What is Commercialization?

Companies engaging under federal grants and contracts will be required to be knowledgeable about their technology commercialization plans.

Commercialization is the process by which a technology-based company moves its intellectual property (IP) to market to gain business profits and achieve growth. This can be performed under different business models that typically follow variants on manufacturing and service-based practices or the transfer of technology and know-how to another entity to commercialize. The path to market will essentially depend on the company’s business objectives, the IP, the development efforts undertaken, and its access to critical human and economic resources.

Commercialization Plans are frequently confused with Business Plans, but the two planning mechanisms are decidedly different. A Commercialization Plan focuses on the development and advancement of a technology. This type of planning can be very early stage and is often needed well before a business model can be fully formulated.

Why it matters

The federal SBIR/STTR programs are legislatively mandated to sponsor R&D that has a strong potential for commercialization. All sponsoring agencies include a Commercialization Plan (sometimes called a Commercialization Strategy or Market Opportunity) component in their solicitation instructions. It doesn’t matter how early-stage the technology might be, it has been demonstrated that making an early commitment to commercialization directly impacts the R&D planning and the potential for achieving market goals. Granting organizations like the National Institutes of Health and the U.S. Department of Agriculture want the technology to be available to the benefit of the public at large. Contracting agencies like the Department of Defense and NASA want the end product to directly serve their program missions, often through federal contracting and procurement channels.

Look beyond the technical R&D needed to create your product. Understand through secondary and primary research to answer: how will your intended customers buy, how will end-users access your innovation, should you find channel or distribution partners or sell directly, what manufacturing or supply chain issues may you face, how will you protect your IP and secure additional funding, capital investments, and human resources when you're ready to scale?

Implementation

Expectations for the depth of commercial planning differ considerably between the SBIR/STTR sponsoring agencies and also between Phase I and Phase II solicitations. It’s important to review specific opportunity guidelines to determine the expected depth of planning detail. At a minimum, a technology developer should be able to knowledgeably respond to points such as:

• What is the first product that will result from the technology?

• Describe the market and industry into which the product will be sold.

• Who are the customers and end-users?

• How will you sell the product?

• What is the competitive landscape?

• What is your financing strategy and your estimated financial projections following the SBIR/STTR funding stage?

It's OK to pivot, but you need to create a pivot point

Your plan is going to change. As you develop your product, interview more potential customers and partners, and pay attention to industry trends, you'll change either your market focus or something about your tech. Write what you think is a good plan now. You must invest time in researching the industry, markets, and supply chains for your technology. Prospective investors, including the federal SBIR/STTR agencies, are reluctant to commit funding to R&D endeavors without a clear commercialization plan.