The Fun in the Fund

Steve Melito: Hey everybody, welcome to New York State Manufacturing Now, the podcast that’s powered by FuzeHub. I’m your host, Steve Melito. Today we’re talking to Patty Rechberger, who manages FuzeHub’s Jeff Lawrence Innovation Fund. The Fund has awarded $8.7 million to 180 awardees and it’s been a great investment, since the economic impact on New York State is $176 million and counting. So we’ve had Patty on the podcast before to talk about the commercialization competition, but today we’re going to be talking about manufacturing grants. That’s because round two of the 2024 awards will open on April 15th. Patty, welcome back to New York State Manufacturing Now.

Patty Rechberger: Thank you, Steve. It’s a pleasure being here. You know I’m a big fan of the work you do. Thank you for having me.

Steve Melito: Well, you know, I should give you a shout out in return, because you’ve been recording some great video content for FuzeHub which folks can find on the FuzeHub YouTube channel, so it’s good to have you with us.

Patty Rechberger: Yeah, we’re going to do this all day, because you’re my inspiration. When I record those as well. When I record those as well.

Steve Melito: You’re too kind. So, Patty, what is a manufacturing grant, and why does FuzeHub award them?

Patty Rechberger: Fantastic question, Steve. So the main mission of the manufacturing grants is to connect the vast network of resources we have in New York with manufacturers that are in need of technical help. We have 86 have in New York with manufacturers that are in need of technical help. We have 86 organizations in New York that are at least partially funded by Nine Star. So that was the original creation of the manufacturing grants. Back in 2016 was the first round. So the original mission was to encourage collaboration between these resources and the companies looking for the technical solutions that these resources can solve for them. Since then, the program has evolved. So now any not-for-profit can apply as the main applicant for the manufacturing grants applicant for the manufacturing grants, and it’s still in the spirit of collaboration. So any kind of support that might still be technical transfer, but it could also be service providing. So I’ve been encouraging incubators and accelerators to apply right. So any kind of support that a not-for-profit in New York State has four manufacturer companies in New York State and all of those collaborations are good. So that’s one aspect of the manufacturing grants and the second one, obviously, is funding.

A lot of our projects are in the R&D space. That is a time when it can be difficult to find funding. We talk about the valley of death right Between having that original idea and getting it to a point where other investors may be looking at it. You may need to validate it, you may need to create your prototype in the first place. You may need a proof of concept. You may need to do some testing and get the qualifications of a material or a product, how it works, how does it compare to current alternatives. So you know, all of this, funding for all of these projects can be difficult to find. So that is what we’re trying to bridge with the manufacturing grants.

Steve Melito: Got it and, Patty, as you know, I wear a lot of hats for FuzeHub, and one is through our manufacturer solutions program, and I will often talk to people who are interested in it, naturally as they should be, and they talk about companies winning awards. And so this prompts my next question, which is, if the applicant is always a non-profit, why do people talk about companies winning awards, or are we just not characterizing that in that way?

Patty Rechberger: That’s a very interesting question, Steve. So the main awardee for the manufacturing grants is the not-for-profit, but of course, as the Manufacturing Extension Partnership Center in New York, our mission is to support the manufacturers, so I think there is no mistake in calling either one the awardee. Every application must have one of each a not-for-profit and at least one manufacturer potentially up to five manufacturers in the same application, as long as the project is cohesive and throughout all the manufacturers within it. So it’s not incorrect to call the manufacturer the awardee, and I think it’s part of our larger services and missions to support the manufacturing company, and so, as such, we can often refer to them and we continue to support them beyond the project completion, while the not-for-profits are often organizations that are almost like sister organizations, we partner up with them, including the solutions program right, so we are well knowledgeable of the resources they have available.

Steve Melito: Sure, and what are the eligibility requirements for manufacturers? You can’t just wake up in the morning and say I’m a manufacturer, right?

