Where can you find cash in a credit crunch? OLI Systems Inc., a New Jersey software company, looked to the government's National Institute of Standards and Technology for funding.
With a credit crunch persisting, where can businesses go to get cash? Think Uncle Sam. More specifically, think the National Institute of Standards and Technology (NIST), a government agency that awards millions of dollars annually through its Advanced Technology Program (ATP). Marshall Rafal, for one, looked to the ATP last year in hopes of striking gold.
Rafal, president of OLI Systems Inc., a New Jersey software and technology business, helps industrial companies forecast the environmental consequences of the way they do business. One of his new software programs is designed to help chemical companies predict the effects of corrosion, which causes $250 billion worth of damage annually to equipment owned by U.S. companies, according to OLI. Despite the juicy potential market, investors hadn't bitten.
After a yearlong effort to raise $5 million in equity financing proved futile, Rafal turned to government programs and cashed in. In addition to winning grants of $1 million from the Department of Energy and $200,000 from the New Jersey Commission on Science and Technology, he scored nearly $2 million in grants from the ATP investment fund.
In order to win the ATP award, Rafal had to prove that his project both had scientific and technological merit and would have a broad-based impact on the national economy. "ATP isn't like venture capital," says NIST spokesman Michael Baum. Unlike private funding groups, ATP has financed companies of all sizes in industries ranging from fish farming to biotechnology to wastewater recycling. "ATP is trying to encourage and facilitate U.S. industry in doing what we call high-risk, broadly based technology research," Baum says. ATP doesn't take a stake in the companies it funds, and it doesn't ask that the money be returned with interest, he says. "We are notoriously patient money," he says.
It's not easy money, however. Companies must send thoroughly researched proposals to ATP. The program then whittles down the list of applicants to a group of finalists, who must pass a rigorous oral exam in which they explain the impact that their new technology will have on the economy. With the help of subcontractor Southwest Research Institute, in San Antonio, OLI convinced the federal government that it could save U.S. companies $75 billion a year and bring in an additional $10 billion in improved productivity.
Last year some 40 small businesses -- as well as industry heavyweights like Motorola -- nabbed $144 million from ATP. Companies interested in applying for ATP funding should log on to NIST's Web site at www.atp.nist.gov.