Business Accelerator Fund FAQ February 10, 2012 USE OF FUNDS Q. What can BAF funds be used for as part of an Accelerator Engagement? A. BAF funds are used to pay Providers to provide high value services to companies. The services should be milestone focused – upon completion of an Accelerator Engagement, the Accelerator Client should be better positioned to accomplish an important milestone (i.e. raise capital, obtain a first customer, launch a new product, solidify a new strategic partnership, etc.) BAF funds should not be used for “operational” services (bookkeeping, tax preparation, web hosting, etc.) BAF funds may not be used for purchase of capital, supplies, or inventory. BAF funds may not be used to cover company expenses such as travel, meals, utilities, salaries or rent. Q. Can a Participating Accelerator use BAF funds to pay for services that had been previously provided to an Accelerator Client? A. No. BAF applications may only request funds to pay for services that have not yet been provided. Participating Accelerators may NOT use discretionary funds to cover costs for services previously provided to the Accelerator Client. Q. Can employees of a Participating Accelerator serve as the Provider in an Accelerator Engagement and be paid to provide services to the Accelerator Client? A. No. Only an outside party can receive payment as a Provider in an Accelerator Engagement. However Participating Accelerators may use Accelerator Development Funds to pay for its employees to provide direct services to Accelerator Clients. Q. Can the Provider in an Accelerator Engagement receive compensation beyond what is covered through BAF funds for services provided under the Accelerator Engagement scope of work? (Example – the BAF covers 75% of a Provider’s hourly rate and the Accelerator Client or Participating Accelerator cover the remaining 25% through non‐BAF funds) A. If a Provider is going to receive compensation beyond what is covered through BAF funds for services provided under the Accelerator Engagement scope of work, the Participating Accelerator must explain the compensation agreement in the BAF submission. Such Accelerator Engagements must go through the screening process and therefore these engagements cannot be funded through discretionary funds. The MI‐SBTDC and MEDC may reject a submission for an Accelerator Engagement where the Provider receives additional compensation from non‐BAF funds for services provided under the scope of work of an accelerator engagement. Q. Can BAF funds be used to pay indirect fees if a university is being used as a Provider? A. Indirect fees on BAF funded projects will be capped at 12%. Q. Can BAF funds be used to cover costs related to acquiring/renewing a green card for company principles or employees? A. No. BAF funds may not be used to cover costs related to acquiring/renewing green cards. ELIGIBILITY Q. Is a company eligible if it has less than $1 million and $2.5 million in annual sales but is a spinout of a larger company that exceeds one or both of those eligibility thresholds? A. Yes, but we do need to look at these case‐by‐case and ask why the company is looking to the BAF rather than the parent company. The accelerator manager should consider this before submitting the application, and the screening committee should consider this when reviewing the application. Q. Can the Provider in an Accelerator Engagement have a formal relationship with the Accelerator Client? If a Provider holds equity in the Accelerator Client’s business and/or draws a salary from the Accelerator Client, that Provider is ineligible to receive payment through a BAF Accelerator Engagement. However Providers that have provided paid consulting or other services to the Accelerator Client in the past may be used as Providers for BAF Accelerator Engagements. Q. Are non profit companies eligible to be Accelerator Clients and receive services funded through the BAF? No. Accelerator Clients must be for profit entities. MISC Q. Can a Participating Accelerator start work on an Accelerator Engagement prior to approval from the screening committee? A. A Participating Accelerator may begin work on an Accelerator Engagement prior to approval of the screening committee at its own risk. If the Accelerator Engagement application is denied by the screening committee, the Participating Accelerator will not receive funding from the BAF to cover costs incurred through the Accelerator Engagement and will have to make its own arrangements for covering those costs. Q. Can an application for an Accelerator Engagement request funding to cover more than one Provider (for example, a request for funds for both an engineering firm to provide product testing services and a marketing consultant to conduct a market study)? A. Yes. Multiple Providers are allowed. However Participating Accelerators should use their best judgment in determining whether such a request strengthens or weakens the Accelerator Engagement application. Q. The Program Guidelines indicate that no Participating Accelerator can access more than 20% of the fund. Does the $30,000 discretionary allocation count in determining whether the Participating Accelerator has reached the limit? Yes. The $30,000 discretionary funds plus any Accelerator Development Funds that a Participating Accelerator receives from the MI‐SBTDC count when determining if the Participating Accelerator has reached the limit. However, Accelerator Development Funds received from Accelerator Clients do not count. Q. Why do companies have to complete the MI‐SBTDC forms? What if they say they already completed them? A. The BAF is administered by the MI‐SBTDC. The MI‐SBTDC is required to have the MI‐SBTDC Counseling Application (SBA Form 641) on file for all companies it provides assistance to. MI‐SBTDC keeps all client proprietary information confidential. In order to receive BAF services, companies