With yet another application round for the Air Force Accelerator powered by Techstars having closed at the end of October, it is hard to believe that it’s been less than a year since the 2019 batch was initiated. It’s hard to believe, too, just how prolific this past year has been.
Since February, more than a handful of the selected startups have developed their projects from concepts to market-ready products. A number have secured multi-million dollar contracts, and one founder even found himself ringing the Nasdaq bell as winners of the Rice University Business Plan Competition.
On the heels of a very successful inaugural year, this 2019 edition of the Boston-based accelerator program brought together program Managing Director Warren Katz and team with representatives from the US Air Force innovation program AFWERX, the Air Force Research Lab (AFRL) and BAE Systems FAST Labs. Matched with these esteemed mentors, select startups were awarded the opportunity to embark on a three-month program uniquely designed to speed up and streamline engagements between the Department of Defense (DoD) and early-stage startups.
The already reputable Air Force Accelerator powered by Techstars is open to innovators developing dual-purpose solutions (both commercial and military) for autonomous systems, AR/VR for training and education, advanced concepts for the Air Base of the Future, as well as any other application that could offer the US military an edge. But in order to maximize growth potential – and thus meet backers’ soaring expectations – teams have been empowered through AFWERX’s new fast-tracked Small Business Innovation Research (SBIR) “Open Topic” contracts. A true game-changer, the highly competitive SBIR government funding option is designed to promote and incentivize R&D for dual-purpose technologies potentially suitable for both the private sector and government applications.
Reflecting on the accelerator program’s noteworthy successes, we sat down with three alumni from previous programs to learn how the program and SBIR contracts have helped scale their growth in such a short time. Shahriar Khushrushahi, Founder and CEO of Notch Technologies, David Kovar, Founder and CEO of URSA Inc, and Caleb Carr, founder and CEO of Vita Inclinata Technologies, joined us to elaborate on the key reasons behind the program’s momentum:
1. SBIRs made acceleration more accessible
Back before being accepted to the 2019 program, Shahriar Khushrushahi was already aware of SBIR contracts as one of the only funding options available for concept-stage products like the metamaterial he was developing to amplify the range of antennas. He knew what it could mean for his idea.
“The SBIR process was perfect for an entirely new concept like Notch, as there would have been no other way that a product like this could have proliferated in any other ecosystem,” he said. “In regular accelerators, investors want measurable results immediately, but new ideas require more time.”
There was just one problem: like many early-stage innovators, Khushrushahi had been hesitant to apply for SBIR given the lengthy and highly competitive application process. The process included submitting a 25-page technical document and waiting months for the application to be reviewed.
But AFWERX was aware of this obstacle, and took measures to streamline the process, developing the SBIR Open Topics program in 2018. The new option includes a redesigned and more succinct application process; it increases the amount of R&D funding available throughout the three-phase program, and also executes a much quicker turnaround time for grant applications.
“With the new program, you don’t have to do 25 pages, only a 5-page technical document and 15 slides which you can do in a day, and you can get an answer in one week.” Khushrushahi recollected. “Whereas the original application process took up to four months, now reaching stage 2 funding of $750K-$1.875M can be completed in just three months.”
And as application time decreased, the rate of funding approvals has jumped. Whereas before only a handful of contracts were approved for each specific round of the SBIR program, an Air Force recruitment sprint earlier this year awarded more than 450 R&D contracts, totaling $140 million, in just 12 days.
David Kovar emphasizes just how streamlined the process has become for applicants: “Now, the output from phase one leads directly into phase two, and the documents needed to pass onto the next stage are pretty much the same documents submitted at the end of the last stage. The process is improving year over year.”
Program partners also play a huge role in helping startups to secure SBIR funding. During the most recent program, experts from BAE Systems FAST Labs team not only helped startups like smileML complete and submit their SBIR applications, they also provided letters of support for startups such as FortifyEdge who was successfully awarded a SBIR Contract with AFWERX USAF.
These types of endorsements from industry leaders like BAE Systems are invaluable, and dramatically improve the chances of a project being awarded government funding. In a handful of cases, partners have even gone a step further and teamed up with startups as subcontractors on their projects too.
2. The partnership created invaluable connections for real business growth
Asked about the principal reason behind the success of the Air Force Accelerator powered by Techstars, each of the three founders we spoke to stressed the shared passion, expertise, and support of Techstars, AFWERX, AFRL and BAE Systems FAST Labs.
