Funding Your Bright Idea

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An MD&DI  January 1998 Column

SBIR Grants Help Enter an Otherwise Out-of-Reach Market

Sandra R. SaboWhile preparing a patient for an electroencephalogram (EEG), a technician typically must scrape the patient's scalp and then paste 19 electrodes directly onto the head. The electrodes measure the brain's functional activity, which helps physicians choose treatment for patients with epilepsy, sleep disorders, or various seizures.

Electrical Geodesics, Inc. (EGI; Eugene, OR), aims to change that scenario. The Geodesic Sensor Net places 128 sensors over the head in a netlike wig that can be adjusted in just 10 minutes without any abrasions. The dense-array EEG and its supporting software can provide physicians with far more detailed brain-activity images than a conventional EEG. Before operating, for example, a neurosurgeon could pinpoint the areas of a person's brain where language function is located.

Despite its bright future, this device might never have gotten off the drawing board. Shortly after EGI was founded in 1992, the company won a Small Business Innovation Research (SBIR) grant from the National Institute of Mental Health. The $100,000 grant was the springboard the company needed to dive into the medical device market.

"We had early prototypes at the University of Oregon, but there were engineering and scientific problems that remained to be solved before the device was practical for use on a large scale," recalls EGI president Ann Bunnenberg, who co-founded the company with Don Tucker, PhD. "Even with a promising technology, it's difficult to obtain private investment capital in the early stages. The SBIR program helps companies get to where they can raise the private money that's necessary to take a product to market."

Since EGI received the initial grant to help it develop its core technology, the company has received almost a dozen additional Phase I and Phase II SBIR grants, enabling it to create systems related to the Geodesic Sensor Net as well as other new products.

TRY, TRY AGAIN

There are two categories of SBIR grants: Phase I for products still in development (a maximum of $100,000 is awarded) and Phase II for newly developed products that show exceptional promise (a maximum of $750,000 is awarded). Generally, a company must earn Phase I funding before being considered for Phase II grants, and success is by no means ensured. The application process is extremely competitive, with only 20% or less of applicants receiving Phase I grants; those turned down can apply two more times.

"NIH is attentive to the scientific merits as well as the eventual commercial applications of the technology," Bunnenberg explains. "The applications go through a rigorous, scientific peer-review process, and you get criticism back. This program is not for the faint of heart!"

Bunnenberg offers the following advice for small companies applying for SBIR funding:

Bunnenberg highly recommends the SBIR program to small companies with no other access to R&D money. She believes that all the effort pays off—not only in cash but ultimately in credibility.

"When you're approaching private investors to raise follow-up funding, it's helpful to have a technology that has been given a critical review by experts," Bunnenberg says.

Sandra R. Sabo is a freelance contributor to MD&DI. She is based in Mendota Heights, MN.

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