Entrepreneurial Institute

Deep Dive into SBIR & STTR Programs and Funding Opportunities

Posted By Desiree Frieson
on Wed, Nov 9, 2016

Small Business Innovation Research (SBIR) & Small Business Technology Transfer (STTR) Programs

Did you know 11 Federal agencies participate in a highly competitive program to grant over $2 billion a year to U.S. owned small businesses to execute innovative research & development projects that have potential to be commercialized?

NYU entrepreneurs should explore every opportunity to receive “free” grant and contract money from the federal government when the opportunity arises. Of course working with the government comes with a plethora of paperwork, audits, reviews, and reports but the benefits outweigh the administrative work.

If awarded through one of the 11 federal agencies, participating companies are provided non-dilutive grants to complete specific research and development projects, and are not required to distribute equity or enter into a repayment agreement.

The purpose of the SBIR & STTR program is to encourage small businesses to research, develop and deliver innovative products and services where a technical unknown has yet to be proven or capability that is currently not available in the marketplace. These federal grant programs focus on strengthening the role of small businesses in meeting federal R&D needs and can be commercialized (aka, selling power).

Before you get excited, for a company to qualify for a SBIR or STTR grant, there are eligibility requirements to meet. Each grant program has varying degrees of eligibility.

Sample of SBIR Eligibility

  1. Company must be considered at Small Business Company (SBC) at time of award and any other time during Phase 1 and 2 of the grant.
  2. SBC must not have more than 500 full-time, including affiliates.
  3. The company must be a for-profit entity.
  4. Must be 51% owned & controlled by U.S citizens or permanent resident aliens.
  5. For subsidiary companies, the applicant firm can be owned/controlled by one or more other small businesses, if parent company has less than 500 employees and is 51% owned by US citizens.
  6. If SBC is subcontracting research and testing deliverables in Phase I and II to an academic institution (research institution), there are strict rules to follow.
  7. All work performed under an SBIR grant must be done in the U.S.

Sample of STTR Eligibility

  1. Each awardee of STTR contracts and grants must be the size, ownership and similar structure requirements as the SBIR program.
  2. STTR program requires that a university, Federal Lab or other nonprofit entity conduct at least 40% of the research.
  3. Principal investigator can be allocated to the Research Institution, except through the National Science Foundation.
  4. A single research entity must qualify as the partner on an STTR grant.

SBIR & STTR agencies engage in a yearly solicitation that is announced on their website and through other communication channels. Monies can be distributed either through a contract with an agency or a grant, each payment methods have different considerations.   

Contract agencies have a specific problem and need to be solved and create “topics” for small businesses to solve with an innovative solution. Grant agencies want to support “good ideas” initiated by small business. Within the 11 participating agencies, there might be overlapping topics, grant and contract opportunities.

SBIR & STTR programs are divided into three phases:

Phase I: Evaluate scientific technical merit and feasibility of an idea

  1. Up to $150K awarded to applicant firm.
  2. 6-9 months during phase I.

Phase II: Expand the result of, and further pursue the development of Phase I Work

  1. Main research & development activity
  2. May involve prototype creation & testing, clinical trials, ec
  3. Up to $1M over a 24-month period.

Phase III: Commercialize results of Phase II.

  1. No SBIR funds available for this phase.
  2. May use private money, or non-SBIR federal funding.

Key consideration to remember when applying:

  1. Applicant must enter program through phase I, cannot go directly to phase II.
  2. Depending on the agency, the entity might fund phase III.
  3. Applicants must consider the differences between a contract vs. grant
  4. Depending on the agencies, there may be narrow, broad and ambiguous topic asks.
  5. Funding levels are different per agencies, grants can be up to $150K or more.
  6. The 11 SBIR & STTR funding agencies have different submission processes.

As some of you may know, the Entrepreneurial Institute hosts several info sessions on these funding opportunities with Jim Greenwood. 

Jim Greenwood has served as a commercialization reviewer for the SBIR and STTR programs
at the National Science Foundation (NSF), reviewing both Phase 1 and 2 proposals, as well as
proposals for NSF’s supplemental programs such as Phase 1b and Phase 2b. Download Jim Greenwood’s presentation for more information.

Visit SBIR.gov to search for open topics, Phase 1 soliticiation schedules and application due dates. Follow SBIR on Twitter for regular updates.

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