Artitcles
Key Features of a Strong Commercialization Strategy
The commercialization section is an often neglected component of an SBIR proposal and it shouldn’t be. A weak commercialization strategy is one of the most prevalent SBIR debrief comments we see.
In a Phase I SBIR proposal, it is critical to convey a specific, relevant, and proven market need for your innovation, along with a logical plan to develop a product that will address this need. For a Phase II SBIR, the commercialization plan requires much more detail regarding the primary commercialization target and plan. As important, it should include additional specific commercialization targets in order to reduce transition risks.
In my experience, there are several key features of a strong commercialization plan that need to be articulated in Phase I and Phase II SBIR proposals. I have laid out a series of questions below that will help you address these.
Additional funding for commercialization is available through the Technical and Business Assistance (TABA) option for many Phase I and Phase II SBIRs. As your TABA provider, (see our article here), we can help you answer the following:
“What is the product or service and its advantages over competitors?”
Your commercialization plan needs to be based around a specific product, or service, that will result from the SBIR project. In addition, if the product is to be successful, it must have unique capabilities compared to the state of the art. Otherwise, what would be the purpose in funding its development? A good opening for an SBIR commercialization section will succinctly describe your product and the benefits that will give it a competitive advantage over other existing or emerging products.
“Who will buy it and what are their needs?”
Many innovative, and seemingly useful, products have been created only to fail because their benefits did not align well with customer needs. Just ask Apple about Newton. This was a revolutionary product credited with creating the personal digital assistant (PDA) concept. However, it was a massive financial failure for Apple because in the eyes of the customer, it was too expensive, too bulky, and its most promising feature, handwriting recognition, did not work very well.
My point is that identifying a specific customer and their requirements is critical to developing a commercially viable product, and should be included in your SBIR commercialization plan/section. For a Phase I SBIR project (especially DoD), this starts by talking to the federal technical point of contact (TPOC) about the primary programs and prime contractors most closely associated with the topic. You can read my articles about specific questions to ask the TPOC here, and how to engage primes here.
For a Phase II SBIR, the primary programs and customers are not enough. We suggest identifying and engaging as many potential federal and commercial end users of your technology as possible. The reason for this is that a Phase II SBIR project can last up to two years. At the end of a Phase II, you will likely be at least three years into the development of your product, and as many as five or more years from the genesis of the original SBIR topic. During this time, requirements and programs may change, or even go away. You can reduce the risk associated with this by diversifying the types of potential transition targets and addressing as many of their requirements as possible during Phase II.
“How big is the market, and how much of it can you realistically capture?”
The more applications and customers you identify, the more easily you can assess the size of the market for your product, and the revenue you expect it will generate. An SBIR commercialization plan needs to address both. For a Phase I SBIR commercialization section, I suggest specifying at least one target market based on your discussions with the TPOC and the intended end users of the technology. For a Phase II proposal, I would include multiple targets, and they should be as diverse as possible. I assess market size by citing reputable reports that can be found online as well as describing the number of systems deployed for a given application.
“What is your development and funding plan?”
In almost all cases, I suggest a transition plan that spans four phases of development and funding including: 1) demonstrating feasibility, 2) advanced prototyping, 3) pilot-scale production and 4) commercial-scale production. This plan has received positive feedback from SBIR reviewers in the past, and aligns well with the SBIR process. Early development funding will come from the proposed SBIR Phase I and Phase II projects, while intermediate development and pilot-scale production funding can be pursued under a future DOD BAA solicitation (i.e. Phase III). As the technology matures, investment from early adopters in industry can be secured to enable full commercial-scale production.
Demonstrating Feasibility: Funding in this stage will come primarily from the proposed SBIR Phase I project. If you have already secured the support of an early adopter such as a prime, you can work with them in this phase to develop a more detailed path for transition into one or more of their applications or federal programs.
Advanced Prototyping: Advanced prototyping can be performed under the Phase II SBIR project during which a proof of concept system is typically tested and demonstrated. Successful completion of this phase of development will demonstrate functionality in a more realistic environment and attract additional early adopters. It is not uncommon for initial commercial investment to begin during this time. This can also lay the groundwork for a potential BAA project which will support the next phase of development.
Pilot-Scale Production: To enable pilot-scale production, we suggest developing a first-article system in what is typically considered Phase III. A first-article has all of the capabilities desired in the final commercial product, but is typically manufactured in lower quantities, yet suitable for integration with the target platform. Funding for pilot-scale production can come via a BAA development contract and may include matching funds from a commercial partner or prime contractor. The first-article units should conform to more stringent specifications, and production costs can be reduced via process improvements that have been developed during the Phase I/II projects. Successful completion of this phase will demonstrate the competitiveness of your technology and solidify the value proposition.
Commercial-Scale Production: During this stage, you will produce and sell commercial-scale systems to the early adopters you are working with, or license the technology to facilitate commercial-scale production. Revenues will be derived from system sales, licensing and contract R&D to develop custom solutions for each customer.
“Do you have the experience and personnel to implement your plan?”
Even with a unique product and strong plan for its commercialization, it is important to convey that you have the right corporate experience to execute your strategy. A convenient way to obtain additional expertise on Phase I and Phase II SBIRs, is to include a commercialization specialist like TechOpp Consulting. On most Phase I or Phase II SBIRs, TABA can provide additional funding to support commercialization activities, at no cost to your project. Typical available funding is $5,000 for Phase I and $10,000 for Phase II. Many small businesses select TechOpp Consulting as their TABA provider, and we use this funding to help develop and execute a strong commercialization plan for their technology. Please email me if you would like to learn more about what we can do for you on TABA, and you can also read more about this option in our article here.