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SBIR Impact - June 2007

SBIR Impact is a quarterly newsletter for small businesses interested in the USDA-SBIR program and for institutions and organizations that support the small business community and rural America.

Program Update



Reminders and Deadlines


SBIR Staff and Responsibilities


Subscription Information

The FY08 Request for Applications (RFA) should be released mid to late June 2007 with a tentative closing date of September 5th, 2007. Please check the Web site for more information as the solicitation will be highlighted when it is released.

All FY2008 proposals must be submitted electronically through Grants.gov and all attachments must be submitted as a Portable Document Format (PDF). Note that the registration process for submitting applications electronically can take as much as one month to complete, and registration must be finished prior to submitting an application. If you intend to submit an application, you don't need to wait until the RFA is published to begin the registration process. To complete the registration process, go to www.grants.gov and click on the "get registered link" under the applicants menu.

FY07 phase II reviews are complete and funding recommendations have been made. Project directors who submitted proposals should have received word via phone or e-mail about their recommendations. If you submitted a FY 2007 phase II proposal and have not been informed about the status of your proposal, contact us at sbir@csrees.usda.gov. Information about the recommendation status of a proposal will only be made available to the project directors and/or authorized organizational officials. Information about new grantees will be posted on our abstracts page as soon as awards are made official, around September 1, 2007. We caution companies that have been recommended for an award about publicizing this information before the grant is made official. Grants are not official until a thorough administrative review of each recommended proposal is complete.

The USDA-SBIR program is pleased to announce that the SBIR program specialist position has been filled. Mr. Scott Dockum comes to the SBIR program with more than eight years of experience with federal innovative technology development programs through past efforts working with the U.S. Department of Defense. Any SBIR related questions should be sent to Mr. Dockum at sbir@csrees.usda.gov or by phone (202) 401-4995.

As a reminder, general questions about the USDA SBIR program, as well as all interim and technical reports, should be sent to sbir@csrees.usda.gov in order to ensure timely responses.


The National Animal Identification System (NAIS) is a voluntary association among industry, state, and federal partners that prescribes procedures for locating and tracking livestock. ZigBeef LLC recently published the following article "A Comparison of Techniques for Electronic Identification of Cattle." This article discusses a new location and tracking technology developed through the USDA SBIR program with pre-existing technology and was part of the Proceedings from the Industrial Engineering Research Conference held on May 19th-23rd, 2007. The article is available for download at the University of Oklahoma Web site.

This article is written by Graeme Henderson, owner of Capstan Ag Systems, Inc., of Topeka, KS. Graeme Henderson founded the company in 1979. To date Capstan Ag Systems, Inc has received funding for three USDA phase I projects and three USDA phase II projects. Capstan Ag Systems projects funded under the USDA SBIR program have focused on the development of new proprietary systems for the agricultural industry, particularly with emphasis on chemical and fertilizer applications. Many of these systems have been successfully commercialized and are currently marketed for commercial agricultural spraying platforms.

In the Beginning:

You, the creator, have a product or process in working prototype shape. It was your invention, and you've been comfortable evolving reality to fit your concept over all this time. Now it's time to commit your concept into the hands of those who will use it to create value for themselves. Will those hands be rough or smooth, skilled or unskilled, patient or impatient, creative or uninventive, honest or dishonest? Will they boost the odds of success or squash your dream? How do you deal with all this?

How do you take the next steps into the unclear world of commerce to provide the highest probability of utilitarian and financial success? Assuming your world centers on technical and intellectual development with, at most, a limited infusion of commercial chaos, there is more than a casual amount of fearfulness in not having a roadmap that starts in your office and leads to commercial success. The well-known six questions keep sequentially neoning ahead: Who, What, When, Where, Why, and How. You know the questions. The answers are......?

Before you move deeply into the details of commercialization, look at your own personal context. Outline specifically what you wish to accomplish for yourself with your product or service. Do you want to become wealthy, save the world, or settle for something in between? Do you yearn for business challenges and occasionally painful and expensive learning associated there with, or would you rather continue in your own creative world and let someone else undertake the "hunting and killing"?

Look at your own résumé objectively and ask yourself if it reflects the person with whom you would invest your net worth to shepherd a new product into the marketplace. Would an outside investor come to the same conclusion?

The marketplace represents a collection of every motive known to man. How skilled are you in reading motives and gaining psychological insights? How averse are you to taking risk? How well do you understand yourself?

