Interviews


TIE SILICON VALLEY AND TECH FUTURES GROUP: GRANTS- GETTING FUNDED WITHOUT DILUTION

In March 2015 TFG advisor, Charles Eason, spoke at a TiE Silicon Valley event about one of the best kept secrets for entrepreneurs, the ability to raise non-dilutive financing via government grants. 

The Small Business Innovation Research (SBIR) is the federal government’s largest R&D grant program targeted to the small business community. With $3 billion available annually, the programs are a source of seed capital to help fund the development of promising new technologies. SBIR/STTR funding can also serve as a pathway to equity financing. This overview will cover the following:

- Overview of the SBIR program
- Qualifications and eligibility requirements for SBIR funding
- How to determine if SBIR funding is a good fit for your company and innovation
- How to search for SBIR solicitations and topics
- And more!




Interview with Gerry Barañano, Director, Tech Futures Group

Oct/Nov 2014

When you think about the San Francisco Bay Area, the term “Silicon Valley” comes to mind. Arguably one of the most fertile places in history for the birth of world-changing technology companies like Apple and Google, it can be compared to a stellar nursery where dense formations of molecular particles give birth to bright new stars like our Sun. In the case of the Bay Area, the molecular particles are the myriad individual engineers, designers, and other people that come together to form startup companies around emerging technologies, or the deployment of new uses for mainstream tech. The Bay Area’s entrepreneurial culture ensures that a continuous stream of new ventures never falters.

New forms of support for fledgling entrepreneurs have developed in parallel, and we constantly hear about a new company being “incubated” or “accelerated” before launching a salable product. More people think of “incubators” in terms of business development than in terms of the machine in which premature babies are maintained until they are viable for exposure to the world. The purpose of an incubator has not changed, just the “baby” it supports.

While our exposure to news about startup companies and their incubators and accelerators seems to be a constant presence, more mature tech companies also need skilled advice and fortunately, venues exist to provide it to them.

Recently Connected World magazine’s Tim Lindner sat down with Gerry Barañano, the director of a leading Bay Area organization dedicated to helping technology-based companies get to the next level of growth in their markets. Gerry is a successful business leader and brings a world of experience to bear upon the issues his organization’s clients are experiencing in the hypercompetitive world of technology.

CW (Conected World): Gerry, thank you for taking time from your busy schedule to speak with us about the TFG (Tech Futures Group).

GB (Gerry Barañano): My pleasure.

CW: Tech Futures Group came into existence in 2012, which is rather recently. Can you give us an overview of what TFG is?

GB: Sure. TFG is a program of the Northern California Small Business Development Centers or SBDC designed to extend the reach of the SBDC to niche entrepreneurial technology companies.

The SBDC are non-profit organizations funded by a combination of federal agencies such as the SBA (Small Business Admin.), educational institutions, and private companies to provide business counseling, training, and technical assistance. The mission of the SBDC is to help local communities expand economic development through the establishment of new small businesses and the expansion and growth of existing ones.

Because our advisors and staff are paid by federal and other funds, our services are completely free to our clients. We take neither equity nor cash.

The traditional SBDC clients are “main-street” businesses such as restaurants, hair salons, grocery stores, retail stores, and so on. SBDC has hired advisors with specific knowledge and experience facing these types of businesses.

CW: What prompted the founding of TFG?

GB: Tech Futures Group was launched to focus on the needs of technology companies. Because tech companies face a series of very unique challenges, TFG has hired advisors with deep expertise and experience in the areas needed by technology companies. Our advisors include experienced entrepreneurs, patent attorneys, corporate attorneys familiar with option plans and the special needs of technology companies, experts in developing financial models, advisors experienced in raising equity through VCs, angel groups, individual angels, and advisors experienced with obtaining grants from government and industry.

We share the same mission of the SBDC—to help small companies attain their goals and succeed. We are measured primarily on capital infusion (both debt and equity) and jobs created. And we have been remarkably successful! We’ve beaten our capital infusion goals by over 120% and our jobs goal by over 30%. We’ve helped our clients raise more than $40 million since launching in the mid 2012.

Other goals for us include number of patents filed, companies started, and so forth. But these are harder to impact directly.

CW: Interesting. You have certainly have “fast tracked” to early success! Is TFG still “on mission” as originally conceived, or has it evolved to meet different needs?

GB: We are still on mission to help small businesses succeed and achieve their goals, particularly in the areas of capital infusion and jobs. What has changed is how we are positioning ourselves in the marketplace.

CW: Gerry, how are you now positioning TFG in the marketplace, as a technology startup incubator, accelerator, or something different?

GB: Let me start by describing the marketplace for startups here in the Bay Area.  As you can imagine, this is an incredibly vibrant startup community. There are numerous groups helping startups overcome obstacles and challenges to become successful. Among these groups are incubators and accelerators.

The difference between the two has become somewhat muddled recently.

Typically incubators are more similar to real estate deals, offering working space, shared conference rooms, and IT services on a long-term lease basis. Many incubators offer basic mentorship or advising services, but it’s not really their main focus. And, incubators typically don’t take equity and don’t directly fund the companies although they may attract a network of professional funders such as VCs and Angel groups.