Patty Rechberger: No, but we try to keep it simple and very inclusive. Right, you have to be established company. You can’t just be okay. I just had this idea. I want to start, because you can certainly start to work before you’re a company. But for the purposes of applying to the manufacturing grants or to any of the Jeff Lawrence Innovation Fund tracks, you must be a registered company. So you have to at least have opened it with New York State. You could be incorporated elsewhere as long as your main business location is in New York. So if you’re incorporated somewhere else, we might have to go through some paperwork to prove where you’re physically located.

This is getting more challenging after COVID, of course, but you know we’ll work with the specifics of anybody who has a question. So back to your question. You have to be open as an entity. As a business entity you can be an LLC, a sole proprietor or a corporation. You don’t have to be a corporation. You have to be located in New York State, even if you’re incorporated elsewhere.

You have to have a valid NAICS code. If you don’t currently have one, we can help folks and I know you do a lot of that in the solution side as well we can help folks get a NAICS code in their Dun Bradstreet account. This is all free, just a little bit of work, and that’s how we qualify what a manufacturer is. So NAICS has a list of codes. Any code that starts with a three is a manufacturer. There’s a few supporting service codes that we also allow for. So packaging testing labs, there’s a few additional codes. We have a list of that on our guidelines and on our website and available for anybody who asks, of course.

But basically we used to say, as long as you have a physical product right, anything from beer to a medical device, it can be a chip, a part of a chip making process. It can be any kind of advanced materials down to the nanoscale. So you know, I almost said the other day, if you can touch it it’s physical. But sometimes it’s still physical even if you can’t touch it right. So quantum computing parts, you know processes are also eligible, and NIST last year included computer systems as a Valenix code. So that’s very interesting. I often get questions about people developing software as medical devices. So I think this is an entry for that type of product as well. So it’s been an interesting path defining what a manufacturing company is. But these are the requirements. Basically, if you check all those boxes, you’re eligible to apply. Got it?

Steve Melito: And so over the years the Fund has worked with some fantastic startups. One of my favorite stories is Josh Aviv of Spark Charge, who is a gave, just a fantastic talk many years ago when he was on the White House lawn, I think earlier this year or maybe last year. But do you have to be a startup to get a manufacturing grant?

Patty Rechberger: Certainly not, although I would say we support a lot of startups it’s probably at least half of the companies we award tend to be in the startup space but for the manufacturing grants, a company can be in any stage of development or maturity to apply. Since we’re naming names, S.Howes out of Buffalo is over 100 years old and they’ve been awarded by us twice, so literally anywhere in the development path they are eligible to apply.

Steve Melito: Good. I’m glad that you shared that example. So you have certainly cleared up a misconception that only startups can win. That’s not the case.

Patty Rechberger: Not at all.

Steve Melito: Do only university-based nonprofits win.

Patty Rechberger: Do only university-based nonprofits win. No, although they are the bulk, I am not going to lie. Universities make at least half of our awardees, probably because they have so much to offer in terms of development and research labs and testing labs and you know so many. It’s incredible. I was actually curious and I was looking up some university-based resources in other states and New York is pretty strong in that regard New York proud. The other half is split. The regional MEP centers in New York are all eligible to apply. They get a chunk of awards each year because they are doing fantastic work. They tend to put very nice applications as well.

Some economic development agencies as long as they’re not a government agency, you know, so an independent not-for-profit that is also economic development leaning tend to win. Like I said, I’ve been working with incubators and accelerators, so I have a small percentage going to them as well. And then some other odds and ends, like years ago we had the Hudson Valley Textile Project, which is sort of a cohort of textile organizations in New York and they’re not-for-profit and they’ve been awarded a couple of times. They did, you know, fantastic development with the funds. So any not-for-profit. The main thing that we look for is fit. Why is this not-for-profit working with this manufacturer in particular we are looking at? Both organizations should be gaining something out of that exchange, somehow right. So an incubator helping a startup perfect fit. An R&D lab at a university helping a manufacturer developer test a new product or process perfect fit. So that perfect fit can happen in a gazillion ways, probably far beyond what I’ve seen or can imagine.

