Hundreds of New Mexican Startups Have One Thing In Common

The Small Business Innovation Research program has helped startups such as VisionQuest navigate the early-stage hurdles needed to get their products to market.

by Kevin Robinson-Avila, Albuquerque Journal, N.M. / January 24, 2017

(TNS) -- ALBUQUERQUE, N.M. — Peter Soliz, founder and CEO of Albuquerque-based VisionQuest, said his company’s rapid retinal screening technology for diabetics might still be languishing in a University of New Mexico lab if it weren’t for the federal government’s Small Business Innovation Research program.

VisionQuest has received 15 SBIR grants for a total of $16.3 million since launching in 2008, allowing it to fully develop the retinal-imaging technology that Soliz and other engineers originally created at UNM. That federal funding also allowed it to build additional, spin-off technologies to screen diabetic patients for nerve damage in their feet, diagnose retinopathy in infants born prematurely and to identify malarial retinopathy, which can indicate cerebral malaria in patients.

But given the company’s inability to raise private investment in its early years, Soliz doubts even its core technology would ever have left campus without SBIR funding.

“We started out in an office that we shared with students at the UNM library,” he said. “I think that’s where we’d still be today.”

Like VisionQuest, hundreds of companies in New Mexico have used SBIR grants to navigate the early-stage hurdles of building and proving new technologies before taking them to market. It’s in those early years that many startups crash and burn because they can’t find the private seed capital needed to traverse the “valley of death” – the gap between a great idea proven in a lab and its development into a proven prototype that can attract the money and market interest needed to move forward.

That’s where the SBIR grants come in, said Trisha Terhar, program manager for the ABQid business accelerator.

“The SBIR program offers huge opportunities if you’re early on and trying to prove out a concept, or even if you’re further along and want to enter new markets,” Terhar said. “And, unlike private investment, this is non-dilutive funding. With so many startups in New Mexico struggling to find capital, we want to help more innovators and entrepreneurs get access to SBIR assistance.”

ABQid received a $50,000 grant last September from the U.S. Small Business Administration for outreach and education to help local companies learn about funding opportunities and how to apply for them. It’s part of a federal effort to make more innovators and entrepreneurs nationwide aware of both the SBIR and the Small Business Technology Transfer program, a related initiative that provides funding for companies working with federally backed research institutions to take new technologies from lab to market.

The programs provide about $2.5 billion annually in grants through 11 federal agencies.

Businesses can receive up to $1.15 million in each two-phased grant to leverage new technology development. That includes an initial $150,000 for six months to prove a technology’s viability, followed by up to $1 million more for two years to build a working prototype that companies can begin commercializing.

To date, those programs have awarded $43.5 billion to companies nationwide, according to the SBA. In New Mexico, 484 small firms have received nearly $637 million, including $30.2 million awarded to 28 companies in fiscal year 2015.

But the programs are very competitive. Historically, only about 10 percent of first-time applicants have managed to win grants, in large part because of the lengthy and often complex application process.

“Many startups go the federal website and just get overwhelmed,” Terhar said. “With so many agencies participating and all the detailed requirements involved, it can be daunting for startups seeking grants for the first time.”

ABQid is using its SBA grant to provide free one-on-one coaching and mentoring, plus group workshops, to teach a step-by-step process to apply for funding. The accelerator hired long-time SBIR consultant Barbara Stoller to do the training.

She now holds office hours twice a week at ABQid’s office Downtown, where people can drop in for assistance. The first group workshop is scheduled for Feb. 9.

“It’s open to everybody, not just ABQid companies,” Stoller said. “We have three startups already working on SBIR proposals now.”

Such training improves the chances of winning a grant.

“People need to learn how to do it to be successful,” Stoller said. “Thanks to all the additional help now available nationally online and otherwise, the success rate has doubled. It used to be only one in ten first-time applicants would get funded, or about 10 percent, but now it’s about one in five, or 20 percent.”

The program helps government agencies leverage federal dollars to develop new technologies and boost the ability of small companies to take them to market.

Albuquerque-based MZA Associates Corp. for example, which does modeling and analysis for laser systems and imaging, has received close to $7 million in SBIR funding since launching 1991. The company reached $11 million in revenue in 2015 and employs 45 people.

“It’s allowed us to develop capabilities that help us compete in an environment typically occupied by larger companies,” said MZA President and CEO Robert Praus.

Vibrant Corp., which used Los Alamos National Laboratory technology to develop non-destructive testing systems for aircraft parts, has leveraged $5.5 million in SBIR grants to grow into a commercially viable firm with operations in the U.S. and Europe. It reached $2.5 million in revenue in 2015 and now employs 22 people in Albuquerque.

“The government looks for win-win projects to develop technologies it can benefit from and that can be viable commercially,” said Vibrant engineering manager Eric Biedermann. “We’ve used SBIR funding to improve our commercial position in the marketplace.”

©2017 the Albuquerque Journal (Albuquerque, N.M.) Distributed by Tribune Content Agency, LLC.