SBIR & STTR Program Basics

TL;DR: FAQs and useful tips on SBIR and STTR funding for small businesses that are developing new technologies or innovations.

What’s the purpose of SBIR and STTR programs?

SBIR is an acronym for Small Business Innovation Research. This is a federal funding mechanism that multiple government agencies participate in, including the National Science Foundation, National Institutes of Health, Department of Defense, and NASA. SBIR exists to:

  • Stimulate technological innovation
  • Use small business to meet Federal R/R&D needs
  • Foster and encourage participation by socially and economically disadvantaged small businesses, and those that are 51 percent owned and controlled by women, in technological innovation
  • Increase private sector commercialization of innovations derived from Federal R/R&D, thereby increasing competition, productivity, and economic growth of the country

STTR is an acronym for Small Business Technology Transfer. STTR is a funding mechanism that exists to:

  • Facilitate the transfer of technology developed by a research institution through the entrepreneurship of a small business concern (SBC).

Phases of SBIR

Phase I (concept)

  • Six to twelve month timeline
  • Supports exploration of the technical merit or feasibility of an idea or technology

Phase II (R&D)

  • May last up to two years and includes expanded funding
  • Expands upon the Phase I results
  • The R&D work is performed during this phase

Phase III (commercialization)

  • This is the period during which Phase II innovation moves from the “laboratory” into the marketplace
  • No SBIR funds support this phase
  • The small business must find funding in the private sector or secure it from other non-SBIR Federal Agency funds that can fund continued development

How to succeed in SBIR & STTR programs

  • You must have a burning desire to conduct innovative research and development.
  • You must have a desire to develop a viable product that you want to bring to the marketplace.
  • Just wanting to do research is insufficient for this type of funding. You must want to see that research commercialized or turned into a useful product that you and your firm will promote either directly, or through a variety of commercialization strategies.
  • You must be doing transformational work.

What are the benefits?

By applying for and winning an SBIR or STTR award, you will:

  • Receive funding to conduct R&D
  • Retain the rights to the intellectual property you develop
  • Gain third party validation of your technology
  • Establish important relationships with government agencies who may become customers or strategic partners later on

Who is eligible?

A small business must be primarily American-owned, organized as a for-profit entity, and have less than 500 employees.

What is a Principal Investigator?

A Principal Investigator (PI) is a single individual who will serve as the principal investigator on the proposed project. You must have one. They are responsible for the overall project and must be credible in terms of their education and background. The PI must be “primarily employed” by the applicant small business during the SBIR award period.

Can you use foreign subcontractors?

In SBIR, the sub-awardee does not have to be located in the United States. However, all of the R&D work performed by the sub-awardee must be done in the U.S. Various SBIR programs do collaborate with similar research agencies in foreign countries.

Additional phase II opportunities

  • Direct to Phase II award: Designed for small business concerns, also known as SBCs that have completed Phase I milestones using non-SBIR funds. Three agencies (DARPA,NIH, Air Force) can participate.
  • Sequential Phase II awards: Allows a Phase II awardee to receive one additional sequential Phase II award to continue the work of an initial Phase II award. This award has a guideline amount of $1 million and a limit of $1.5 million.
  • Phase IIA award: Allows the grantee to complete the R&D associated with the initial prototype, product, or process development.
  • Phase IIB award: Provides additional financial support for a new R&D task that extends beyond the scope of the original Phase II grant.
  • Cross-program awards: Enable a Phase I STTR award winner to receive a Phase II SBIR award, or the reverse.
  • Cross-Agency awards: Enables any Agency to fund an initiative in Phase II that was initially funded by another Agency in Phase I.
  • Open phase II competition: All DoD Phase I awardees have the opportunity to submit a Phase II proposal to DoD without invitation, but the mechanism for doing so varies by Service and Component.

*Across all Agencies, a ceiling, or cap, has been placed on all SBIR/STTR awards. An Agency may provide awards capped at 150% of the base. The cap then is $225,000 for each Phase I award. The cap for each Phase II award is $1.5 million.