovation, John Williams, who recently joined us from the Department of the Navy’s SBIR and STTR programs, to be a more service-oriented program lead – finding best practices and expanding them across the entire government, connecting scientific discoveries to capital, etc.
These programs are extremely important and I look forward to their reauthorization process in 2017.
SBIR Pulse: What advice do you have for American start-ups?
My friend David Bray, the FCC’s CIO recently told me this: “in 1977, 4.2 billion people lived on earth and the first Apple II went on sale running at 1MHz w 4 KB of RAM (note, that is the first half ofa second of your favorite MP3 song).” He continued, "today there are 7 billion people, about 850 million web servers online, and about 4 billion Zetabytes of digital content worldwide- and by 2022 there will be 8 billion people, 75-300 billion networked devices globally and 96 Zetabytes of digital content is estimated to exist”.
96 zetabytes, by the way is 96,000,000,000,000,000,000,000 bytes = 96 billion trillion bytes. So what is my point? He got me thinking, with that kind of exponential growth and change, the opportunities are boundless, and that is exactly what American start-ups should be like, boundless.
Combine boundless ambition and brains with perseverance, willingness to fail, risk taking, big vision, and relentless execution and you get the grit of the American entrepreneur and the most inventive country in the planet. Go get ‘em!!!
This interview was conducted by Edward Metz of the Department of Education, Betty Royster of the National Institutes of Health, and Lindsay D’Ambrosio of the National Science Foundation.
About SBIR & STTR
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programsare collectively the largest single source of early-stage capital for innovative small companies in the United States. Via these programs, the federal government invests over 2 billion dollars in early stage and high growth American entrepreneurial firms to develop and commercialize technologies that strengthen our nation's defense, improve the health of our citizens, and enhance education. Over the past 30 years, SBIR/STTR has been a springboard for many breakthrough innovations including 3-D printing, minimally invasive robotic surgery, and LASIK technology, and has driven advancements in fields such as nanotechnologies and educational games for learning.
For more information on the program across the 11 Federal agencies that operate programs, please visit www.SBIR.govand see this recent blog post. For timely updates and resources follow us on Twitter (@SBAgov, #SBIR) to stay connected!