must waive confidentiality pertaining to work covered by the BAF so that the MI‐SBTDC may discuss BAF activity with Participating Accelerators and report required information to the MEDC. If a company says they already completed the forms, please ask them to complete them again (it only takes a few minutes.) Q. Can a Participating Accelerator submit a staged engagement proposal on behalf of an Accelerator Client? A. Participating Accelerators may submit 2 stage proposals that request committee approval for a defined funding amount to complete a certain set of deliverables with the remainder of the funding to be released upon successful completion of the first set of deliverables. The first set of deliverables must be approved by the Accelerator Client, the Participating Accelerator manager, and the BAF manager before the remainder of the funding is released. Q. If an Accelerator Client receives more than $15,000 in services through multiple Accelerator Engagements, does the Accelerator Client pay 10% to the Participating Accelerator? A. Yes. Once an Accelerator Client exceeds the $15,000 threshold, it must pay the Participating Accelerator 10% of the entire amount of services provided, including the previous Accelerator Engagement(s.) Example: The Accelerator Client receives a first Accelerator Engagement of $15,000 in services. It does not pay the Participating Accelerator at that point. Later, the same Accelerator Client receives another Accelerator Engagement of $25,000 in services. The Accelerator Client must pay the Participating Accelerator $4,000 at that point (10% of the sum of the 2 engagements.) Q. When Accelerator Clients receive Accelerator Services above $15,000, does the Accelerator Client have to pay the 10% fee to the Participating Accelerator up front? A. The Accelerator Client must pay at least 75% of the 10% fee to the Participating Accelerator in order to start receiving service. The remaining 25% may be paid at the completion of the engagement. Q. Does the Participating Accelerator collect the normal 5% up to $300 Accelerator Development Funds from the MI‐SBTDC form Accelerator Engagements paid for through the Participating Accelerator’s Discretionary Funds? A. No. Q. Does the Participating Accelerator collect the 10% Accelerator Development Funds from the Accelerator Client for an engagement greater than $15,000 if that engagement is paid for through the Participating Accelerator’s discretionary funds? A. Yes, the Participating Accelerator is required to collect 10% from the Accelerator Client for all services provided above $15,000. Q. Can a different Provider be used in the BAF engagement than the one indicated in the submission that was approved? A. If the Provider’s part of the approved engagement was budgeted for less than $15,000, a Participating Accelerator may replace that Provider. If the Provider’s part of the approved engagement was greater than $15,000, the Participating Accelerator should indicate the reason for the switch and submit a 1 page bio/description of the new Provider. SCREENING COMMITTEE RESPONSIBILITIES Q. When I am one of the selected reviewers for a BAF submission, can I talk to the other reviewers? To the manager of the Participating Accelerator Manager? To the company that applied? A. Selected reviewers may contact other selected reviewers to discuss the submission. Reviewers may also contact the Participating Accelerator Manager with questions about the submission. Reviewers should NOT contact the prospective Accelerator Client or Provider involved in the submission. Any questions that reviewer has of the company or Provider being considered should be directed to the Participating Accelerator Manager. Q. If I am selected as a reviewer for a BAF submission, may I recruit an employee of the MI‐SBTDC or MEDC to conduct the review? A. No. While the Participating Accelerator may use a volunteer or contractor to conduct the review, MI‐
SBTDC and MEDC employees may not be used to serve this purpose. Q. As a BAF reviewer, may I discuss the BAF submission with the BAF manager, other MI‐SBTDC employees, or MEDC employees? A. Yes, you may discuss the proposal, but MI‐SBTDC and MEDC do not make yes/no decisions. MI‐
SBTDC employees may not be able to answer certain questions if the prospective Accelerator Client is an MI‐SBTDC client due to the MI‐SBTDC confidentiality policy. Q. Are attachments beyond the required documents allowed in a BAF submission? A. Attachments are allowed only to validate specific claims about the applicant company made in the executive summary or cover letter. Examples of allowable attachments:  Company applicant claims that it has a beta customer lined up. A letter of intent from the beta customer is allowed as an attachment.  Company applicant claims that existing customers are having successful results with the company’s product. Support letters from the customers are allowed as attachments.  Company applicant claims to be under contract with a certain entity. A copy of that contract is allowed as an attachment. In general, validation of claims about the market should not be included as attachments. That should be addressed with quotes and/or footnotes in the executive summary. Bios/resumes of company principals should not be included as attachments. Those should be covered in the management team section of the executive summary. Q. Can an Accelerator switch Providers after an Accelerator Engagement has been approved? A. If the proposal that was approved was for less than $15,000, the Accelerator that submitted the proposal may switch Providers without resubmitting to the committee for approval. But if the proposal was approved for greater than $15,000, the Accelerator should submit an explanation for the change in Provider(s) and 1 page descriptions of the new Provider(s.) The reviewers will vote to approve/disapprove the new Providers.