The Small Business Innovation Research (SBIR) program was introduced by Congress in 1982 as part of the Small Business Innovation Development Act signed into legislation by President Reagan. The Small Business Technology Transfer (STTR) program was authorized by the Small Business Technology Transfer Act of 1992 and aims to foster technology transfer through cooperative R&D between small businesses and research institutions.
Designed to encourage domestic small businesses to engage in Federal Research and Development (R/R&D) with the potential for commercialization, the program's goals are to:
- Stimulate technological innovation.
- Meet Federal research and development needs.
- Foster and encourage participation in innovation and entrepreneurship by women and socially or economically disadvantaged persons.
- Increase private-sector commercialization of innovations derived from Federal research and development funding.
Agencies offering...
SBIR/STTR programs
Department of Defense (DoD)
Department of Health & Human Services (HHS)
Department of Energy (DOE)
National Aeuronautics & Space Administration (NASA)
National Science Foundation (NSF)
Department of Agriculture (USDA)
SBIR programs
Department of Homeland Security (DHS)
Department of Transportation (DOT)
Environmental Protection Agency (EPA)
Department of Commerce (NIST and NOAA)
Department of Education (ED)
Federal agencies with extramural research budgets over $100M per year are required to commit at least 3.2 % of the funds to SBIR. Additionally, agencies with extramural research budgets that exceed $1B are required to commit an additional 0.45% to STTR. Eleven federal agencies administer SBIR programs – six of which also administer STTR programs. Together, these agencies provide over $4B in early-stage, non- dilutive seed funding annually to fund technologies that are typically too high risk for private sector funds.
SBIR/STTR awards are divided into phases: Phase I is the concept phase where you test the feasibility of the idea (6-12 months); and Phase II awards where you expand the Phase I results (typically 2 years). The bulk of the R&D is performed during Phase II and efforts often result in a prototype. Many agencies offer follow on Phase II awards particularly if the technology under development is Deep Tech where there will be a much longer development path and time to market.
Phase III translates to the receipt of any non-SBIR funds directly resulting from the technology developed using SBIR/STTR funds – typically commercial sale of the resultant product. However, licensing and government contracts using non-SBIR funds fit this definition of Phase III as well.
SBIR/STTR programs provide many benefits to participating small businesses. The funding is non-dilutive meaning no company equity is given up (i.e., the government does not take any part of your business). The funding is not a loan (i.e., you do not ever pay it back). And you keep your intellectual property.
However, it is a statutory goal of SBIR/STTR funding that technology developed using these designated taxpayer funds result in some form of benefit for the American people whether it be in the form of taxable revenue, jobs or some other societal or scientific benefit. To that end, any agency that has an SBIR/STTR program is required to evaluate the commercial potential of R&D conducted using these funds.
Historically, small businesses are 50% more likely to successfully commercialize the technology if they begin building partnerships early – during Phase I. Which is where PARTNERS come in!