Accelerators often offer working space for a limited time frame, typically 3-6 months. They offer extensive one-on-one mentorship that can be part of the accelerator or billed separately. They offer cash for equity upon acceptance into the accelerator. The cash can vary from $25,000 to a million for 4% of the company on a pre-money valuation basis. Accelerators offer a structured program that their companies are required to go through. It’s like a college class, if you will. In fact, companies are accepted as a cohort or “incoming class.” Graduation day is typically a company pitch presented to a panel of VCs and Angel investors. Once the client “graduates,” the mentoring / advisory services are much reduced or even disappear. And, the working space is given to the new entering class.

Tech Futures Group is different from both of these. We do not offer space nor do we give money to our clients. We are a free advisory group that acts as the advisory wing for our clients. Accelerators can also use TFG as the advisory wing for their graduates.

And, our services are completely free to our clients—we take no equity, we accept no cash.

CW: What kind of technologies do the participating companies develop and sell? I noticed that you have a special program for biomedical and life sciences companies. Do you have this because of the concentration of such companies in your geographic area of operation?

GB: Tech Futures Group is completely agnostic with respect to technology. We define what a technology company is pretty broadly. Clearly, a company that has been spun out of Sandia or Lawrence Livermore National Labs having multiple issued patents is a technology company. But, we also include companies that have developed an innovative product using existing technologies. It also includes process enhancements where the innovation is not the product per se.

CW: Can you tell us how TFG works? How does a company participate in your program, and how do you “qualify” a company asking for participation?

GB: TFG requires all prospects to complete an online application. Typically, we get about 3-4 times as many applications as we can accept. The staff carefully reviews the applications to reduce the number to 7-9 applicants. Our group of three EIR (executives in residence) and seven key advisors then interviews these approved applicants individually. Each applicant has a one-hour interview with the group of TFG EIRs and advisors. From these interviews, we typically accept 4-6 applicants. We look for applicants that have an interesting technology, a good team (or at least a good founder) and whom we feel we can help. We have application deadlines approximately every other month.

Once accepted into the program, each new client is assigned an EIR. They meet with the EIR to identify the areas they need most assistance. Sometimes that means help with general strategic and business advice. Many of our clients need to pivot with their technology or their target market. The EIRs provide this type help. The EIRs will introduce clients to our specialty advisors when appropriate. The introductions are not automatic but are relatively easy to obtain.

TFG advisors invest 20-100 hours on each client. This includes EIR time and specialty advisor time.  That’s a lot.

CW: You are the successful CEO of RevLaunch. How and why did you come to work with TFG?

GB: It was a desire to give back. Prior to helping launch TFG, I had been the point person for the SBDC with the national labs (Sandia and Lawrence Livermore). The special projects director of the SBDC, James and I became friends. We discussed the idea of starting a group exclusively for technology companies where we would recruit advisors with the highly specific expertise required by tech companies. Things like entrepreneurs who had been through the process multiple times, patent attorneys, coaches who prepare entrepreneurs to pitch venture capitalists and angels, experts in grant writing for both government and private grants, go-to-market experts, and so on.

James asked me to be one of the founding EIRs in the Tech Futures Group. So I started with the Tech Futures Group as one of the Entrepreneurs in Residence. Earlier this year, he returned to Los Angeles to help his father with his small business. I think the world of James. When he went back to LA, I threw my hat in the ring and was asked to be the director of TFG.

CW: As Director of TFG, do you see the need for its services expanding, and if so, why? What are the market conditions, for example, that are fueling the need for companies to seek out TFG’s help?

GB: Like all groups, expansion is dependent on funding and demand for services. We certainly have surplus demand for our services, funding is more difficult. We buy about a week a month of each EIR’s time and a little less for the specialty advisors (patent attorneys, financial model, grant person, VC/Angel person).

To be a comprehensive advisory wing of a tech company, particularly a startup, Tech Futures Group needs to attract advisors with other capacities. The needs we hear most often are:  customer/go-to-market assistance, branding, and marketing/PR. I would like to expand our specialty advisors to include these areas.

In fact, we have recently added an advisor whose specialty is HR or talent acquisition. She was busy almost from the first day she joined as an advisor.

But, it takes funding to add more advisors and to buy more of their time. We are looking for additional funding from companies and from other governmental bodies.

CW: As you think about the future, will we see more organizations like TFG emerge across the United States and the world?

GB: I would hope so. Many cities and metro areas are trying to build out the ecosystem that has developed organically here in the San Francisco Bay Area. And, that is really difficult. I think an organization like TFG can be a catalyst in the development of a startup and tech company friendly environment.

I believe the TFG experience here can be very helpful to others throughout the country.

I welcome conversations with people throughout the country who are looking to foster this kind of environment. Perhaps they can get a hold of me through the contact information provided below.

CW: Gerry, you have certainly provided us with a better understanding of the challenges technology companies are facing today, and how TFG is addressing them. Thank you again for taking time to give us a lot to think about.

GB: Thank you Tim.