Who is eligible to apply for funding, and how are funds administered?
Collaborative company/university teams involving Oregon startups or small businesses teamed with ONAMI member researchers and/or shared user facility staff. Successful proposals will become projects (maximum $250,000) funded through the participating university with an ONAMI member researcher as Principal Investigator (PI). Some tasks or parts of tasks on the project may be performed by the participating/beneficiary company under a subcontract from the university. This is indirect funding to the company, but it can be quite substantial. The PI needs to be involved in the project and proposal development, budget and contracting.
Why does funding have to go to/through a university?
This is core to ONAMI’s purposes of both commercializing university technology (approximately 75% of Gap projects have some element of this) and encouraging powerful partnerships among knowledge creators, talent developers (key to your company’s future employees), technology infrastructure and entrepreneurs in Oregon.
If the Commercialization Advisory Council (CAC) “recommends” our project for funding, does that mean we have been awarded funding?
No, but it is a good sign. For academics, this stage is similar to when an NSF peer review panel recommends funding, and the program director starts to ask budget questions and prepare to recommend funding to agency funding officers. For entrepreneurs, the rough equivalent is when an angel or VC indicates they will send you a term sheet. In all these cases, there is a mutual desire to fund a project, but a lot of work probably remains to be done to completely specify the final project and reach the agreements required between ONAMI and the company, ONAMI and the University, and possibly between the company and University.
How long does it take to refine the project proposal, do final due diligence, and negotiate terms?
The best case is a few weeks, which is only possible if we have had time to pre-negotiate project structure (tranching, milestones and success criteria) and financial terms with a team well in advance of their CAC presentation. PI's need to work within their university to obtain approval of a fund proposal before submitting it to ONAMI. We like to begin working with university contracts staff and project proposers as early as possible rather than receive proposals for the first time the day before the CAC deadline. If we are unable to quickly reach agreement on project structure or financial terms, the process can take months or fail to result in a funded project.
Why are projects tranched (which is very different from how NSF and NIH funding works)?
Commercialization and business development can be very difficult, and we don’t want to spend funds (or waste the team’s time) beyond the point where failure appears to be the likely outcome. This is also true of some DoD and DoE funding. We have also learned from experience that the accountability that goes with quantitative success metrics, contingent next-stage funding, and rigorous tracking of use of funds leads to better commercialization outcomes. Tranched budgets tend to limit overspending on early tasks and help keep the project on schedule. Finally, this discipline forces academic personnel and company personnel to work together closely.
ONAMI used to provide Gap project grants without any financial strings attached. Now there is a requirement to share in financial success. Why did this change?
It has always been the intention of the Oregon Innovation Council that as Signature Research Centers (which ONAMI is) become mature, their activities would shift more toward commercialization and they would be expected to start generating some revenue to fund future commercialization activities, i.e., start to become self-sufficient. After 6 years of Gap funding experience, we felt we knew enough to begin doing this in a way that would provide some future income for the Gap fund program and at the same time be a very good deal (“charitable” terms) for Gap fund beneficiary companies and university licensing office partners.
What do you mean by “charitable” terms?
Our general objective with the Gap fund, which works with technologies and companies at the very earliest stages (which only friends, families and “fools” typically fund), is to either (a) participate in the licensing/equity revenue/gain stream from the company back to the university (this only applies to cases where the enabled tech transfer IP is the foundation of the company) or (b) take a direct financial interest in the company at a cost of capital approximately half of what we think professional for-profit investors would offer if the company were fundable. This direct interest can take a variety forms – stock, convertible notes, capped share-of-revenue or other arrangements appropriate to the specific case.
If we do a good job on our Gap fund project, can we apply to ONAMI for another?
Generally, no, since we expect gap projects to enable follow-on private and/or federal funding (e.g. SBIR/STTR Phase II). Exceptions may be considered, but we will probably require closer to market-rate financial terms.
OK, this sounds interesting. What should I do first to explore ONAMI gap funding?
Contact ONAMI gap fund manager Jay Lindquist and ONAMI President Skip Rung to tell us about your idea. We’ll give you a quick assessment and suggestion of next steps, which may include helping you form a university/company team or assigning one of our Entrepreneurs in Residence to help you develop your case.
ONAMI is a 501(c)(3) non-profit organization funded by the State of Oregon Economic Development Department.