By Tom Still
MADISON – It’s no secret Wisconsin fares poorly when it comes to attracting federal dollars. In annual 50-state rankings, Wisconsin scores in the bottom five in getting a return on the federal tax dollars its citizens send to Uncle Sam. In bringing home the bacon, Wisconsin is mostly “oink” and little pork.
The exceptions are those federal programs where Wisconsin research institutions and, increasingly, its high-tech companies, compete on merit rather than the size of the state’s congressional delegation. In a contest based on the quality of its science, Wisconsin can win its share of the prizes.
The latest example will take center stage Tuesday evening at the Wisconsin Entrepreneurs’ Conference, where 45 companies will be honored for winning 74 federal research and development grants worth a total of $24.6 million. The grants were received during the year that ended Sept. 30, 2003, and reflected a solid increase over the previous reporting period, which was 15 months instead of 12 months. In that cycle, 35 companies received grants worth $23.3 million.
As recently as 1995-96, only 21 Wisconsin companies received federal R&D grants worth $6.5 million. In seven years, the number of companies has more than doubled and the dollars have quadrupled.
Most of the grant dollars in the latest round came to Wisconsin through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. Along with several smaller funds, these federal R&D programs provide critical early-stage capital for developing innovative products, for transferring technology from lab to market, and for launching new Wisconsin companies from university research.
Here are some highlights of the latest awards:
Dane County is still dominant in federal R&D success, but southeastern Wisconsin is improving. In the 12 months ending Sept. 30, 2003, nine companies from southeastern Wisconsin won federal R&D grants. That compares to six in the previous 15 months.
The top 10 companies secured more than $840,000 in federal R&D awards. The largest award winner, Stratatech Corp. of Madison, won four awards totaling nearly $4.9 million.
The size of the average federal R&D award increased from $284,000 to $333,000.
More Wisconsin companies are converting Phase I awards into more lucrative Phase II awards. Both SBIR and STTR are two-phase programs. Companies must first win a relatively modest Phase I award before competing for Phase II, which can be worth as much as $750,000 to $1 million, depending on the federal agency. There were 25 Phase II awards worth $14.7 million in Wisconsin for the latest reporting period, up from 21 and $12.3 million in the previous 15 months.
There is no guarantee that companies winning SBIR or STTR grants will be successful over the long term, but the track record of the program is at least as good, if not better, than other efforts aimed at jumpstarting small businesses. Federal SBIR and STTR grants can help a company survive a critical early stage, but it almost always takes private equity to keep a company growing.
The state of Wisconsin will now piggyback on the SBIR-STTR program, basically on the theory it makes better sense to target technology dollars to firms that have already proven themselves through the rigor of federal selection processes. The technology commercialization program passed this spring by the Legislature (Act 255, or SB 261) allocates $26 million over 10 years to give an extra push to firms receiving federal grants.
The state dollars will be used to leverage the federal money – and make it easier to attract Phase II federal grants.
There are a number of reasons for Wisconsin’s improved performance in landing SBIR and STTR grants. Organizations such as the Wisconsin Small Business Innovation Consortium, the Wisconsin Procurement Institute and the Wisconsin Innovation Network have provided “how-to” forums for interested companies. TechStar, an organization serving southeast Wisconsin, has added a SBIR-STTR specialist. This week’s Wisconsin Entrepreneurs’ Conference in Milwaukee will feature a “fly-in” for SBIR-STTR specialists from federal agencies. The word about how to apply is getting out.
Wisconsin may lag when it comes to traditional pork-barrel programs, but its high-tech companies can compete with the best – and win. That’s good for the companies and taxpayers, too.
Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.