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Kyle Bayliss: Finding money to bridge the ‘valley of death’

Mention the phrase “valley of death” to the typical small business owner, and you will undoubtedly receive a variety of responses — from quizzical looks to gasps.

But for small technology business owners, it is an all-too-familiar term that looms in the distance as they attempt to move toward viability. The valley of death is referred to as the part of the high tech business life cycle between concept and commercialization where many high tech businesses fail.

Prior to receiving funding, tech companies must prove that their concept is both feasible and viable — not always an easy task when you have money going out (through R&D) but none coming in. You can’t make sales until you have a product.

Many companies go under during this phase — simply because there is no revenue to support their R&D efforts. Banks and investors are often hesitant to jump in, especially if the company has no track record.

Arun Vohra, CEO of Mini LLC, a Bethesda-based engineering company, is one such entrepreneur.

Vohra was working as a transportation engineering consultant when he came up with the idea for a rail cleaning and analysis system. He discovered that the U.S. Department of Transportation was in search of such a system, so he submitted a proposal.

“Many technology companies don’t realize that the federal government has funds available to assist them in various stages of product development, said Ralph Blakeney, technology manager at the Maryland Small Business Development Center.

$129K grant

Vohra’s proposal was accepted and he was awarded a $129,000 grant from the Small Business Administration’s Small Business Innovation Research Program.

“The funds allowed me to establish proof of my concept and create a working prototype,” Vohra said.

The program, Blakeney said, provides small businesses with opportunities to propose innovative ideas that meet the specific research and research and development needs of the federal government.

Based on the merit of his Phase I proposal and prototype, Vohra was invited to apply for a Phase II grant, which can be upwards of $1 million.

“Only those who are invited are eligible to apply for Phase II funding,” Blakeney said.

The process can be both rigorous and intimidating. Initially, Vohra’s proposal was rejected.

“The contracting officer challenged my figures,” he said.

Vohra faced the same challenge as many high tech companies.

Said Blakeney: “They are experts in their field who understand the technical side, but when it comes to the business aspect, they’re not as skilled.”

After his proposal was rejected, Vohra sought assistance from the Small Business Development Center, which came in the way of proposal development, effective justification, analysis as well as cost and pricing of the Phase II product.

“As a result of their help, we were awarded a Phase II grant of $500,000 from the Department of Transportation,” Vohra said.

The SBDC has been providing counseling and assistance to Maryland businesses for more than 20 years. Its specialized technology program was launched in 2003 and since then it has provided special support services to more than 140 seed, early stage and startup high tech companies in the form of in-depth, long-term consulting, training, outreach, and other direct support services.

Small businesses helped through the program were able to collectively obtain more than $5.2 million in grants. The program has also helped small businesses develop strategic plans to commercialize their products or services.

High Tech Center accreditation

This March, the Maryland SDBC was awarded the High Tech Center accreditation, becoming one of only nine SBTDCs in a national network that is comprised of more than 63 SBDCs.

With the addition of six regional technology consultants and the technology outreach support center, the newly accredited SBTDC High Tech Program will continue to serve pre-venture and high technology.

In addition to support for the SBIR program, the Maryland Small Business Development Center provides support to businesses seeking to transfer technology from federal labs and universities.

For more information about technology services available through the SBTDC, visit them online at www.mdsbdc.umd.edu.

Kyle Bayliss is a regional director with the Small Business & Technology Development Center, University of Maryland, College Park. He can be reached at kbayliss@umd.edu