Small Business Innovation Research Program (SBIR) Program
Small Business Innovation Research Program (SBIR) is a highly competitive federal program that encourages small businesses to explore their technological potential and provides the incentive to profit from its commercialization. The federal SBIR and STTR programs are sources of a combined $2.5 billion in early-stage R&D seed capital set aside exclusively for small, tech-based US companies. These programs offer grants or contracts to support serious R&D and subsequent commercialization of technologies valued both by the business applicant and the federal government. The company owns the intellectual property and all commercialization rights. Companies such as Symantec, Qualcomm, DaVinci and iRobot were started with R&D funding from this program.
STTR is another program that expands funding opportunities in R&D. This program promotes public/private partnerships and requires collaboration with a research institute. Read more about the STTR Program here.
Qualifications for SBIR
In order to be eligible to participate in SBIR, businesses must meet the following qualifications:
Organized for profit, with a place of business located in the US;
- At least 51% owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the US, or
- At least 51% owned and controlled by another for-profit business concern that is at least 51% owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States; and;
- 500 or less employees, including affiliates (exceptions may apply).
The SBIR programs are designed to fund the development of truly innovative technologies. These technologies often represent advancements in the state-of-the-art in their field, but some agencies will also fund significant improvements of existing technology and/or innovative applications of existing technology.
Use of Funds
SBIR funding is unique in that it does not have to be matched, nor does it ever have to be repaid by the small business. It also is not an equity investment that will dilute ownership. The award monies can be used to fund most costs directly associated with the R&D project – e.g., salaries/wages, benefits, supplies and materials, and in some cases, equipment. The money can also be used to pay a share of the awardee’s overhead and administrative expenses and even pays the awardee company a profit of up to 7%.
Each year, federal agencies with extramural research and development (R&D) budgets that exceed $100 million are required to allocate 2.5 percent of their R&D budget to these programs. Currently, eleven federal agencies participate in the program:
- Department of Agriculture
- Department of Commerce - National Institute of Standards and Technology
- Department of Commerce - National Oceanic and Atmospheric Administration
- Department of Defense
- Department of Education
- Department of Energy
- Department of Health and Human Services
- Department of Homeland Security
- Department of Transportation
- Environmental Protection Agency
- National Aeronautics and Space Administration
- National Science Foundation
Each agency administers its own individual program within guidelines established by Congress. These agencies designate R&D topics in their solicitations and accept proposals from small businesses. Awards are made on a competitive basis after proposal evaluation.
Three Phased Program
The SBIR Program is structured in three phases:
Phase I. The objective of Phase I is to establish the technical merit, feasibility, and commercial potential of the proposed R/R&D efforts and to determine the quality of performance of the small business awardee organization prior to providing further Federal support in Phase II. SBIR Phase I awards normally do not exceed $150,000 total costs for 6 months.
Phase II. The objective of Phase II is to continue the R/R&D efforts initiated in Phase I. Funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the project proposed in Phase II. Only Phase I awardees are eligible for a Phase II award. SBIR Phase II awards normally do not exceed $1,000,000 total costs for 2 years.
Phase III. The objective of Phase III, where appropriate, is for the small business to pursue commercialization objectives resulting from the Phase I/II R/R&D activities. The SBIR program does not fund Phase III. Some Federal agencies, Phase III may involve follow-on non-SBIR funded R&D or production contracts for products, processes or services intended for use by the U.S. Government.
Is SBIR Right for You?
Below is a short list of questions for you to consider when assessing if it makes sense for your firm to pursue SBIR and STTR grants. While not every answer needs to be yes, there needs to be a strong business case in order to increase your chance of winning. ConnecTech can help you determine if it is possible for you to build a team to fill in some of the gaps that may exist.
- Is firm a for-profit entity, or will a for-profit entity be formed?
Does firm meets the current ownership and other SBA requirements for "small company" status: a. 500 or fewer employees including affiliates and subsidiaries
b. at least 51% owned and operated by US citizen or permanent resident
c. located in the US
- Does firm have R&D personnel, capabilities and access to facilities needed to credibly carry out at least 2/3 of the Phase I work in-house for SBIR or at least 40% of the work in-house for STTR?
- Does firm have an "eligible" Principal Investigator (PI) available during the period of performance of the SBIR/STTR contract or grant -- "eligible" being determined both by employment status with the company (51%) and credible R&D credentials?
- Are the PI and the rest of the R&D team likely to be credible as researchers in the eyes of the agency reviewers? What kinds of people need to be added to the team to add the needed credibility? Is the team complete?
- Does firm have a great RESEARCH idea? Is this project really about research? Are there Phase I feasibility issues to address? What research will be done in Phase I? How will Phase I success be measured? Is there any indication that a Phase I work plan exists? Does a realistic work plan fit the Phase I scope and budget?
- Does research idea fit with a participating federal agency solicitation topic?
- Does preliminary data (obtained by the applicant, his team members or others in the field) indicate the potential for the feasibility of the project?
- Does the applicant have ACCESS to the needed facilities and equipment?
How Can ConnecTech Help You?
The ConnecTech SBIR/STTR Initiative is dedicated to providing assistance to DC based companies interested in the SBIR and STTR program. We have a full time staff that will help your firm with the full lifecycle of SBIR/STTR support, including:
- Selecting the right agencies / topics to pursue
- Identifying and connecting with teaming partners including prime contractors
- Providing introductions to university partners
- Proposal review and support
- Intellectual property support
If you think that your firm is well positioned to pursue the SBIR/STTR program, we would love to work with you. Please reach out to us by contacting Philip Reeves, Manager of Small Business Technology and Innovation at Philip.email@example.com
Additional SBIR Resources
- SBIR.gov - http://www.sbir.gov/ - The official SBIR website for the federal government
- SBIR.gov Webinars - http://sbir.gov/content/sbir-webinars-posted-online - Past webinars posted by the national website
- National SBIR Conference Slides - http://www.navysbir.com/sbirconfpresentations.htm - A wealth of information is on the slides presented at the 2013 National SBIR conference.
- SBIR Gateway - http://www.zyn.com/sbir/ - A great resource for SBIR information
Know another resource we should highlight? Get in touch at firstname.lastname@example.org