Research support

A great leap forward

The Innovative Research in Small Businesses Program (PIPE) broke a record for assistance grants in 2013, which shows that small businesses are becoming increasingly interested in innovation

CATARINA BESSELAn attentive and interested audience of 150 entrepreneurs and researchers from several cities in the state of São Paulo spent three hours in the FAPESP auditorium in São Paulo on the morning of last December 18 to familiarize themselves with the details of the Innovative Research in Small Businesses Program (PIPE). This FAPESP initiative, established in 1997, has already disbursed more than R$180 million to support the 1,368 innovation projects that have been carried out in micro and small businesses in the state of São Paulo. This type of meeting, known as the Dialogue to Support Research for Innovation by Small Businesses, has been held periodically to disseminate information about the program and answer questions about writing proposals. This is one of the factors that help explain the increase in the number of projects PIPE approved last year.

The number of grants in the PIPE program in 2013 was the highest in the history of the program, with 174 projects in 2013, breaking the previous record of 165 grants in 2006 (see chart). “There has been an increase not only in the number of companies that are interested, but also in the number of quality projects. The interest in learning about the program and clearing up questions has generated more substantial projects,” says Sérgio Robles Reis de Queiroz, professor at the Department of Science and Technology Policy at the Institute of Geosciences at the University of Campinas (Unicamp) and assistant coordinator in the area of Research for Innovation at FAPESP.

Other factors also help explain the growing interest in the program. In 2012 PIPE began to offer four opportunities each year for submitting proposals as opposed to three rounds in the past. Many of the entrepreneurs who were at FAPESP on the 18th are expected to submit proposals in the first round of 2014, in which R$15 million will be provided for projects; this round will be open until February 3. Whenever a new request for proposals is issued, FAPESP publishes announcements in newspapers in the city of São Paulo and the interior of the state to publicize the new opportunity, which also helps boost demand. A partnership with the Center for Industries of the state of São Paulo (Ciesp) has also helped PIPE become known in the interior of the state. Projects have already been approved in 117 municipalities in the state, although they are concentrated in the cities of São Paulo, Campinas, São Carlos, Ribeirão Preto and São José dos Campos. “And, of course businesses are increasingly concerned with innovation. They are looking for more and more existing government programs to foster innovation. As a result, in the coming years, I feel quite certain that PIPE will experience continued growth,” Queiroz says. “In 2014, our challenge will be to ensure that the 2013 performance continues and that it is the beginning of a trend.”

PIPE uses funding that does not have to be repaid for projects by businesses that develop technology innovation and business potential and that provide a research team capable of dealing with the proposed challenges. The lead researcher who works in the company is the recipient of the funding from the Foundation. The projects range from technical and commercial viability studies for a creative idea, known as phase 1 and expected to last nine months, to research development or phase 2, which lasts up to 24 months. In phase 1, the maximum amount of scheduled funding is R$200,000 for each project. Up to R$1 million is provided in phase 2. The lead researcher has to have a connection with the company and spend at least 24 hours on the project per week. Companies with up to 250 employees may participate. They must have their headquarters in the state of São Paulo and have a research project in the pipeline that is likely to result in an innovation.

The SBIR (Small Business Innovation Research) programs in the United States have been one of the sources of inspiration for PIPE. The law that established these programs in 1982 ordered innovation development initiatives to be created for small businesses in agencies with budgets greater than US$100 million. Today they exist in several institutions that support research such as NASA, the National Science Foundation and the National Institutes of Health. PIPE’s economic impact was measured by an assessment of the projects it carried out between 1997 and 2006, performed by the Study Group on Organization of Research and Innovation (Geopi). The group is part of Unicamp, and FAPESP commissioned the assessment.

An article published in 2011 in the journal Research Evaluation, the lead author of which was Sérgio Salles Filho, professor at Unicamp and one of the coordinators of Geopi, showed that for every R$1 that FAPESP allocated to the program, a return of R$10.50 was generated. If all the investments in the projects made by the companies themselves and other sources are included, the ratio is R$5.98 for every R$1 invested.

