Atlanta Startups Grapple with NIH Funding Uncertainties
Disruptions to funding streams from the National Institutes of Health (NIH) are causing ripples of concern among Atlanta startups. These young companies, which play a vital role in translating scientific breakthroughs into real-world solutions, are now facing uncertainty about their financial stability.
These small businesses bridge the gap between research and consumer products, using a tiny portion of the NIH’s budget to create breakthroughs. Their work includes developing new methods to improve nerve repair, devices that lower pain without opioids, and digital tools to assist people with their cognitive challenges and daily lives, among other innovations.
According to estimates from an agency reporting tool, the NIH has awarded approximately $700 million to Georgia universities in fiscal year 2024. In comparison, small businesses within the state received less than $27 million for 45 projects across 29 companies during the same period.
“It’s a Swiss Army knife in terms of impact,” Stephen Susalka, CEO of AUTM, which represents technology managers who help commercialize discoveries, said of the economic benefits of technology transferral from labs to small businesses. This process fosters the creation of new products, companies, and jobs. He adds, “That just leads to economic development, right? So now you have a new tax base. You have new facilities that are purchased. Those people are buying lunch every day.”
Maria Thacker Goethe, president and CEO of Georgia Life Sciences, a nonprofit industry group, explains the federal funding “can really lead to strong industry and academic collaboration.” Many startups in Atlanta have “spun off” from local universities, playing a key role in the state’s innovation economy.
Four Stories of Impact
In the face of these uncertainties, several Atlanta-based startups offered insight into how these NIH funding changes are impacting their day-to-day operation.
MapHabit: Tech for People with Dementia, Autism
Matt Golden, co-founder of MapHabit, credits the Small Business Innovation Research program for his company’s success. MapHabit’s tablet-based platform is designed to help people with conditions like dementia or autism carry out their daily routines. The company has placed first in a National Institute of Aging innovation competition in 2019 and received four NIH awards. The company currently employs 15 full-time and 15 part-time workers, many in Atlanta, according to Golden.
Golden’s funds were temporarily frozen in February but were restored shortly thereafter, he noted. However, proposed changes at the NIH, such as cuts to payments for overhead expenses, have him worried.
“The shotgun approach is going to reverse decades of progress, unfortunately,” Golden said. “These grants have been given to us so that we can spend the time to publish… to generate the data that proves this work, and that’s essential in health care.”
“They’ll just basically be halfway complete,” Golden said, fearing that any future cuts to funding could lead to products such as his being shelved before reaching those who need them. “That’s going to put America at a big disadvantage.”
Friendi.fi: AI Technology for Relationships
Facing an abrupt loss of NIH funding, startup founder Chantal Kerssens scrambled to adjust. Her startup, Friendi.fi, which Kerssens runs remotely from Atlanta, is backed by the NIH to develop and test its technology, which uses artificial intelligence to connect people with an AI friend and coach. The technology is also designed to help insurers gather information about the needs of their patients. Facing this at only 6 months old, the company relies on NIH grants, even with other sources of funding.
Kerssens stated, “We need to know what we’re up against.” She convened a company meeting to discuss options for covering NIH-supported salaries by using funds from other expenses.
Kerssens was unable to access the company’s NIH grant funds through a federal portal for nearly two weeks, even amid reports that the funds had been restored, which added to her existing worry. She voiced serious concerns about the future of the program.
Buzzy: Drug-Free Pain Relief
Dr. Amy Baxter, a specialist in pediatric emergency room medicine, developed Buzzy, a device to reduce pain when getting a shot, for which she won a 2020 Tibbetts Award for SBIR achievement. The program temporarily lost access to funds from NIH for eight days in February. As of this week, operations were back on track.
Baxter is dedicated to developing tools to reduce pain without the use of opioids. This includes her Vibracool device, which uses vibrations, heat, and cold to reduce pain, and DuoTherm, a product to address back pain, both of which are part of a federal initiative to end opioid addiction. She is using NIH funding to develop a tool to capture more accurate data regarding people’s opioid use to help researchers better track the effectiveness of her inventions.
Vivo: Testing a Virtual Strength Program for Seniors
Eric Levitan is utilizing an SBIR award to evaluate the effectiveness of Vivo, a virtual strength program designed for older adults. He was deeply saddened by the news in February that NIH funding had been put on hold, explaining that it forced his team to “rethink everything.” Vivo, founded in 2020, integrates workouts with community-building and helps reach older adults where they are, including senior centers, a crucial customer, Levitan said. Vivo employs four full-time and 35 part-time workers, 10 of whom are in Atlanta.
The company has raised more than $4.1 million from angel investors, investors such as AARP’s AgeTech Collaborative and Techstars and also has a three-year, $2.3 million award from the NIH. Levitan teamed with Kathryn Starr, an associate professor at Duke University School of Medicine, to apply for a small business “fast track” grant to conduct a randomized control trial. The trial is designed to determine whether the Vivo program decreases blood sugar in people with prediabetes.
Levitan stated, “Once we realized that all NIH funding may be at risk, it caused a ripple effect across our team and our research partners. …Will it change how we’re looking at R&D, how we manage funds, or [our] approach to growth?” He adds, “It forced us to go into contingency mode.”
A proposed NIH policy to cut how much it pays for the “indirect” costs of research like maintaining a facility and routine bills would result in a 25% reduction in payments, Levitan said, which would likely force him to stop the randomized trial.
What’s Next for the SBIR Program?
The proposed NIH policy to cut research funding is currently on hold because of a federal judge’s injunction, pending lawsuits filed by universities and other organizations. It is yet to be determined if the policy—if it is implemented—would apply to existing SBIR grantees, said Mark Skinner, CEO of SSTI, a national nonprofit focused on bolstering innovation.
In order to be accepted, the application process for the NIH’s small business grants is rigorous, with the applications being reviewed in a two-step process involving industry professionals and academic scientists.
About the Author:
Rebecca Grapevine is a reporter covering public health in Atlanta for Healthbeat. Contact Rebecca at rgrapevine@healthbeat.org.
Healthbeat is a nonprofit news platform reporting on public health from Civic News Company and KFF Health News.