Steve Melito: Good to know. So, Patty, let’s talk about equipment. A lot of manufacturers I talk to are looking for money to pay for equipment. Will a manufacturing grant pay for the purchase of a machine and, if so, who owns it, the nonprofit or the manufacturer?

Patty Rechberger: Okay, I’m going to whisper now because this is our best known secret. We are one of the very few grants that cover equipment. I hear that a lot, right, when people are looking for equipment and incidentally, the Hudson Valley Textile Project was looking for new equipment and they’re like Patty, who else can fund this? I don’t know anybody else who can fund the equipment. So this is a strong part of our program.

Equipment purchases are eligible for the manufacturing grants. Who owns it? We don’t make that assessment. We don’t make that assessment. We don’t make that call. It’s up to the team by team I mean the not-for-profit and the manufacturer and whoever else is working together to put the application together and who else is benefiting from the equipment is up to them to decide who owns it. However, during the scoring process of an application that may come into account, if whoever owns the equipment can subsequently make it available to other organizations that will benefit from it, particularly other manufacturers, you’ll probably score better. That is not to say that we haven’t scored well and awarded equipment that was ultimately owned by the manufacturer and not shared with anybody else. So you know this is. It really depends on the details of the technology, of how innovative it is of the needs to share that equipment. There’s a whole set of right of subtasks to consider there, so we don’t have a hard rule for that.

Steve Melito: Good to know. Another question and I’m sure you get this one an awful lot what are some things that the manufacturing grants will and won’t cover? You mentioned things like testing, and we just talked about equipment, of course, but what else would you like to highlight?

Patty Rechberger: Okay. So the main thing that it covers consulting work, some travel, if you can justify it, how does it relate to the project? So it’s pretty broad and in the most generic term it does not cover overhead. So any admin costs, project management costs, any sales. For the most part the manufacturing grants do not cover marketing. We have allowed for minimal marketing. That was a recent change but it has to be justified. It has to be right, part of a broader project. It can all be marketing. Patent costs are a tough one, right. We struggle with that because they can add up so quickly and we don’t want to fund a project that is nothing but patent development, specifically right in terms of costs. But sometimes those costs may be necessary. So we’re still struggling with that one. And I mentioned labor as an eligible cost. However, any executive labor is not eligible. So frequently in the case of startups, the founder is also the main engineer and even if they’re doing bona fide engineer development for their product or prototype, their time is not eligible for reimbursement.

Steve Melito: I see that’s an important distinction to make.

Patty Rechberger: Yes, and I know, and I’ve gotten pushed back, just like with the patents, right, I’ve gotten pushed back about that one and I understand it, but that’s how the program is set up, so just putting it out there.

Steve Melito: Well, as long as I’m asking you tough questions, how do you find a nonprofit to partner with if you don’t have one already?

Patty Rechberger: That is definitely a frequently asked question, Steve. Manufacturers hear about this program. They are eager to apply. They have a great idea. They’re like, okay, I just need a not-for-profit. So there is a couple of things we can do. We don’t promise to make that connection. I have been curious and I’ve looked it up. There are hundreds of thousands of not-for-profits in New York State. I couldn’t possibly get familiar with all of them, but obviously we’re familiar with all the nine-star resources. So we got at least 86 organizations we can try to partner manufacturers with for the purpose of applying to a manufacturing grant. So if the manufacturer has a product or a technical issue, that is a fit for what those centers can solve. That is a clean one and we have made those connections so successfully. We connected Opal Wearables with the Binghamton University IEEC Don’t ask me to spell it out, but it’s the electronics center at Binghamton and that partnership became so successful. They applied to the manufacturing grants. They were awarded. Subsequently Opal applied to the commercialization competition and was awarded. So that’s like our highlight of how everything works perfectly if you come to work with FuzeHub. All that said, we encourage people to look.