Before creating a plan for product commercialization, you first need to analyze and create a plan for yourself. You can then step forward with prototype in hand to add definition to the roadmap ahead and create a plan for your product.

Organizing Primary Advice:

As background for your plan of commercialization, you will need to tap the wisdom of others, in both written and oral form. Two publications from Nolo Press are useful as starters: "Patent it Yourself" and " The Copyright Handbook." These books are updated regularly, so secure the latest versions. Both address areas in which you will require protection for your proprietary intellectual property.

Whom do you know that has first-hand experience in commercializing products and concepts? Ask around to find others with such experience. Seek their advice; most people are happy to share their road maps.

You will need a banking connection, preferably a local institution. Local bankers typically know business people in the community and can steer you toward those who might be in position to provide assistance. Ask around for recommendations of superior bankers and let the experience of others work for you.

A banker can also recommend small, locally based accounting firms and the most suitable partners to deal with. If you intend to create more than the most rudimentary business, you will need solid accounting and tax guidance. Accountants are not cheap, are not easily replaced, and may not be as accessible as you need. You need one with a convenient location not far from yours.

Another critical resource is a business attorney. From contracts to litigation, you need coverage from a lawyer. Convenience is important when you need to talk through issues face-to-face.

A solid patent attorney, however, does not need to be locally based. For instance, our company is located in Kansas, and we use an excellent firm in Greenville, SC. They were highly recommended by clients of long association and are cheaper than many big-city firms. Mail, fax, phone, and e-mail have worked perfectly in pursuing multiple U.S. and international patents along with registering trademarks.

Solving a Problem:

Your product (system, process, or whatever) is designed to solve one or multiple problems. Customers won't buy it unless: they recognize the problem; see that your solution costs less than the value of its benefits; there are no structural or societal impediments to integrating your solution; and they are willing to change their procedures. You may have the first three items working for you, but don't ever underestimate the fourth.

The most penetratingly clear observation on change I've read was scribed by Niccolo Machiavelli in " The Prince," in 1513: " (H)e who innovates will have for his enemies all those who are well off under the existing order of things, and only lukewarm support in those who might be better off under the new."

It is surprising how many prospective customers refuse to acknowledge a problem; logic doesn't penetrate their sense of reality. While the existence of a problem and the inarguable suitability of your solution may be obvious to you, others may view your approach as not applicable to them. "Why, we've always done it this way," is the rationale of these people. Selling them your product will be frustrating and difficult, if not impossible.

Whichever way you elect to proceed in commercializing your product - licensing out, joint venturing, building your own company, or otherwise you first need to prove it works in real-life situations in the hands of unrelated people who want to solve their problems. From that point, early adaptors represent the next point of commercial attack. Early adapters are people who think ahead of the pack, relish the challenges of innovation, and can readily absorb the costs of occasional setbacks. Their success with your product can lead to endorsements, which, in turn, might lure the next group of customers to leave the pack and accept the benefits of, by then, proven change.

You may be surprised to learn that attempting to sell your solution is a lot less productive than "selling the problem." Early adaptors who have already recognized the problem(s) tend to have their checkbooks closer at hand. They may recognize other problems that you can solve with Small Business Innovative Research (SBIR) program assistance and return you to the marketplace for more commercialization.

Staying Power is Everything:

Rare indeed is the project that progresses according to plan. Driving into the unknown is almost guaranteed to take longer than you anticipated, involve course corrections to accommodate the unexpected, and consume more resources than expected. Like remodeling an old house, one needs to allocate a jumbo financial cushion and a generous calendar stretch beyond the planned scope.

If you have surplus money, time, and physical resources, read no further. Head right to the Wall Street Journal. However, if you don't, read on.

Lining up one or more financial cushions will cost you something, perhaps a substantial amount of your product's equity. One approach is to license out your product. You should normally expect to receive some value initially, plus a percentage of gross sales down the road with a minimum annual royalty. Consider this concept: a 3-percent royalty on gross sales amounts to about 15 percent of the product's profits, assuming a 20 percent pretax profit on sales of the product. In effect you would be getting a 15 percent equity in your product's business, which seems fair considering that you turned over a prototype to the licensee who then must do all the work of taking your product to market. And, you are free to invent something else.

At the other end of the spectrum, you may want to create your own business and seek capital from financial angels or venture capital sources. No simple formula exists that can predict capital costs without comprehensive analysis. However, for the sake of discussion, say that an outside investor committing funds for a defined program into a new and unproven company is entitled to between 35 percent and 75 percent of the equity. Should these funds prove inadequate over time, other funding rounds will cost more slices of equity, rendering your percentage ever smaller- assuming the enterprise does not fold up, and you lose everything.

