Among the last people to be invited to the White House during the Obama administration is Snehal Patel, CEO and co-founder of Sokikom, an online, collaborative math program. Perhaps it’s a fitting reward for his dedication: he’s been working on the game pretty much since the beginning of Obama’s presidency.
The official purpose of Patel’s trip to D.C. this past Tuesday, however, was to receive a Tibbetts Award, an annual recognition of high-performing organizations funded by the federal government’s Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBTT) programs. The only other education technology company present, out of 45 total recipients, is Agile Mind, which develops online math and science curriculum and assessments.
What distinguishes SBIR-backed companies is the level of research baked into their product development. In education, administrators responsible for choosing technology for their schools often wrestle with what tools actually work. Among the evidence they seek is research. Nonprofits like Digital Promise have been tallying products whose makers claim such roots. But perhaps one of the largest lists comes from the U.S. Department of Education’s Institute of Education Science, which has given 85 SBIR awards since 2002.
Since its creation in 1982, SBIR has awarded more than $40 billion to small businesses. The program currently invests an estimated $2.5 billion each year. Funding for SBIR is disbursed through 11 federal agencies, each of which has more than $100 million for its R&D budget. Of that between 2 to 3 percent must be channeled to their respective SBIR programs. Awards are doled out in phases that typically range from $150,000 to $1 million.
Although the amounts may seem small in contrast to the venture capital dollars that get splashed around in the private sector, they come with big impact: SBIR is about strengthening the research base behind products. Each year hundreds of companies apply; only a dozen or so win support.
The pace at which SBIR and venture capital operate may be reminiscent of the “Tortoise and the Hare” fable. SBIR demands meticulous planning and methodical execution; applications often top 60 pages and read like a doctorate’s thesis. A strong effort, says Sokikom’s Patel, requires “a lot of studying into the history of education research, and even research in fields outside of education.” He’s applied for eight SBIR grants and has won six, totalling more than $2.1 million. The most recent, awarded in 2015, will help the company build and test the feasibility of program’s just-in-time prompts, lesson-assigning tools and a teacher dashboard.
SBIR does not require entrepreneurs to give up equity in their company, unlike typical venture terms. Money from private investors also comes with high expectations to make speedy financial returns. Yet that pace may not be suitable or even realistic for many education companies. The venture path is “one I avoided because I was not confident we could fulfill the level of returns they require,” says Agile Mind CEO Linda Chaput.
Founded in 2002, Agile Mind has received nine SBIR grants from Department of Education and National Science Foundation totalling more than $2.2 million. Chaput says the dollars and support have been invaluable to building the assessments, visualizations and reporting tools that are now part of the company’s math and science offerings. The company has grown at a steady clip; this year it will serve roughly 330,000 students and 5,000 teachers in 600 schools across 220 districts, Chaput says. It does have several private investors but Chaput chose carefully: one of them is the Jefferson Education Accelerator, which provides research support in addition to capital.
SBIR dollars also support independent efficacy research that can validate a company’s work. For Patel, this effort materialized in a third-party study (PDF) on Sokikom that was recently published in a research journal. It found that reliable use of the game correlated with better performance on a California standardized math test, independent of teacher or school factors.
“One of the great things that make SBIR program different from venture and angel funding is the rigor of research,” he adds. “On one end, it slowed us down because it took a long time to test and develop our program. But it forced a discipline on being very rigorous and methodical with the research.”
Having the backing of government research dollars can be a competitive advantage. “If you tell a school or district that your product is funded by Andreessen [Horowitz] or [Vinod] Khosla, they may not know what that means,” says Patel. But if you can say you were funded by Department of Education, that’s something they’ll recognize which can differentiate the company and add value.”
The ultimate aim of the SBIR program is to support sustainable businesses, with deep roots in research. “You have to make not just a good intellectual case, but also a good business case for what you want to do,” says Agile Mind’s Chaput.
The SBIR program has spawned some successful and recognizable companies including Symantec, Qualcomm and 23andMe. The Institute of Education Sciences still awaits its star. Recently, the department put a big bet on educational games, awarding roughly half of all SBIR grants in the past five years to such developers. (Disclosure: EdSurge is not building a game but did receive an SBIR award in 2016 for its Concierge service.)
SBIR “is a huge untapped resource,” says Patel, “even though everyone thinks it takes too much time or work.” The support is appreciated not just by young entrepreneurs and small companies, but also by Bill Gates, who’s lauded government investment in R&D as “America’s secret weapon.”