Entrepreneurs find new ways to leverage federal funding
Federal science funding can be a boon to Maine companies, but some of its requirements can limit entrepreneurial activity.
Take the federal Small Business Innovation Research and Small Business Technology Transfer grant programs, also known as SBIR and STTR. Some 336 early-stage businesses have received more than $88 million in total from the programs from 1997 to 2014.
But at least one provision can limit activities for an entrepreneur receiving project grant funds. That is, unless you figure a clever way to make it work for you, as did Kevin Strange, president of MDI Biological Laboratory in Salisbury Cove.
Strange already co-founded the first spinoff in the lab's 117-year history, Novo Biosciences Inc., which is developing a therapeutic compound to help speed tissue healing and stimulate the regeneration of lost or damaged body parts in animals, with the aim of eventually translating it for use in humans. He encourages all of the lab's scientists to work toward commercializing their technology.
SBIR and STTR funding is targeted toward independently owned and operated small business, though the labs can be subcontractors to the funded companies.
And since the investigator leading the project must be more than a 50% employee of the business at the time of the award, he or she cannot have another full-time job. That means labs like MDIBL could lose key personnel for long periods of time, or forever.
Enter the new MDIBL policy, the “Entrepreneurial Leave of Absence.” Strange readily admits he lifted the notion from an idea he heard about in Kentucky. The policy allows MDIBL faculty and staff to take a leave of absence, if approved, and go to a company doing work broadly related to their institutional research. Novo Biosciences already is taking advantage of the policy, he said.
“I established [the leave of absence] mainly so people can launch startups and then apply for SBIR funding. Theoretically, it could be applied to other types of things as well,” Strange told Mainebiz. “For example, a company not launched from the institution may want to work with our faculty on a specific project. The company in turn would provide salary support for the faculty member for a defined period of time.”
Since SBIRs require that the principal investigator who submits the proposal and directs the research be employed by the company for at least 51% of their effort, benefit packages in particular become a problem. Strange explained that with leave of absence policy, the principal investigator would work for the company at 60% effort, for example, and the SBIR grant would pay 60% of his/her salary directly to them. In addition, the SBIR would pay 60% of his/her benefits to MDIBL, which in turn would pay the employee 100% of their benefits and 40% of their salary.
Additionally, the principal investigator and others working at the company could, in theory, be paid more than their MDIBL. Said Strange: “The key goal here is to help commercialize research discoveries in Maine.”
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