Created by Federal legislation in 1982 as an economic stimulus program (during the Reagan Administration), the Small Business Innovation Research Program (SBIR) is a highly competitive program that encourages small businesses to explore their technological potential and provides the incentive to profit from its commercialization. The Small Business Technology Transfer Program (STTR) is a companion small business program that expands funding opportunities to small business joint venture opportunities which include one or more nonprofit research institutions. The combined SBIR/STTR program, awarding about $2.2 billion/year in high-risk, high-potential, R&D contracts, has been called, “The world’s largest seed capital fund”.
On a regularly scheduled basis, each of the participating Federal agencies releases one or more solicitations inviting proposals from small business firms against a list of technical topics which are aligned with the agency’s needs. Proposals are judged on the basis of their (1) innovative technical approach, (2) the credentials of the Principal Investigator, and (3) the plan for commercializing the technology into U.S. competitive products or services in the global marketplace. Of the approximately 20,000 proposals received each year, about 19% win a Phase I award ($150K for 6 months), and about half of those go on to earn a Phase II award ($1,000K for up to 24 months). The average SBIR/STTR participating company size is 12 employees, and 20% are startups. Advantages of the SBIR/STTR Program include, protection for I.P., support for commercialization, and the fact that Phase I/II projects can qualify for Phase III sole-source follow-on Government contracts and subcontracts.
Unfortunately, far too many small business firms do not have the necessary marketing skills and business savvy required to capture the needed additional funding, and find themselves caught in the so-called funding “Valley of Death”. Over the years, countless promising innovations have never reached their full market potential due to a lack of adequate planning for their all-important Phase III funding needs. Many of these projects represent opportunities for larger firms to acquire the technology, Principal Investigators, or the small business company itself.
Technology from SBIR/STTR Program Winners