University of Illinois central to $3.5 million NSF I-Corps node
For many years, the National Science Foundation (NSF) has sponsored Small Business Innovation Research (SBIR) grants to spur the process in turning research into viable commercial products. While venture capitalists are generally looking to invest in businesses that are well developed, SBIR has often been the lynchpin to help startups explore their technology in an effort to get to that point.
Earlier this decade, the (NSF) began the I-Corps program as a precursor to SBIR with the goal to “develop and nurture a national innovation ecosystem that builds upon research to guide the output of scientific discoveries closer to the development of technologies, products and processes that benefit society.”
The NSF has announced a $3.5 million Midwest I-Corps node, which combines four universities with strong engineering programs – the University of Illinois at Urbana-Champaign, the University of Michigan-Ann Arbor, Purdue University, and the University of Toledo.
“The I-Corps program accelerates the technology commercialization process by helping researchers validate technology and ensuring they are developing technology and products that industry cares about,” explained Jed Taylor, Director of Operations for Illinois’ Technology Entrepreneur Center (TEC).
SBIR Phase I grants are typically $225,000 with a match of $30,000. Phase II grants are in the $750,000 range with a match of $500,000 for a total potential investment of $1.5 million in equity-free funding. I-Corps, a pre-SBIR program, offers $2,000 per team to participate in a regional program and an additional $50,000 for the national program.
“The I-Corps program was created five years ago to increase the likelihood of teams succeeding once they reach the SBIR program,” Taylor said. “I-Corps bridges the gap, giving teams a little money for customer discovery before they spend more time and resources into creating a product. This allows teams to either fail quickly, validate their product idea, or in lot of cases, shift the focus into something more likely to succeed.”
Illinois has been an I-Corps site for the I-Corps program for three years, being selected in large part because of the volume of technology being produced on the campus and because it had a track record in creating successful SBIR teams.
The TEC hosts two seven-week cohorts of 10-11 teams each semester. Through four workshops, teams are compelled to talk to at least 50 potential customers or other players in their ecosystem. Once teams complete the regional site program, they are ready for the national program or some team go directly to the SBIR program.
“While participating in the I-Corps program, we help you validate your value proposition and validate your customer segment by pushing you to go through the scientific method for those business processes,” said Taylor, who is one of the instructors of the program on campus. “We’ll help you map your ecosystem, identify potential customers to talk to, and clarify you value propositions.”
Rather than introducing those potential customers to a specific product or solution, the conversation is guided to finding out what they need or want.
Taylor indicates that the new partnership with Michigan, Purdue, and Toledo is part of a strategy to build the entrepreneurial ecosystem in the region, leveraging the Midwest Engineering Entrepreneurship Network (MEEN) to develop shared spaces and mentors from other universities, much like the partnership the College of Engineering at Illinois has with the University of Chicago Booth School of Business.
“In developing this collaboration, we will leverage each other’s strengths,” Taylor said.
To achieve the goal of creating a collaborative network, the newly formed Midwest I-Corps Node will host world-class training programs for scientists and engineers throughout the region.
“Our programs will enable us to build upon our strengths in technology research, as well as bolster our industry partnerships,” Taylor said. “The projects accelerated by the node will be pipelined into support programs to help mature them to the point of license, partnership, or funding to launch a stand-alone startup.”
The next step for those who complete regional I-Corps is the National I-Corps program, which requires a team to have a principal investigator, an entrepreneurial lead, a business mentor, and an executive summary. That program is eight weeks in length, and guides teams in validating key partners, a revenue model, a cost model, and channels to get products to market.
Rithmio is a one of the teams that stands as a prime example of the I-Corps mission. Adam Tilton, then a doctoral student in mechanical engineering and Prashant Mehta, associate professor in mechanical science and engineering at Illinois, founded Rithmio to make missile guidance and satellite control more precise. Feedback from the I-Corps program, however, revealed a small customer base for that application and led them to take their motion-recognition software into the growing wearable market. Their first product, EDGE, tracks a weightlifting workout program.
Another, OceanComm, co-founded by TEC director Andy Singer, began as a vision to build acoustic modems underwater. In the process of customer discovery through I-Corps, however, the company realized a need to control cameras wirelessly underwater and is moving to apply their technology in that realm.
Success in I-Corps comes in many forms.
“After going through I-Corps, many teams discover that the timing is not right to move forward,” Taylor said. “If a team discovers that the timing is not right and they need to conduct more research before moving forward, if can save them several years, which is a success.
“The magic of I-Corps comes from the process of validating an hypotheses and ensuring product-market fit before aggressively moving towards product development and manufacturing. Instead of guessing what your potential customers think is important, you are able to make informed statements about your value propositions backed up by data from interviews.”
That was the case for Dave Cohen, co-founder of Petronics, who affirmed the experience made the company’s SBIR application much stronger. He and his team went through I-Corps following a successful Kickstarter campaign for Mousr, a cat toy that reacts to being chased by a cat similar to the way a real mouse would.
“We took the opportunity to talk to 50 of our Kickstarter backers and figure out what they liked about it and where they buy similar products,” Cohen said. “That helped us nail down Mousr’s basic features and where the good sales channels would be for us both short term and long term.”
“I think the most useful thing about I-Corps was the customer discovery,” added Brett Jones, co-founder of Lumenous, who went through I-Corps in 2014. “We still continue to use its principles in our business model to this day. It helped organize our go-to-market strategy.”
That has been top-of-mind for Jones as Lumenous nears the launch of its projection mapping device, which uses a small form-factor computer that when connected to a projector, changes every existing physical object into an interactive display. The company recently receieved their National Science Foundation Phase II award for $750K.
Veriflow Systems recently raised over $11M in their Series A from Menlo Ventures and NEA and found their participation in I-Corps critical in the early stages of their company formation.
“The I-Corps program helped us to narrow down our customer segments and focus on key value propositions at an important early stage of our company. Going through this customer discovery exercise was critical in landing our early SBIR funding, Brighten Godfrey, co-founder and CTO, Veriflow, said.
“We see our I-Corps site as an entryway to a potential $1.5 million in equity free funding from the National Science Foundation,” Taylor concluded. “That is just another example of why innovators have found the University of Illinois and Urbana-Champaign a great place to start and grow a business.”