What are SBIR/STTR Grants?

05/19/21 | 3 MIN READ Revised 08/18/21

SBIR and STTR federal grants are an important part of many startup's development.

What are SBIR/STTR Grants?

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants are non-dilutive federal funding for small businesses. Non-dilutive means that the government does not own a percentage of your small business after you receive the grant. The non-dilutive aspect of an SBIR grant is what makes SBIR/STTR grants attractive in comparison with venture capital (VC) or other dilutive sources of funding. The SBIR/STTR program is overseen by the Small Business Administration, and is often referred to as America's Seed Fund.

According to the SBIR.gov website, the federal SBIR/STTR mission is to “support scientific excellence and technological innovation through the investment of Federal research funds in critical American priorities to build a strong national economy.” Additionally, the STTR program aims to bridge the gap between research and development done by small businesses and larger research institutions. 

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🔬 Learn about: Funding Options for Biotech Startups

Who Awards SBIR/STTR Grants?

SBIR and STTR grants are federal grants that can be awarded by a wide variety of federal agencies. The most prominent agencies that award federal grants are:

  • National Institutes of Health (NIH)
  • National Science Foundation (NSF)
  • Department of Defense (DoD)
  • And many others!

The National Institutes of Health

The NIH focuses on small businesses in the biomedical field that are seeking to commercialize their technologies. The NIH is more focused on public health research in comparison to the NSF and the DoD. The NIH looks for tailored applications, sound science, demonstrated data (or plans to do so), among other factors in their selection process. The NIH is the #1 funder of biomedical research in the US, so it is no surprise that many small businesses look here first for funding opportunities.

🔬Related: 9 Strategies for Winning Grants at the NIH and Beyond

The National Science Foundation

The NSF is another institute in the US that is heavily involved in SBIR funding. The NSF looks for research that furthers society and progresses science. There can be overlap between research funded by the NIH and the NSF.

The Department of Defense

The DoD is the third agency that is heavily involved in the SBIR and STTR programs. However, the DoD differs from the other two in a few key ways. One of the most important ways in which the DoD differs is that the agency normally extends contracts as opposed to grants for their research. Contracts are also non-dilutive funding but they require a results based approach, as opposed to a pure research grant.

🔬Related: DoD Funding: Understanding the Options

The DoD also differs from other agencies in that they are mainly concerned with military applications of the specific innovation. They are more often the customer or beneficiary of the technologies they choose to fund, as opposed to other organizations like the NIH or the NSF. Understanding intended use and communicating with potential customers (military members) is essential for obtaining a DoD SBIR or STTR award. 

🔬Related: DoD Funding Strategies: Understanding the DoD Perspective

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Writing an SBIR or STTR Proposal

Writing an SBIR or STTR proposal is no small feat. Oftentimes, small businesses will take multiple rounds of submissions before their first SBIR or STTR application is approved. These grant proposals vary by department, and postings can be found on each department's website for funding opportunities. 

🔬Related: How to Mine Federal R&D Databases for Funding Opportunities

Before you begin writing, you might want to search through all possible funding opportunities to see which would best fit your research. Once you have found which opportunity to apply for (and at what agency) you should contact the program managers with any questions. Each agency has different requirements for their applications, so understanding their particular protocol is essential to be selected.

🔬Related: 8 Tips For Writing a Winning SBIR

You will also need to understand which Phase your company will be applying for. Phase I grants are typically for projects 6-12 months long and are awarded up to $300,000 dollars. Phase I applications are typically in pursuit of a proof of concept. In contrast, Phase II funding is focused on furthering research and development, typically allotting 2 years and up to $3 million per project. The goal of Phase II funding is to be prepared for commercialization near the end of the project.

🔬Related: 10 Tips For A Competitive SBIR or STTR Proposal

Requirements for an SBIR/STTR Application

The SBIR/STTR grant application structure consists of several pieces to be reviewed: Abstract and Summary, Specific Aims, Significance, Innovation, Approach, and Other. After planning, consulting, and setting specific goals, a prospective applicant continues with grant creation. An incredible amount of writing and rewriting will be expected during the grant creation process. However, the actual writing is ultimately not as important as precise content presentation. It is estimated that writing an effective SBIR/STTR application can take upwards of 300 hours!

That being said, there are pieces of an application that are not requirements, but are preferred by reviewers. These can include:

  • IP Ownership
  • Letters of Recommendation / Letters of Support
  • Preliminary Data

Reviewers look for these things because they strengthen an application's credibility. An incubator, like University Lab Partners, can provide SBIR/STTR applicants with tools to obtain these items, like contacts for a letter of recommendation or lab space to test initial findings. 

🔬Related: How Incubators Can Improve Your SBIR/STTR Grant Application

SBIR and STTR Overview

SBIR/STTR grants are issued by several national agencies, all overseen by the Small Business Administration (SBA).  Grant amounts and timelines can vary by agency, but can be generally summarized as follows:

  • Phase I - Ideation - 1 year - $300,000 - $500,000
  • Phase II - Development - 2 years - up to $2 million
  • Phase IIB - Marketing - 3 years - up to $3 million

Overall, SBIR and STTR grants are a great option for small businesses looking to receive non-dilutive funding.


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