‘Testimony presented to the Council Committee on Technology in Government, ‘and the Council Committee on Small Business ‘The Council of the City of New York, December 16, 2009 ‘Ways to Boost the Small Business Tech Sector Presented by Colleen Gibney TTAC My name is Colleen Gibney, and I am the Technology Practice project manager for ITAC, The "New York City Industrial & Technology Assistance Corporation. ITAC is an economic development organization with 21 years of helping NYC small businesses to grow and to create high-value jobs. ITAC is funded by New York State Foundation for Science, Technology and Innovation (NYSTAR) as the designated Regional Technology Development Center (RTDC) for the NYC Region. Itis also a Manufacturing Extension Partnership (MEP) Center under a nationwide National Institue of Standards and Technology Program. We are one of three centers in the State funded toassist small R&D firms to apply for Small Business Innovation Research (SBIR) program funding from eleven Federal agencies. We also run sponsored programs for New York City companies, such as our City Council-funded MoveSmartStayLean/GrowFast program, and our NYSERDA-funded NYC Energy Tech program to accelerate energy grid technology companies. We would like to take this opportunity to thank the Couneil for your consistent and genercus support of MoveSmartStayLean/GrowFast ‘The Council Committees have asked, “how small technology start-ups are faring inthis tough economy.” From whet we are seeing, the answer depends upon @ company’s access to capital as ‘well as ther sector. We have seen in the past that recessions can be a great time for innovative start-ups to gain significant market share as their competitors go under. For this to happen, however, a company has to have sufficient resources to make it through their commercialization process, including R&D, alpha and beta testing, and supply chain relationships, or clinical trials {in the case of biotech start-ups, Pre-seed-stage star-ups, particularly those working to make the transition from a single founder to a compensated team, often lack these resources, and we have seen an increase in cempanies shelving innovative technology because they cannot afford topursue IP protection or further work. This Valley of Death scenario certainly did not begin with the recession, but the drying up of credit lines—including creditcard limit cuts for sole proprietors, seems tobe forcing start-ups to end projects sooner. Recessions are also time when ‘more new businesses ae started, however, and ITAC has seen a greater number of first-time tech, «entrepreneurs in 2009 than in previous years. While some ofthese projets will end as job growth tums, there exists an abundance of highly talented people on the Fence right now who could add value to start-up team. For start-ups creating truly innovative science-based projects, the Federal Small Business Innovation Research can provide the best chance of projet funding. ‘This program has grown increasingly competitive. ITAC provides support services to write SBIR grants for qualified ‘companies through a grant from NYSTAR, and we provide a monthly outteach program to small tech firms. We expect to see program changes from Congress shortly as part of SBIR’s reauthorization proces, though, and we are concerned that some of these changes could make it ‘ougher for pre-seed start-ups to win awards, but we will have to wait and see the final bill As it ‘now stands, companiss who have personnel with advanced degrees qualified to manage scienee- based RAD projects on their compensated team are inthe best positon to receive awards. Some sectors may be better positioned forthe post-recession economy than others, ITAC runs @ ‘commercialization assistance program called NYC Energy Tech, funded by NYSERDA. Energy ‘rid technology is anarea of growth and focus for the State, but the supply chain is complex and difficult for small businesses to access. We are working closely with our grant advisors, including Con Ed, tobring a set of firms into investment rounds or a first customer. Once @ ‘company’s commervalization process is underway in this area, they are often eligible for ‘matching projec funds from NYSERDA. ‘The Council ean help small tech firms who have passed proof-of-concept and alpha testing by ‘encouraging larger esterprises wishing todo business in New York City to implement a local firms technology when feasible, orto serve asa beta test partner. Achieving a successful first implementation is key to many tech firms being able to interest VC firms in investing —both technical and market risks are lowered for investors,