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OARS fills funding gap for entrepreneurs

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By Scott Meacham

Copyright © 2014, The Oklahoma Publishing Company

These days, early stage investors — who are almost always angel investors and not venture capital funds — want more of their funding to go toward proving market feasibility and less to be spent on building risky prototypes.

These first investors are increasingly looking for deal flow with mitigated product development risk, especially in bioscience and advanced manufacturing startups where the product development time and costs to prove regulatory milestones or alpha and beta trials are significantly greater than in other industries.

Fortunately for entrepreneurs, there are ways to fill this very early stage funding gap with nondilutive investment options — financing that doesn’t require the sale of company shares. The Oklahoma Applied Research Support — OARS — program administered by the Oklahoma Center for the Advancement of Science and Technology, OCAST, and the national Small Business Innovation Research/Small Business Technology Transfer or SBIR/STTR programs are great examples.

OARS provides up to $300,000 per project in incentive funding to approved Oklahoma businesses, universities, and nonprofit research organizations for applied research projects. OARS requires a dollar-to-dollar match, which further leverages the state’s investment.

The federal research and transfer program is an awards-based initiative that allows small businesses to explore the commercialization potential of their technologies and profit from the resulting products. Awards are in two phases and range from $150,000 up to $3 million. OCAST also operates Oklahoma SBIR Collaborative Resource, an initiative that i2E helps support, to help Oklahoma companies better compete for federal research grants.

Both OARS and SBIR/STTR grants provide critical cash to help a young company hone its prototype or navigate early therapeutic models or trials. Startups also gain expanded credibility from the agency vetting and review process.

When nationally recognized technical and industry experts — people at the top of their fields — approve a startup for investment, they send a strong message that the company and management team are a cut above and worthy candidates for future equity investment, and angels pay attention.

A company that successfully clears Phase I grants may qualify for Phase II grants of millions, putting the entrepreneur in an even more favorable position to raise angel-based equity capital.

The Oklahoma Legislature was far-sighted when it established OCAST and the OARS program.

There is a lot of innovation in Oklahoma. This innovation leads to job and wealth creation. OCAST and OARS are critical to the state’s efforts to have a robust innovation pipeline.

OCAST’s funding for i2E and the Legislature’s funding of the Seed Fund is critical to commercializing those technologies.

That’s why business groups and others are so supportive of full funding for OCAST and its programs. It’s just good business.

Scott Meacham is president and CEO of i2E Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology. Contact Meacham at [email protected].

Did You Know? The Oklahoma Center for the Advancement of Science & Technology has returned more than $20 to the state for every dollar that Oklahoma has invested through OCAST.

Read the story at newsok.com

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