Do you own a business in the US with a technological innovation that could use an infusion of research and development (R&D) investment to meet its commercial potential? If you do or know someone who may be, continue reading to learn about federal SBIR and STTR funding and which companies are eligible to apply.
What are the SBIR and STTR programs?
SBIR/STTR are acronyms for Small Business Innovation Research and Small Business Technology Transfer. Both are competitive programs developed by the federal government to spur small businesses to engage in federally-funded research or R&D. The mission of the SBIR/STTR programs is to “support scientific excellence and technological innovation through the investment of Federal research funds in critical American priorities to build a strong national economy.”
There are 11 federal agencies that administer SBIR and STTR grants or contracts and the Small Business Administration (SBA) serves as the coordinating agency for the program across the federal landscape. Awarding agencies include the U.S. Departments of Agriculture, Defense, Education, Health & Human Services, and Transportation. Some agencies only award SBIR/STTR grants, others award procurement (contracting) opportunities, while others award both grants and contracts.
A recipient of SBIR and STTR funding is required to explore the innovation and commercial potential of its product; an STTR awardee is also required to do the same but it must also collaborate and establish an intellectual property agreement with a nonprofit research institution during Phase I and Phase II funding cycles. There are other specific requirements for the STTR program.
Is Your Company Eligible To Receive Funding?
An eligible applicant of Phase I or Phase II SBIR/STTR funding must be a for-profit, US company with no more than 500 employees (affiliates included), and is more than 50 percent directly owned or controlled by an American citizen or permanent resident. SBIR awards from certain federal agencies allow for the company to be owned by a venture capitalist, hedge fund, or private equity firm as long as no single type of these firms owns the majority of the stock. To learn more about SBIR eligibility requirements, read 13 CFR 121.702.
The Three Award Phases
There are three phases for SBIR/STTR awards and, as of early 2021, only the first two phases include funding.
Phase I funding is used to determine the technical merit and commercial viability of the research or R&D effort. The awardee’s organizational capacity is also assessed. As of November 2020, federal agencies can provide awards of up to $259,613 (including modifications). Award terms range from six months (SBIR) to one year (STTR).
As of November 2020, Phase II funding can be up to $1,730,751 over a two-year period. These awards are typically awarded based on the awardee’s Phase I performance and are used to continue the research or R&D from Phase I.
Phase III does not include funding, however, the business is expected to pursue commercialization efforts based on the research or R&D activities from the two previous phases.
Interested in Learning More?
As a former federal employee at one of the 11 federal agencies that administer SBIR grants, Grants Works staff worked with a range of awardees including one that developed technology created to combat the high rates of older adult falls that result in injuries and deaths each year. We have also worked with clients to help them pursue SBIR grants or a National Science Foundation SBIR Project Pitch.