SBIR/STTR’s Role in Tech Commercialization
Commercialization is the process of transitioning technology from the research lab to the public market.
To encourage the research and development of new technologies by small companies, the Small Business Administration (SBA) powers America’s Seed Fund–the biggest source of early-stage capital for tech commercialization in the country–through multiple federal agencies.
America’s Seed Fund has two parts: Small Business Innovation Research and Small Business Technology Transfer. The competitive three-phase SBIR and STTR programs fund promising research focused on the creation of technology that addresses federal priorities. In 2019, the programs awarded over $3.73 billion in funding.
For entrepreneurs seeking to commercialize new technologies, SBIR and STTR are non-dilutive sources of funding, unlike venture capital or angel investment.
What Is SBIR?
The Small Business Innovation Research (SBIR) program focuses on funding early-stage small businesses and startups that are working on innovative technologies. The mission of the SBIR program is to give small businesses the opportunity to participate in federal research and development that results in the development of cutting-edge technology.
Eligibility
You must be a U.S.-owned and operated small business to receive SBIR funding. Other eligibility requirements include:
- Must be organized as a for-profit business
- More than 50% owned by citizens or permanent residents of the U.S.
- No more than 500 employees
Federal Agencies that Participate in SBIR
- Department of Agriculture
- Department of Commerce (National Institute of Standards and Technology and 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
What Is STTR?
Small Business Technology Transfer (STTR) is very similar to the SBIR program in mission and structure. However, there are extra requirements that must be met. To receive STTR funding, a small business must formally collaborate with an approved, non-profit research institution.
Eligibility
The requirements for the STTR are similar to the SBIR. The non-profit research institution must be located in the U.S. and meet at least one of these definitions:
- Non-profit university
- Domestic non-profit research organization
- Federally funded R&D center (FFRDC)
Federal Agencies that Participate in STTR
- Department of Defense
- Department of Energy
- Department of Health and Human Services
- National Aeronautics and Space Administration
- National Science Foundation
What Is the Difference Between SBIR and STTR?
Though the SBIR and STTR are similar in function and mission, there are two key differences that set them apart.
Non-Profit Research Partner
While the SBIR certainly permits a qualified small business to consult with research institutions, the STTR requires a formal partnership between the two. Under STTR, the research group must perform at least 30% of the total effort, and the small business must complete at least 40%. The other 30% can be completed by either party or by a third-party vendor.
Principal Investigator
For SBIR, the principal investigator (PI) has to be primarily employed by the small business both when the funding is granted and for the duration of the project.
With the STTR, the principal investigator does not need to be primarily employed by the small business.
The definition of “primarily employed” means more than half your time is spent with the organization.
How Do You Write a Commercialization Plan?
SBIR and STTR applications include a commercialization plan. The plan should be succinct and concise in detailing the proposal’s planned path to commercialization and its overall market potential.
This is the strategy that your business or research institution will use to create business opportunities and generate revenue. It should illustrate your vision for your technological innovations and articulate your unique value proposition to your intended customer.
Each of the participating federal agencies release solicitations of specific research topics 1-3 times per year. The agencies do not accept unsolicited proposals that do not correlate with their proposed research topics of interest.
Check out the NIH Commercialization Plan Suggestions for an agency-specific step-by-step resource.
SBIR/STTR Guidance for Arkansas Companies
If you are interested in SBIR/STTR funding for tech commercialization in Arkansas, the Arkansas Small Business and Technology Development Center offers personalized one-on-one guidance. You can also apply for ASBTDC’s 2022 Lab2Launch Accelerator program.
First, take our self-assessment to see if you qualify for the SBIR or STTR programs before reaching out to your local ASBTDC. We have innovation specialists to walk you through the application process and decide if your research or technology is a good fit for the SBIR/STTR programs.
Review our SBIR/STTR Frequently Asked Questions page to learn more about how the programs support early-stage technology commercialization.
As a recipient of Federal and State Technology Partnership Program support, ASBTDC works to increase the number of SBIR/STTR awards to women, socially/economically disadvantaged individuals, and small businesses in underrepresented areas, such as rural Arkansas.
Whether or not you decide to pursue SBIR/STTR funding on your path to commercialization, take care to safeguard your intellectual property. Check out our IP Toolkit for videos and educational content that can help you get started.