The creation of skilled jobs is another important outcome of PIPE in that companies with PIPE projects increased the number of jobs by 29% and created job opportunities for researchers. The number of employees with an undergraduate degree climbed by 60%, and the number of professionals with a PhD soared by 91%. Roughly 60% of the projects that were evaluated generated technology innovations, which is considered very satisfactory. However, there are outcomes that are seen only during the visits that the PIPE coordinators pay to the businesses that receive funding. “Some entrepreneurs are able to instill a research culture that ultimately bounces off onto other areas of the company,” says Sérgio Queiroz.

One of the companies that had a PIPE project approved in 2013 was InGene Biotecnologia in São Paulo, which was attempting to develop a new genetic diagnostic test to be used for couples who wanted to have children, to determine if they had any recessive mutation in common that increased the risk that they would have children with a genetic disease. “This already exists in the market, but our project proposes a new and more modern methodology that is capable of lowering the costs of the test and making it more accessible,” says biomedical researcher Juliana Cuzzi, who is in charge of the company’s laboratory and is one of the participants in the project. The lead researcher is molecular geneticist Péricles Assad Hassun Filho, director of the company. The project that was approved is a PIPE phase 1, focused on determining whether the process is applicable and viable. Completion is scheduled for August 2014. The project was submitted for another program (PIPE/PAPPE) back in 2012, but was rejected. “Since the first attempt, we improved the proposal and were successful,” says Ana Carolina Laus, biologist and project researcher.

The PIPE/PAPPE program supports projects for phase 3, in which the idea and prototype have already been sufficiently developed and the company has resolved to invest in a business plan to launch it. PIPE/PAPPE is the result of a cooperation agreement between FAPESP and the federal government’s Brazilian Innovation Agency (Finep). On the national level, PIPE is credited with providing the inspiration for a similar program at the federal level, the Program to Support Research in Small Business (PAPPE), a Finep initiative launched in 2004. In the state of São Paulo, because PIPE exists, FAPESP and Finep established a format to implement PAPPE with different features that resulted in the PAPPE-PIPE III program, in which the companies PIPE financed received funding for phase 3.

In addition, projects were recently approved for companies that have previous experience with the program. In 2004, CFlex Computação Flexível Aplicada in Campinas developed an algorithm that assists in decision-making on the organization of rail traffic (see Pesquisa FAPESP Issue No. 136), for which it received PIPE support for project implementation as well as two grants for researchers. The CFlex Movement Planner computational system proved itself capable of reducing by as much as 18% the amount of time that trains are stopped in yards for crossing and passing, and several operators have acquired it. In the new project, the company wants to move on to the next step: “We want to use the software we have implemented today and develop a new infrastructure using this algorithm so that decisions can be made with complete information,” states Plínio Roberto Souza Vilela, the researcher in charge of the project. “Today, the algorithm can make decisions in our system based on local information when it calculates a workable schedule for trains. A local decision means having a limited number of options for what the train can do. With the research, we want it to be possible to manage a schedule that takes into account all the information on train traffic.”

CFlex has links to the university from which it sprang. In the late 1990s, Vale commissioned three professors from Unicamp, Fernando Gomide, Rafael Mendes and Luís Gimeno Latre, to develop software to help plan train traffic in its railroad network. The work was completed and was used as the basis for a master’s dissertation and a doctoral thesis that led to the company’s creation. “One extremely positive point about having a project selected by the PIPE program is that the painstaking FAPESP peer review shows the market that we are on the right track,” says Souza Vilela.

Depending on the company’s capacity, it may have more than one PIPE project approved simultaneously as long as the research challenges are different and the lead researchers are separate. This is true in the case of Chemyunion Química of São Paulo, which now has three projects underway, all in phase 1. They involve developing a gel with organic fluid for use in cosmetics, a plant extract with skin-lightening properties and the use of nanoparticles for application in a cosmetic for hair. “We have already had five PIPE projects, two of which are in phase 2 with products that have already been launched” says Cecília Nogueira, the company’s director of research and development. “FAPESP provided substantial support for leveraging our research and today 6.5% of the profit is invested in innovation.”