Vouchers help startups turn small ideas into big ones

Innovation vouchers are helping startups get their ideas off the ground.

Startups, small businesses and entrepreneurs who have an idea with commercialization potential can tap into a system of state funding and support through a research-focused grant program.

The Innovation Voucher Program supports high-potential startups with up to $50,000 to launch product development, simulations and studies. To receive funding under the grant program, an applicant is required to partner with a research provider, such as a university or research-focused not-for-profit.

The funding can be used to subsidize what is often pricey testing and research that small businesses can’t afford on their own, while the partnerships can provide expertise and access to equipment or data.

The program was born out of a partnership between the Indiana Economic Development Corp. and Applied Research Institute, a Bloomington-based not-for-profit that advocates for and coordinates innovation and technology funding and strategy in Indiana.

The voucher program’s goal is to spur more entrepreneurship and innovation, in part by helping fledgling companies get off the ground and grow. And it sometimes does that in connection with other programs, including the federal Small Business Innovation Research and Small Business Technology Transfer grants, known colloquially as SBIR and SBTT grants.

IBJ talked with Applied Research Institute CEO David Roberts as well as Brooke Pyne, the organization’s executive vice president of innovation and strategy, and Courtney Baker, the Innovations Vouchers Program project manager, about the vouchers and how small companies can obtain them.

Give us an overview of the program.

Roberts: The whole idea was, how can we help small businesses take better advantage of the resources that we have as a state? … And that includes, absolutely, the universities that are present in the state, but it also includes then a lot of industry-specific nonprofit resources.

The idea is … similar to the [state’s] manufacturing readiness grants that have been pretty successful. The innovation vouchers say to a small and medium-size company, “If you are willing to spend some of your money to develop your technology in the state of Indiana with a nonprofit partner, then we will subsidize that activity up to 50%.”

There’s a high demand for it. It’s a very, very successful program in terms of uptake and in terms of impact to the businesses.

What are you looking for in a startup’s application?

Roberts: The number one thing is, are they committing to investing, in developing their company and developing their technology here in Indiana? These are not vouchers that they could redeem in California or in Massachusetts or across the state line. They have to be developing their technology and growing their company here in Indiana.

Number two is skin in the game. So the state is never going to put more than 50% into [the project].

I would say there is also an aim to be opportunistic. So, as it’s written, the company does not need to formally be present yet in the state of Indiana. However, they have to have a bona fide intent to come to Indiana. So, it can be part of an attraction project that the state, that the IEDC uses.

We’ve seen pretty good success where [the voucher has] been included in a couple of offers to companies that are considering coming to Indiana.

Small businesses can receive up to $50,000, but what is the typical disbursement?

Baker: It’s pretty much across the board. The lowest one we had was [a] $5,000 project. It was a quick research project that they wanted to do with the University of Southern Indiana, and so it was a pretty low expense and low labor cost for that.

Then there are quite a few, I would say most applications, apply for the $50,000, and depending on the statement of work, it might shift a little bit.

What type of companies are applying for this funding?

Roberts: They tend to be technology-oriented companies, because specifically you’re going to Purdue or [Indiana University] or Notre Dame or one of the other universities, and you have an idea, which is point A, and you’re trying to get to point B.

These are also companies that tend to be, not always, but tend to be a little earlier on in their life cycle. There are some examples of established companies that are iterating new technology that still qualifies as a small business. [But] I’d say most of the companies are smaller, earlier-stage companies.

Besides the funding piece, what else are companies getting out of this program?

Pyne: This is now a program that fosters innovation because it can help fund some of those early connections, those early partnerships that really start driving to a more rapid transition point to get to innovation that has a commercial potential.

This program is what we often call an “innovation enabler” that resides within all of our ecosystems that we support, because this program is not focused on one tech area. There’s life sciences, there’s manufacturing. … It really has created that earlier framework to get that innovation off the ground, to then get it to the next stage and level much quicker.

Baker: In that ecosystem connection, we have another program called the INForm Series, which is working with small businesses who are … working through the SBIR/SBTT process. And Matt Burkett, the gentleman who runs that, and I work very closely, and we share a lot of companies. If I have a company interested in an Innovation Voucher and they’re also looking to capture rural funding, I can send them over to Matt. And the same way, he will send people who are maybe in an earlier stage. … He can send them to me for an Innovation Voucher to expand their research or even expand upon their current SBIR award.

Roberts: Our job is to help someone who says, “I didn’t realize I needed help with communications, technology,” and all of a sudden, we can introduce them in 10 seconds to the person that runs the advanced communication lab. Or someone that comes in through that lab that says, “I didn’t realize I had an issue with the battery in my wearable device,” or whatever it is. So in 10 seconds, we can connect them and hopefully, help that company iterate their technology and grow their company that much faster.

When’s the next deadline for applications?

Baker: The program is evaluated three times a year—January, May and September—on a cohort basis. The application is always open. You can always submit. It’s just when we’re going to evaluate your project.

We just hit the May cohort, and those approvals will be going out shortly. The next one is in September. It’s always going to be the third Friday in that month, so the third Friday of September is when (the application) will be due.

It will go through a couple of evaluations. ARI does our own internal review, and then we make a recommendation before we send it to the state. Because it is state funding, they’re going to make the final decision whether or not they’re going to approve or reject the project. That process takes about a month, a month and a half.

One thing to remember when applying is to give that process some time before you start your project. The deadline might be the third Friday of September, but if you try to start the end of the month of September, we’re going to need to push that project back so that we can have time for our evaluations as well as our contracting process, and then you can start that project. Once everything is signed and fully executed, (the company) can begin that innovation and the research that they’re doing.

Why make this investment? What’s the big picture?

Roberts: The ideal setting is that you have a company that is formed here, based on a great idea and grows here based on an awesome support network and continues to accelerate through to be a major player in our economy in the state. That’s pretty much it.

It’s just heartbreaking to hear of a technology that originated here, and then someone felt like they had to move somewhere else in order to grow the company to meet their vision.

We want to provide every opportunity and invest along with the companies that are making a big commitment to Indiana so that they stay here in Indiana.•