Dear SBIR Insider,

After thoroughly studying the SBA's proposed rule (RIN: 3245-AG46), and listening to many experts, insiders, and professionals from other areas of small business, I'm convinced (as are many others) that the SBIR and STTR programs are in great danger.

Long time readers of the SBIR Insider know that we don't like to overburden you with issues and publications, but this edition is the precursor to a very important "call to arms" for our small business community to come together, as you did for SBIR reauthorization. The response time will be short, and the issues complex, and once again we will have to involve Congress.

A critical mass will be required to engage Congress, which will be a tough job in this political climate. However, elections often make candidates "more receptive," and that may include the Obama Administration, whose help may be needed in putting the SBA's wheels back on track to protect and serve America's small high tech innovative businesses.

The homegrown business accelerator program DreamIt Ventures continues to expand. Started in Philadelphia five years ago, DreamIt first branched out to New York and then Israel. In mid-June, the organization announced that Comcast Ventures would continue to fund its program for minority-led entrepreneurs that it began in 2011.

Doing all this has meant adding hands to help.

Now Karen Griffith Gryga, who has been a venture capitalist, angel investor, and entrepreneur, last week joined as a managing director in Philadelphia. That expands the organization to eight professionals, including its three founders (David Bookspan, Michael Levinson, and Steven D. Welch) as well as Kerry Rupp, who remains managing partner.

Seven pharmaceutical companies and four research institutions, working with the Bill & Melinda Gates Foundation, have launched a groundbreaking partnership, to expedite the discovery of new treatments for tuberculosis. The partnership, known as the TB Drug Accelerator (TBDA), will target the discovery of new TB drugs by collaborating on an early-stage research. The long-term goal of the TBDA is to create a drug regimen that cures patients in just one month. Existing drugs, which are all at least 50 years old, require six months to cure the disease — a lengthy process, during which at least 20 to 30 per cent of patients end up discontinuing the treatment before the completion of the course.

The federal JOBS Act will make it easier for novice investors to use crowdfunding platforms to make actual equity investments in startups, rather than just donating money, as they can now through sites like Kickstarter. But with any crowdfunded project, there are some concerns to watch out for, according to David Tisch, managing director of TechStars NYC.

Speaking on a panel last Thursday at the Consumer Electronics Week (CE Week) conference in New York, Tisch said inexperienced investors may not be aware of just how risky a startup investment can be. “People are going to lose a lot of money betting on early stage Internet companies because 90 percent of Internet companies fail,” he said. “People are going to lose 90 cents on the dollar on a regular basis. That risk probably applies to Kickstarter on some projects.”

The U.S. economy is undergoing a structural transformation that requires increased cross-sector collaboration for sustained job creation and economic growth. Such public-private partnerships blend innovative economic development tools with improved public policy prescriptions. The opportunities to unleash growth are substantial.

The transformation of our nation's economy involves a shift from what economists refer to as one-vertical economies to networks of multiple-vertical platforms. In the past, a single industry vertical, such as steel manufacturing, drove economic growth and job creation in a region. That is no longer the case. Now, the main driver of growth and job creation is a more complex interconnection of multiple industries and firms of all sizes. More specifically, current data indicates that the engines of growth are resident establishments, which are the companies that have established roots in their communities and are creating 70 to 80 percent of jobs and revenues (YourEconomy.org). These establishments tend to be strong sources of leadership for social and public enterprises because they donate to nonprofits that help local communities; actively engage in strategic community decision-making; share knowledge and networks as board directors; and establish long-term roots in their respective communities.

Maryland's secretary for business and economic development rallied Lower Shore leaders behind a state venture capital initiative that seeks to invest millions of dollars into companies and entrepreneurs with innovative ideas.

The state is poised to award a total of $84 million raised through an online tax credit auction earlier this year, but Lower Shore companies that don't apply cannot benefit from the infusion known as InvestMaryland, Christian S. Johansson, secretary of the Maryland Department of Business and Economic Development, told leaders gathered in Salisbury on Monday to unveil the new facility of the Tri-County Council for the Lower Eastern Shore of Maryland.

Every entrepreneur wishes that he could predict whether his idea could be the “next big thing,” before he spent his life savings and years of energy on it. Investors, on the other hand, typically don’t even look very hard at the product or service, but prefer to evaluate first the entrepreneur, and secondly the business plan.

