Federal grants are the most publicized source of funding, and they involve the largest pool of money. That pool was estimated
at $5 billion in 2004, and since then, it has grown even larger. Most funds are distributed through Project BioShield, which
was signed into law in 2004 with the goal of providing new tools to improve medical countermeasures against chemical, biological,
radiological, and nuclear attacks. Project BioShield is charged with expediting research and development by the National Institutes
of Health (NIH) on medical countermeasures, based on the most promising recent scientific discoveries. Proposals for funding
from the US military may be directed through a number of programs; the Defense Advanced Research Projects Agency (DARPA) is
probably the best starting point for a biodefense spin-off seeking funding.
The Department of Homeland Security (DHS) is funding some projects, particularly in biodetection and treatment. Some DHS funds
pass to individual states, which may be additional sources of grants (see below).
The first step in identifying and applying for any federal grant is generally a conversation with the company's local member
of the US Senate or US House of Representatives. This representative is likely to have a paid aide responsible for helping
companies cope with governmental complexities. Companies outside the US can gain access by partnering with a US company.
Grants made by an individual US state typically go to companies in that state and provide jobs for the state's residents.
Many states have established their own programs to promote the research and development of biodefense products. They also
may be distributing federal money, such DHS grants. The best starting point for a company seeking a state grant is usually
a congressional representative or senator.
Some state programs offer tax abatements instead of cash grants. Although abatements are not as desirable as direct funding,
they may make it easier to attract investors. Many states use job creation as a major selection criterion for grants, and
they may be more open to projects located in economically depressed areas.
The availability of international government grants seems to change rapidly, and their requirements can range widely. The
World Health Organization (WHO) is the focus for the United Nations' programs. The International Red Cross can also be a funding
source for applied and delivery projects.
Many countries have established programs similar to Project BioShield. For example, Great Britain, the Netherlands, Sweden,
Germany, Switzerland, and Israel have actively funded biodefense companies in recent years. These national programs generally
require that outside companies partner with in-country organizations.
Foundations can be prime sources of research and development grants for biodefense and other medical applications. The first
step for a spin-off seeking such a grant would be a letter to a foundation officer. The spin-off company that applies for
multiple government and foundation grants, in cooperation with related universities or international partners, has a high
probability of success and generally will carry no debt or loss of equity.
Research foundations have been established for most major diseases. Biodefense projects with the potential to prevent or treat
a specific condition, such as cancer or birth defects, may attract funding from these targeted organizations.
Other foundations, both large and small, are oriented toward the general public health. Most of these can be easily identified
through a web search.
Corporate foundations have been established to fund promising medical and public health research. These are most commonly
biomedical: Johnson and Johnson's Robert Wood Johnson Pharmaceutical Research Institute is an example. Although these foundations
are functionally independent of their corporate parents, a spin-off company seeking a corporate foundation grant can enhance
its potential for success by matching a project with an area of corporate focus.
Although abatements are not as desirable as direct funding, they may make it easier to attract investors. To compensate for
the high risks of early funding, investors typically seek equity or bond arrangements with high rates of return—often as much
as an eight- to 10-fold return in five years.
Angels are private individuals. They may be successful entrepreneurs themselves, professional athletes, private medical and
dental professionals, or other individuals attempting to shelter large, short-term incomes over long-term periods. Angels
often invest as groups (known as "angel networks"), and their investments are typically in the range of $50,000 to $1 million.