Sometimes people are already working with not-for-profits in some regard and they didn’t realize that that could be the venue right. So I’ve had people call me out and say I need a not-for-profit. And in the conversation I go you know, are you familiar with any not-for-profits? Oh, actually we’re working in this other regard. With this not-for-profit, it’s like, well, you know, tap them, because if you already know them and you’re already working with them, chances are you got the fit right Because you’re already working together. So clearly there is benefit in that relationship. And you know I hate to say this, but the end all be all Google it.

Try to find a not-for-profit in your space. You know there’s so many different industries we’re industry agnostic within manufacturers. So there are not-for-profits right In every industry. Get creative We’ve already mentioned it doesn’t have to be a university so you can find somebody whose mission is to support underprivileged workers, maybe a contract manufacturer. That is a not-for-profit. We’ve awarded those as well. There’s a gazillion ways to get creative is a not-for-profit. We’ve awarded those as well. You know there’s a gazillion ways to get creative with a not-for-profit.

Steve Melito: Good, could it be your local MEP center.

Patty Rechberger: Absolutely yes. In a blue sky world, the one that we’re mentioning, where everything happens, ideally every MEP center would apply every year. Shout out to our sister MEP centers, send me your applications.

Steve Melito: Very good. Now, Patty, let’s talk happier stuff. What happens when you’re awarded? Or if you’re awarded, I should say, but what happens when you’re awarded?

Patty Rechberger: Fantastic. Yeah, so that’s the fun part. We immediately set up a call so we get the whole team on a Zoom call. We cover everything that is required of them. We answer questions, we talk about the project. We set a timeline not necessarily on the call, right, but then after the call they send us the specifics of the timeline. They have a generic timeline as part of the application, but then they have to send me some more detailed information. The not-for-profit signs the grant agreement and then they start the project. We have a little bit of a window between announcing the award and when they can start the project. So we work with them to define the start of the project. They have 12 months to complete it and then they get to work. We follow up on a regular basis. We set up some milestones. Upon milestone completion they submit a report. We meet with them.

We go through what I like to now call the good, the bad and the ugly, which sometimes people will giggle in a call when I say that. I was like oh, Patty, we got some ugly, because things don’t always go as planned right, like sometimes you start the work and people don’t receive the materials or, even worse, they don’t receive the equipment they’re trying to order. We had a lot of delays. We’ve seen a lot of delays occur. Or you test something and it doesn’t happen the way you anticipated, and that again can be good or bad. I’ve had projects where products got tested and they did not behave in the way that they were hoping for. They were worse. So you know, that’s one way to de-risk that project is you go through the test and you find out that well, it doesn’t work this way. How else could it work? But I also had products tested where they far surpassed the best expectations. So you know. So we go through all of that.

We continue to support, we connect our awardees to the solutions program. If they have not worked or are already being engaged with the solutions program, we introduce them to the other services we provide at FuzeHub. We introduce them to the other services we provide at FuzeHub. We introduce them to the marketing team on occasion. If that’s what they’re looking for, if it’s a fit, then eventually they complete the project. We come out and visit and check things out and you know, and then continue ongoing support for the life of the company. We, you know, I try to stay in touch with, would you just say 180 manufacturers. It’s getting harder to visit everybody, but I do my best to stay in touch and I encourage people to reach out and anytime, anytime they have news or anything interesting to share, I’m always eager to hear from them.

Steve Melito: Well, good, and what happens upon project completion?

Patty Rechberger: You know they send a final report. We check everything that you know, dot all the I’s, cross all the T’s and that’s pretty much it. So at that point we just set up a time for the FuzeHub team to come and visit.

Steve Melito: Listen, when does round two of the manufacturing grants opener begin?

Patty Rechberger: Right. So, as you mentioned, round two opened April 15. I know that people are eagerly waiting for the announcement of round one. People have been asking. So the announcement of round one is currently scheduled to be made anywhere between April 18th and the 25th. We’re still in the process of selecting them, so between the 18th and the 25th we should be ready to announce, which is past the round two opening date.

