Strategy
Phase I to Phase II: the transition that decides whether the money continues
Phase II is where the substantial funding sits, and Phase I is effectively a twelve month audition. What to build into Phase I so the follow-on proposal writes itself.
Phase I is an audition
Only companies that have completed a Phase I can apply for the corresponding Phase II, and the Phase I results are the primary evidence base for that application.
That means the experiments you choose in Phase I should be selected partly for what they will let you claim twelve months later, not only for technical curiosity.
Hit your stated milestones, in writing
Reviewers of a Phase II proposal look for the Phase I objectives and the measured outcomes against them. Missing a milestone is survivable if you explain what you learned; failing to report against your own objectives is not.
Keep a running results log from month one. Assembling it retrospectively wastes weeks you will not have.
Start commercial work early
Phase II proposals weight commercialization far more heavily than Phase I. Customer conversations, letters of intent, pilot agreements and any matching or investor interest should accumulate throughout the Phase I year.
Several agencies offer supplemental funding for commercialization support during Phase I. Taking it is a strong signal as well as useful help.
Plan the funding gap
There is normally a gap between the end of Phase I and the start of Phase II funding. Companies that do not plan for it lose their technical team at the worst possible moment.
Bridge options include state matching programs, agency-specific gap funding, revenue from pilots, or a small investment round. Decide which one you are using well before Phase I ends.
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