I define these products and services as “solutions” (customers buy solutions to a problem), but Guy Kawasaki more generically calls them causes, meaning any new idea, company, or service. Yet we can all agree that the quality of the solution or cause is very important, and there are attributes that reduce the business risk and make it more likely a success in the marketplace.

In a global, hyper-connected economy, where security failures in one corner of the world can lead to an economic catastrophe on the other side of the world, it's in everyone's best interest to promote greater security and prosperity everywhere. Especially in the world's most fragile states, economic development is critical to stability, as I argued in a recent paper for the Council on Foreign Relations.

For countries that are struggling to recover from war, negative economic shocks of just 5% can increase a country's risk of civil war. Foreign aid, which can account for to up to 97 percent of a nation's GDP, is neither a long-term nor a sustainable solution to help the citizens of these fragile countries. Promoting entrepreneurship, particularly among small- and medium-sized enterprises (SMEs), fosters more lasting, stable economic growth in the world's most vulnerable economies. Boosting SME growth has the power to diversify economies and make them far less vulnerable to sector-specific shocks and fluctuations in private capital flows.

Why it matters: Cells grown on the Wyss Institute's organ-on-chip devices behave more like cells in the body. The devices could improve the speed and success of drug discovery and reduce animal testing.

The way pharmaceutical companies test drugs is broken, and Donald Ingber has an idea for how to fix it.

Scientists typically test potential pharmaceuticals on animals, but more often than not, "the predictions from animals fail when a compound is tested in humans," says Ingber, director of Harvard University's Wyss Institute. Performing initial tests on people, of course, is too dangerous. "Our proposed solution is to do studies with human cells," he says, "but not just cells in a dish—cells that exhibit organlike structures and functions."

I don't like using terms like "fire" or "terminate." To me they have too much emotion attached to them to be appropriate when splitting with an employee. I like to say that "fred was asked to leave the company" or "fred, we need you to leave the company." That works better for me and, I think, it also works better for the person who is being asked to leave the company.

But more than how to say it, I think how you do it is paramount. Here are some simple rules along with some color commentary on each:

1) Be quick - once you've made a decision to let someone go, move quickly to do it. Don't procrastinate. Do get things buttoned up (terms of departure, departure date, how it will be communicated, etc) but once you've got things in order, have the conversation.

MIT Media Lab Director Joi Ito and a group of his students are currently participating in the Aspen Ideas Festival, hosted by the Aspen Institute and The Atlantic. Focused on “bringing ideas to the public at large,” the Festival has sparked a new kind of collaboration aimed at accomplishing just that, called the “Innovators Guild.”

Ito wrote a blog post today called “Innovating Innovation,” highlighting “the tribe of iconoclasts, risk-takers and renegades” he’s had the pleasure of working with over the course of the last year.

As we interviewed Serial Innovators (SIs), the most frequently recurring themes expressed to depict the “know how” of innovation were “systems thinking” and “connecting the dots.” The SIs used these concepts again and again to describe the emergence of insight that they experienced in the act of innovation.

In many respects it is not surprising that they spoke of innovation in this way. As illustrated in Figure 1 on the next page, they typically carry around with them countless “dots” – with these dots defined as pieces information about a vast array of topics, ranging from technical insights, to customer insights, to views regarding the marketplace, to an understanding of critical financial measures, to knowledge of manufacturing processes. As such, their “connecting the dots” across this mass of information and arriving at an innovative, breakthrough insight is truly a challenge. If it were easy, someone would have already done it.

Expert advisors are a business builder’s best friends and resources. We might also call them coaches, teachers or mentors. They are people with specific expertise, knowledge and business relationships. They have learned the key principles and best practices of their trade. They think abundantly and are willing to share what they know with those who ask for assistance. They have been taught themselves by other luminaries and are delighted to “pay it forward.”

Choosing a mentor is not a one-time occurrence. Smart entrepreneurs continue to enlist advisors themselves throughout their lives for guidance, instruction and counsel.

Continuing our mid-year review of the top trends of 2012, in this post we look at the emergence of the Visual Web. Two of the hottest products in the first half of 2012 are the best examples of this phenomenon: Pinterest and Instagram. But one or two swallows don't make a summer. Beautiful design is a key part of online business in this era, which has resulted in more images and video all across the Web.