Assessing your risk across the spectrum of commercializing options is a task for your own introspection, but the exercise is better if enriched by the advice of experienced commercializers. Seeking such vicarious experience is probably the most worthwhile effort you can make. Whichever path you choose to commercialize, you want to insure, as best you can, that you, your licensee, or your partner won't run out of resources in mid-stride. Wisdom stemming from borrowed entrepreneurial experience can measurably curtail the risk of empty pockets.


FY 2007 phase I grants were made official in May. Interim technical reports for these grants are due by October 8th. The USDA SBIR program will send additional information about the interim report process to each awardee before the end of June. These reports must be sent electronically to sbir@csrees.usda.gov in order for grant funds to be authorized beyond the initial 50 percent of the grant amount. For more information on reporting requirements, please see SBIR Grantee Resources on the website.

Reports are required even if you have not spent any grant funds during a given quarter. Failure to submit reports in a timely manner will result in a hold placed on your Payment Management System (PMS) account with the Department of Heath and Human Services (DHHS), and you will not be able to withdraw funds until the delinquent report(s) have been submitted and the hold is lifted by the DHHS. USDA-SBIR program staff does not have access to this system and cannot remove any holds placed on the system by DHHS. If you have questions about these reports or need help in completing them, you can contact Vivian Hughes (vhughes@psc.gov or 301.443.9181) at PMS who handles the USDA-SBIR account. Questions can also be sent to the general PMS help desk (PMSSupport@psc.gov).

Each grantee must provide the SBIR office with current contact information. Because correspondence between USDA-SBIR staff and grantees is conducted almost exclusively via e-mail, correct e-mail addresses are critical. Although maintaining this information is only explicitly required for the duration of the grant, we encourage all prior grantees to maintain contact with our office. Please send changes in contact information to sbir@csrees.usda.gov and include either the proposal or grant number for all projects to which the change applies.

Please note: e-mail addresses also need to be updated with the Department of Health and Human Services' Payment Management System as well.

Acknowledging SBIR Funding

Proper acknowledgement of CSREES funding in published manuscripts, presentations, and press releases is important for the success of the USDA-SBIR program. We specifically ask that you use the following language to acknowledge this support:

This project was supported by the Small Business Innovation Research program of the USDA Cooperative State Research, Education, and Extension Service (CSREES), Grant Number (Insert Grant Number Here).

We strongly encourage you to acknowledge CSREES funding in interviews and articles that feature your company and work that has been supported through our program. This acknowledgement is beneficial for both the USDA-SBIR program and the companies with whom we partner.

Finally, we ask that you use the CSREES logo on your PowerPoint presentations or posters at meetings. Please contact sbir@csrees.usda.gov for a high quality image file of our logo.


Dr. Bill Goldner will be representing the USDA SBIR program at the American Society for Horticultural Science meeting July 1619, 2007, in Scottsdale, AZ, and will be available to meet with potential and past applicants to the program throughout the meeting.


Dr. Pete Burfening

  • 8.3 Animal Production and Protection

Dr. Charles Cleland

  • 8.1 Forests and Related Resources
  • 8.4 Soil and Water Resources
  • 8.7 Aquaculture
  • 8.12 Small and Mid Size Farms

Dr. William Goldner

  • 8.2 Plant Production and Protection – Biology
  • 8.8 Industrial Applications
  • 8.13 Plant Production and Protection – Engineering

Dr. Richard Hegg

  • 8.11 Animal Manure Management

Dr. S. Sureshwaran

  • 8.6 Rural and Community Development
  • 8.9 Marketing and Trade

Dr. Dionne Toombs

  • 8.5 Food Science and Nutrition


The USDA SBIR staff encourages feedback concerning this newsletter and, more broadly, the administration of the USDA SBIR program. We are committed to being responsive to the needs of applicants to the program and to those companies who have received USDA SBIR grants. Please send comments to sbir@csrees.usda.gov or call (202) 401-4995.


To receive email notification of future USDA SBIR Newsletter releases, send a message to sbir@csrees.usda.gov and type subscribe sbir in the subject line.

Leave the Subject line blank and type the following message in the text area: Subscribe sbir

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual’s income is derived from any public assistance program (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, DC 20250-9410, or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). USDA is an equal opportunity provider and employer.