So anybody who’s waiting and in doubt feel free to start a round two application. If you’re awarded on round one, you can let us know. Well, obviously we’ll know. You may not pursue round two. You may only get one award a year for the manufacturing grants. So you know we can just delete that application after the fact. But anybody who has not applied for round one can start their application on April 15th the due date is May 14th and very excited this year about the video component that was new for 2024. Instead of a fully written application, we asked the teams to send a 10-minute video of who they are and what’s the project, what’s the product, what’s the economic impacts, and I am thrilled with the submissions. People really delivered. Our applicants delivered on their videos. It’s been a pleasure watching them, so I can’t wait to watch more of that.

Steve Melito: Oh, that’s excellent, so listen. One last question for you, Patty, and it’s sort of a two-part question how do you apply, and then what do you do if you have questions about the application process?

Patty Rechberger: All right, easy peasy. I’ve actually been told earlier this year by more than one previous applicant that our application process is pretty simple. So you know, encouraging everybody to take a look at it because it can be daunting, specifically if you’ve never applied for a grant before and we have, first time ever, grant applicants come in and be awarded, so that’s very exciting. You go on our website and be awarded, so that’s very exciting. You go on our website right, FuzeHub.com. You find the funding tab. You go into manufacturing grants. All of the materials are in there. So there’s some basics right on the manufacturing grants page. But then you got access to your guidelines. There’s a budget template. You submit us the budget for, if you’re awarded, how you’re spending the money. We’ve mentioned eligible and ineligible costs, so we need to make sure that you have a good sense of how you’re spending that money within the eligible costs.

So you create an account in the SurveyMonkey Applied Platform. That’s the platform we use for applications. You’ve got the link right on our website so you just follow. You know it’s click, click, click. You just follow the prompts. Create an account, you follow, you fill out with some contact information, you film your video. That’s the fun part. You know, have fun with it.

Don’t make it. You know it doesn’t have to be a strict presentation. It doesn’t have to be a PowerPoint presentation in any way. We presentation it doesn’t have to be a PowerPoint presentation in any way. We want to see people’s faces, we want to see your product. We want you to. You know, just talk about it like we’re talking right now. Upload that, upload your budget. There’s a $65 fee to apply and then you submit and then it goes through scoring and the second part.

If you have questions, and the second part. If you have questions, reach out to the Fund team. My email is [email protected]. You can send generic inquiries to the Fund at FuzeHub.com. So you know, if you don’t want to necessarily talk to me, that’s fine. I won’t be heard a little bit, but not too much, you know, and then we’ll address all your questions and you can always give us a call and whoever answers the phone we’ll send you my way and you know I’ll guide you through whatever questions you have. We can check eligibility questions If you’re not too sure, I may or may not be a fit If you have further questions. As far as you know, I’m thinking of this not for profit organization. I don’t know if this is a fit. I can give you a general assessment of all that.

Steve Melito: Very good, Patty. Thank you so much for being on New York State Manufacturing Now.

Patty Rechberger: It’s been my absolute pleasure, Steve, thank you for having me.

Steve Melito: Wonderful. We’ve been talking to Patty Rechberger, who manages FuzeHub’s Jeff Lawrence Innovation Fund, and Patty puts the fun in the Fund. But that’s not the only way to have fun with FuzeHub. That’s because it’s almost time for Vitality in the Valley, a manufacturing expo that’s scheduled for June 4th and 5th in Herkimer, New York. Vitality in the Valley is where New York State’s food, beverage and agriculture ecosystem comes together, and if you exhibit at this year’s event, you’ll gain access to an exclusive pre-event reception with pairings of local foods and drinks. And, yes, networking is on the menu. Don’t wait to register. Go to FuzeHub.com, slash, viv-2024, to learn more and make sure you register. So on behalf of New York State Manufacturing Now, this is Steve Melito signing off.