Written by Jeff Barta
The world is full of innovative ideas, but moving those ideas to an impactful solution is no easy task for any entrepreneur. One of the biggest hurdles innovators and start-ups face is having enough capital to support their product development efforts. That is where the SBIR/STTR program enters. The SBIR/STTR program is two federal initiatives that offer grant funding on a competitive basis to small businesses looking to move their Research and Development (R&D) into commercialization.
Administered by the Small Business Administration, the goal of the program is not only to stimulate technological innovation, but to bring it to life and into an impactful societal use.
SBIR: Small Business Innovation Research
Eleven federal agencies participate in the Small Business Innovation Research (SBIR) Program by listing topics specific to research and development they wish to explore and that align with the mission of their agency. Businesses are not required to collaborate with research institutions, but partnerships are allowed and encouraged.
STTR: Small Business Technology Transfer
The Small Business Technology Transfer (STTR) Program differs slightly from SBIRs in that it requires collaboration between small businesses and a non-profit research institution, such as a university. It focuses on technology transfer and commercialization through the collaboration of those partners. Only five federal agencies participate in the STTR program: Department of War (DOW), Department of Energy (DOE), Department of Health & Human Services (HHS), National Aeronautics and Space Administration (NASA), and the National Science Foundation (NSF).
America’s Seed Fund
Labeled as “America’s Seed Fund”, SBIR/STTR is a three-phased process that moves research from concept to commercialization. Applications to the program are scored and awarded based on two things: scientific merit and the potential for commercialization. Winning an award can be a giant step forward for small businesses and academic researchers, as investors and industry partners look favorably on this process because of its progressive de-risking nature.
Typical Funding Ranges
Phase I: Provides the smallest award for funding. The goal of Phase I is to establish feasibility, scientific and technical merit, and proof of concept. The length of the award is approximately 6-12 months.
Phase II: Provides significantly larger awards intended to support continued R&D and creation of prototypes. The length of the award is up to 2 years.
Phase III: No funds provided by either SBIR or STTR, and companies are expected to continue their commercialization efforts either through private investment or follow-on federal contracts.
| Range of SBIR/STTR Funding Awards by Phase | |||
| Program | Phase I | Phase II | Phase III |
| SBIR | ~ $50,000 – $300,000 (depending on agency) | $400,000 – $1,800,000 (depending on agency) | No direct funding. Focus is on commercialization through private or non-SBIR federal contracts. |
| STTR | ~ $50,000 – $300,000 (depending on agency) | $400,000 – $1,800,000 (depending on agency) | No direct funding. Same as, SBIR commercialization support only. |
Benefits for Small Businesses and Researchers
The benefits small businesses or academic researchers gain by participating in the SBIR/STTR program can be significant. They,
- could receive non-dilutive capital to support early-stage R&D in the form of grants or contracts, without losing equity. This is ideal for high-risk, high-reward innovations that many investors shy away from.
- gain access to federal agencies and their expertise. The ability to work directly with a federal agency allows their innovation to gain credibility and technical validation, both which are appealing to potential investors.
- will retain the rights to their intellectual property. This ability to protect IP can be a critical factor for future commercialization.
To learn more about the SBIR/STTR programs, visit https://www.innovators.net/sbir-sttr/