David Kovar, who took part in the 2018 program and continues to participate as a mentor, believes that the sense of community, as well as the energy for collaboration and support, are fundamental to the program’s track record of driving real business growth. He praised the program’s philosophy of encouraging startups to ‘pay it forward’ via collaboration, explaining that the approach not only helped foster personal bonds but also facilitated a number of solid business deals. With good reason, he himself has brought on board an alumni member as commercial partner for his innovative UAV data analysis platform.
Caleb Carr had more to add. Carr has previously taken part in other aerospace-focused accelerator programs around the US, working to develop technology that eliminates the swing during helicopter hoisting-and-sling load missions. He argues that the Air Force Accelerator offers an unrivaled advantage by coupling a direct relationship with key players from the DoD and the business growth experience awarded via work with Warren Katz’s team. Carr noted that while there has been a big push for DoD innovation in recent years, these relationships provided his team a much needed conduit and mechanism for engaging this community, and for understanding what innovation really means for DoD.
In the past, securing DoD contracts had the ill fame of taking years due to red tape and complicated administration systems – something that does not jibe well with the fast-paced world of startup innovation. However, Carr, whose company has since procured upwards of $75M in pending contracts, explained that having direct access to AF advisors well versed in DoD processes streamlined the process a tenfold.
“The Air Force is dealing with hundreds of potential contractors at any time. The likelihood of us being able to get quick answers, and quick reactions from our home base in Seattle would be minimal.” Carr stated. “However, being here in the same ecosystem, allowed us to close a contract in nine days, and boosted our ability to exponentially grow within the DoD.”
3. The program offered a structured path for lightning-speed commercialization
On top of SBIR’s singular funding options, and in addition to the propitious contacts afforded through the program, the remaining factor behind the accelerator’s success has been its fast-paced, comprehensive approach to ensuring startups are prepared. And ‘preparedness,’ explained our three interviewees, means not just readiness to close government funding, but also to succeed in the private market.
The SBIR is a three-phase program that rapidly takes founders from the concept validation phase to developing an MVP, all the way to actively commercializing the product with real customers – all the while contributing scaleable funding during the first and second stages. It’s worth noting that, under the guidance of the program’s partners, most of the startups in the 2019 batch were already prepared to enter phase three by the end of the acceleration period.
David Kovar in part attributes the effectiveness of the accelerator’s intensive approach to an SBIR grant stipulation requiring products to be dual-purpose. The stipulation, says Kovar, motivates founders to quickly develop strong, sustainable business models, leaving them in a strong position upon completion of the program. By forcing startups to finish the program with real customers lined up, and with ‘bootstrapped’ non-dilutive funding, the program ensures founders aren’t forced into accepting average VC term sheets just to keep their projects alive.
“The fact we had to be commercially viable increased our chances of overall success.” He added. “Every time we filled out a SBIR document we had to tick this box – the Air Force wants products to be commercially viable to ensure that worthwhile projects survive, even if government funding dries up.”
The Air Force Accelerator obliges companies to swiftly get their ‘houses in order,’ paying careful attention to administration and accounting. Throughout the program, they’re pressed to articulate their technologies and business models, and then to undertake customer acquisition in a challenging environment. Through all this, the program helps produce healthier companies prepared not only to engage with the DoD, but to triumph on the commercial side too.
For Caleb Carr, the fact that his company was pushed to go down the licensing model route to make their product viable for the private market helped them to tap into what might have been otherwise unrealized potentials. This would not have been possible, he says, if the DoD had invested in his product development directly, rather than via SBIR.
Carr emphasizes that it was the SBIR program’s demanding and versatile approach that ‘catapulted’ his company into the next phase. On top of their contracts with the DoD, VITA is now aiming to roll out its product in a range of commercial applications including emergency services, oil and gas, and construction.
The horizon looks bright
With so much achieved in such a short time, the Techstars team is extremely excited about the next chapter of the Air Force Accelerator powered by Techstars, and thrilled about continued cooperation with AFWERX, AFRL and BAE Systems FAST Labs.
By increasing accessibility, streamlining processes, and driving structured growth via the three-phase SBIR option, the program is transforming the way that the DoD is able to interface with early-stage startups. The result, thus far, has been a uniquely empowering accelerator program capable of producing remarkably strong products, ready both for sale to the government and for commercial success.
Expectations are sky-high. But thanks to a rigorous, well-conceived program, and exceptional resources, our startups are going above and beyond. The horizon looks bright.
The 2020 program of the Air Force Accelerator powered by Techstars will begin on February 10 and culminate in a Demo Day on May 7. Learn more about the Air Force Accelerator powered by Techstars.