What is SBIR/STTR funding?
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs provide federal funding for small businesses that enables them to perform research required to develop early-stage innovative products to the point where they can attract outside capital.
The SBIR program goals are to stimulate technological innovation; foster and encourage economically disadvantaged businesses; and increase competition, productivity and economic growth. The goal of the STTR program is to facilitate the transfer of technology developed by research institutions through small businesses. For both, the application is submitted by the small business. The awards are broken up into phases:
- Phase I lasts six to 12 months and supports research to establish technical merit or feasibility.
- Phase II lasts up to two years and moves the Phase I results toward commercialization.
- Phase III moves the innovation from the laboratory to the marketplace.
In 2020, the combined SBIR/STTR budget across 11 federal agencies was over $4 billion. Of that, half was provided to small businesses as contracts and half as grants. This page focuses on grants.
Grant requirements
For SBIR/STTR grants, the small business:
- Must be primarily U.S.-owned (at least 51% owned by U.S. citizens and/or permanent resident aliens).
- Must be for-profit with less than 500 employees.
For SBIR grants (11 agencies), the small business:
- Must be the primary employer of the grant principal investigator (51%) during the award.
- May subcontract up to 33% of the Phase I research and up to 50% of Phase II.
For STTR grants (five agencies), the small business:
- Must subcontract 30 - 60% of the research to a nonprofit entity referred to as the Research Institution (RI), often a university or federal lab.
- Must be the primary employer of the grant's principal investigator (51%) during the award if administered through the National Science Foundation (NSF) and may be the primary employer during the award if administered through the Department of Defense, Department of Energy, NASA and the National Institutes of Health.
Award information
Funding is non-dilutive, therefore no equity is taken and the funding does not have to be repaid; this is a grant, not a loan. Funding typically starts around $100,000, but over multiple phases can reach $1 to $2 million or more.
Because this is federal funding, the Bayh-Dole Act applies, and inventorship laws determine ownership of resulting intellectual property.
Agency solicitations
SBIR/STTR funding opportunities are delivered through solicitations, known by many names, including Request for Proposal (RFP), Funding Opportunity Announcement (FOA) or simply a solicitation. They document the agency’s interests and provide guidance on how to prepare an application or proposal. Unsolicited proposals are not accepted by any SBIR/STTR program.
Search SBIR.gov for all solicitations. Release dates are distributed throughout the year depending on the agency. Each solicitation will provide proposal preparation instructions, application and submission guidance and evaluation criteria. A good method to find a solicitation is to first determine which agencies fund your topic of interest by searching previous awards, and then verify if those agencies have a current solicitation.
Team qualifications
The SBIR/STTR review places a strong emphasis on the qualifications of the team that will conduct the work.
- Do the principal investigator, key staff, subcontractors and consultants have the appropriate experience or training? Qualifications include not only the ability to perform the research and development, but also previous experience in commercialization (business experience).
- Does the project team have access to the necessary instrumentation, machines, tools, facilities, etc., to fulfill the objectives of the project?
Proposal evaluation
Grants are highly competitive. In FY2016, the NSF Phase I funding rate was 15% for SBIR and 19% for STTR. To increase your odds of getting funded, ask these questions:
- Are the objectives and tasks required to meet those objectives thoroughly described?
- Does the application challenge and/or seek to shift current research or clinical practice paradigms by utilizing novel theoretical concepts, approaches or methodologies?
- Does the application demonstrate an understanding of the current state of the art and commercial need?
- Does the commercialization plan demonstrate a high probability of success?
Conclusion
The SBIR/STTR programs can be an avenue to move your research toward commercialization, but they are very different from traditional federal funding programs. If you would like more information or help with developing or submitting the application, you can go to sbir.gov/tutorials, or contact the Technology Advancement office to get connected with a business counselor.