Pinterest: The Fastest Growing Social Network of 2012

There's no doubt that image-based social network Pinterest has had a stellar year. According to comScore, it now has a global monthly audience of nearly 30 million visitors. It was just under 12 million at the start of this year. comScore reports that Pinterest has grown 4377% since its public launch in May 2011, with a steep uptick that started around December last year.

Richard Bendis, founder, president and CEO of Innovation America. Rich is a former president and CEO of Kansas Technology Enterprise Corporation, and a succesful entrepreneur who took his technology company public and eventually sold it to an international conglomerate. He is also an angel investor, venture capitalist, internationally recognized innovation and technology expert and a small business advocate. Rich will share his insights on innovation in the 21st century and how entrepreneurs can maximize innovation and find funding for their business ventures.

People are pouring into startups at a rate we've never seen. Literally, never--not even during dotcom mania, at least if Stanford's MBA program is a good barometer. Per a Fortune report, the 2011 class sent 16% of grads to start their own companies, a full third higher than the late-'90s peak, and more than three times greater than the early '90s averages. And we should probably assume that the 2012 numbers will be higher yet.

The reasons for this are well documented: It’s never been easier to start a company, lots of traditional careers (banking, consulting) have been tarnished, and Instagram sold for a billion bucks to a certain online yearbook website. 

Imagine for a moment you’re a hotshot biomedical scientist at a university. You have invented a technology in your lab that you think has potential to make a big difference for the world of medicine. Despite all the accolades you might be getting in Nature, you are savvy enough to know you still have a pretty raw concept. Your idea needs someone who can build a business around it, and invest a lot of time, money, and talent to prove it’s the real thing.

Who would you call?

There aren’t that many people who you can call anymore, and the number is shrinking. This question has been gnawing at me for a while, as I’ve sought to understand the historic contraction that’s occurring in the biotech venture capital business, and what effect it will have on the biotech industry’s ability to turn bright ideas into valuable new healthcare products.

Of course you know about the "pinboard" site Pinterest, which attracts 20 million visitors a month and has been valued at, oh, a cozy $1.5 billion. And Spotify, the Internet music service, is a whisker from being a household name, with more than three million paying users and a reported $220 million funding round waiting in the wings. To have created either company would be a pretty amazing lifetime achievement.

The fact is, though, the two companies' founders are just getting started.  Pinterest's leaders--Ben Silbermann and Evan Sharp--are each just 29 years old. The serial entrepreneur behind Spotify, a Swede named Daniel Ek, is also a year shy of 30.  In the age of Mark Zuckerberg, it's easy to shrug at tales of fabulous success among the improbably young. But seriously, now: How many great, disruptive businesses had you launched by age 29?

Choosing the right market opportunity will make or break a startup. Unfortunately, most entrepreneurs choose to tackle markets that are over-saturated, not realizing their mistake until it's too late.

I've listened to thousands of pitches from thousands of startup founders. Most of the time, these pitches don't stand up to my scrutiny for one reason or another. Some don't have differentiating features while others simply don't tackle big enough market opportunities.

One of the biggest stumbling blocks that trips up most entrepreneurs though is their lack of market and competitive research. They come up with a startup idea and start writing code without even realizing that somebody has already done it. They start pitching investors without killer features that differentiate it from the competition.

Typically, bio-oil produced from fast pyrolysis consists of a complex mixture of aliphatic and aromatic oxygenates (e.g., acids, aldehydes, ketones) and particulates (solids). It is very viscous, acidic and unstable liquid with relatively low energy density (16-19 MJ/kg) compared to conventional fossil oil (42-45 MJ/kg). However, as scientists and industries are developing technologies that can upgrade low quality bio-oil to high quality carbohydrate chains such as JP8, the fast pyrolysis process is becoming more and more attractive.

To make a use of bio oil driven from biomass, AST has at least three catalysts that can deoxygenate the bio oil and produce liquid hydrocarbon with an 8 to 12 carbon chain length (JP8) When coal and biomass are pyrolyzed together, the excess oxygen from biomass becomes available to hot tar and char. With proper catalyst the chemical reaction can be pushed to generate lot more syngas and leave behind low oxygen and rich carbohydrate blend of bio-oil and tar.