The challenges of getting SBIR funding, and are things better in Canada?

Here’s more from Laura Crabtree, who created a startup after 12 years at SpaceX, speaking on the Venture Stories podcast. She provides some anecdotal evidence that access to government funding is somehow smoother for new aerospace companies in Canada:

I can’t tell you exactly what the Canadian government does, but I can tell you that every Canadian company that I’ve talk to has government funding. And I asked them how hard it was to get and they said, ‘not very hard, the Canadian government supports us completely.’ I said, ‘wow, that’s amazing.’ Many of them have multiple millions of dollars of funding, from what I gather, without a lot of extra work.

I’m not sure about the mechanisms Canada is using, but Laura was discussing this in the context of the United States SBIR program. It looks like Canada started its own SBIR-like program in 2017 called Innovative Solutions Canada and before that was the Build in Canada Innovation Program which was consolidated. It seems to run less than $100 million USD a year, with phase I at $150K and phase II at $1M Canadian (or $117K and $780K in USD). Perhaps these Canadian companies she talked to were the lucky ones, or they also received regular procurement contracts, or other sources of innovation funds.

Here’s Laura discussing the challenges of a startup getting SBIR funds in the United States.

Both of those programs are very good in that they enable small businesses to get non-dilutive funding to move their technology further. What’s hard about these things? Number one, there’s not a quick, easy database to be able to find what the topics are the government is looking for. There are so many different moving pieces of government that they don’t all come together in one place.

 

Once you find someone that wants your tech, it’s hard — let’s say you have to write a proposal, then you have to wait six months for the proposal to be accepted, or not accepted, or you could be accepted and not funded. There are a lot of complexities with that. Most companies that are VC backed and are looking for SBIR funding will hire a consultant to actually do that for them. That’s an expensive thing. The fact that you have to hire a consultant to weed through the things to write the proposal, when you actually know the technology that you’re bringing forth, just makes it a pretty high barrier to entry.