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How SBIR and STTR Grants Work September 5, 2010

Posted by Jim Price in Business, Entrepreneurship.
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A few more thought on SBIR (Small Business Innovation Research) and STTR (Small-Business Technology Transfer) grants:

SBIR and STTR grants share many similarities, but have a few basic differences.  The major difference is in the amount of funding available, and in the types of entities to which the grants are awarded. 

Generally speaking, SBIRs tend to be 20-25% larger than STTRs in dollar amounts, all other things being equal.

The principle investigator (PI) of an SBIR grant must be primarily employed by the small business recipient of the grant for the duration of the project.  With the STTR, on the other hand, the PI may be employed by another entity involved in the grant project.  Additionally, with STTRs the small business is required to involve a university or other nonprofit research institution in the project, and that organization or those organizations must receive at least 40 percent of the grant funding.  (With an SBIR, by contrast, the small business is allowed to do all the work itself, retaining all the funding for its own purposes.)

SBIR and STTR grants share the same basic funding structure, wherein commitments come in two separately-approved tranches or phases, as follows:   

Phase I

  • Amount and Timeframe of Phase I – Between $85,000 and $150,000 in total cost, intended to fund the project for between 6 and 12 months.  (The amounts and timeframes vary depending on the specific agency and program. )
  • Objective of Phase I: 
    • Establish the technical merit and feasibility and potential for commercialization of the proposed R/R&D efforts
    • Determine the quality of performance of the small business awardee organization
    • …Prior to providing further Federal support in Phase II.

Phase II

  • Amount and Timeframe of Phase II – Between $750,000 and $1,400,000 in total cost, intended to fund the project for between one and two years.  (The amounts and timeframes vary depending on the specific agency and program.)
  • Objective of Phase II: 
    • 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.

I’ve given you some ranges here, and, as I say, grant awards vary depending on the agency, the program and the year.   But here is a rule-of-thumb to think about when contemplating going for an SBIR vs. an STTR:

If you have the Ph.D. or M.D. or other high-end technical expert on-staff (that is, on full-time payroll) in your small business who is qualified to be the Principle Investigator (PI) for a million-dollar grant, then you might consider applying for an SBIR as opposed to an STTR grant.  Why?  For three reasons: 

(a) The grant funding is likely to be higher by 20% or so (Phases I + II is likely to add up to closer to $1.2 million rather than $1.0 million.)

(b) You don’t have to hassle with institutional review boards (IRBs), conflict-of-interest (COI) and other stuff that can slow down grants by 2 months to two years when you’re working with a university partner (no kidding); and,

(c) Your startup gets to spend all $1.2 million, rather than only 60% of the grant in the case of the STTR, or $600,000. 

Perhaps as much as twice the net revenue, a more efficient application process, less administrative hassle for the small business by going it alone via the SBIR route.  So why would you, as a small business go for an STTR and collaborate with a university lab or other research institution? 

They might have the perfect research collaborator.  That collaboration may help land the grant — indeed, it may be absolutely necessary.  And, technology transfer and research collaboration with prestigious research institutions can add great credibility and long-term perceived equity value to a startup. 

It’s a trade-off.


Who Funds SBIR Grants, and Where Can You Find Them? September 1, 2010

Posted by Jim Price in Business, Entrepreneurship.
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Following up on yesterday’s post…  Eleven U.S. federal government agencies participate in the SBIR program.  Here’s who they are, along with some links so you can find additional information:












In the Great Lakes Region, we’re fortunate to have a consulting firm called BBC (see  http://bioconsultants.com/sbir_sttr_grant_assistance.html) that’s developed a national reputation for its expertise in advising small businesses in understanding and successfully navigating the federal government small-business grant process.  Periodically, they provide superb, cost-effective seminars on the topic ($50-100 for a ½-day orientation – see latest seminar schedule at http://bbcetc.com/training.html).  I highly recommend the BBC  folks –they’ve got 3rd-degree black belts in SBIR… and make no mistake, it is a contact sport!