Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Resource Center
The federal SBIR/STTR programs provide funds for early-stage research and development at small U.S. businesses. For those looking to commercialize innovation, Small Business Innovation Research (SBIR) and Small Business Technology Transfer Research (STTR) grants are important options to consider. University researchers across the country have found these to be significant sources of funding and, in some cases, more accessible than NIH R01 grants or angel investing/venture capital.
Through the SBIR and STTR programs, the federal government sets aside $2.5 billion in extramural research support to small businesses engaged in technology innovation research.
Mission of the Programs
The SBIR/STTR programs, often referred to as "America's Largest Seed Fund," can serve as alternate venues for university faculty research. Various models have emerged for the university researcher to spin off a business or to collaborate with an existing business and then subcontract part of the work back to the university. In fact, co-partnership with a research institution is a requirement for the STTR program.
Congress initiated the SBIR program for the purposes of:
- Stimulating technological innovation in the private sector
- Meeting Federal Research and Development Needs
- Improving the Return on Investment from federally-funded research for economic and social benefits to the U.S.
The STTR has the further purpose of stimulating public/private partnerships through funding joint ventures between small businesses and research institutions.
Resource Center Services
The Texas Tech SBIR/STTR Resource Center, jointly sponsored by the Texas Tech Office of Research Commercialization and the Northwest Texas Small Business Development Center, serves the rural West Texas community, including those in the Lubbock, El Paso and San Angelo regions. Assistance is provided to those starting small businesses with a technology research focus. Resource Center services include:
- Identification of appropriate SBIR/STTR funding source
- Sponsorship of educational seminars and webinars
- Proposal preparation guidance
- Identification of potential research and commercialization partners
- Coordination with Innovation-Corps (I-Corps) resources for purposes of determining commercialization potential
- Coordination with services offered by the Small Business Development Centers (SBDCs) which can provide assistance with formation of the business and market research
- Leasing of office space, engineering and life science laboratories and simulation resources
- Coordination with ORC Intellectual Property resources including patenting and licensing
Requirements for Employment of Principal Investigator (PI)
There are differing requirements for the primary employment of the Principal Investigator, with there generally being more flexibility on an STTR award. In most cases, the PI must have primary employment at a small business where primary employment is defined as 51% employed by the small business for the duration of the award. However, this requirement may differ, depending on the policies of the federal agency. (See links to each participating agency below.) For further information on potential Conflicts of Interest with regard to ownership of a small business and subcontracting to a university lab, please see the Texas Tech University Financial Disclosure website.
History of the program
The SBIR program started as a pilot program at NSF in the late 1970's. Since then, subsequent legislative acts have been passed to govern its existence and execution. In 1992, Congress approved the creation of the STTR program. Currently, both the SBIR and STTR programs are operating on a continuing resolution basis.
SBIR/STTR Program Description
Small Business Innovation Research (SBIR)
- A set-aside program for small business to engage in Federal R&D – with a potential for commercialization.
- 3% (will increase to 3.2% by FY2017) of the extramural research budget for all agencies with a budget greater than $100M per year is dedicated to funding SBIR projects.
- In Phase I of an SBIR, the research institution can perform up to 33% of the total effort, with the small business concern performing the remainder.
- Depending on the agency, Phase I funding can range from $100,000 to $225,000 with a duration of from 6 to 12 months.
- In Phase II, the Small Business can subcontract 50% of the effort to a research institution (NIH does offer 'Hard Cap' waivers for certain topics).
- Phase II funding is for 24 months and can range from $500,000 to $1,000,000 depending on the agency (NIH does offer 'Hard Cap' waivers for certain topics).
Small Business Technology Transfer (STTR)
- A set-aside program to facilitate cooperative R&D between small business concerns and U.S. research institutions – with the potential for commercialization.
- 0.45% of the extramural research budget for all agencies with a budget greater than $1B per year is dedicated to funding STTR projects.
- In Phase I and II of an STTR award there is a requirement that the small business collaborate with a research institution, with the small business performing at least 40% of the work and the research institution must perform at least 30%. It is possible for more than one research institution to perform up to 60% of the total effort.
- Phase I funding ranges between $100,000 and $225,00 with varying time frames depending on the agency
- Phase II funding is for 24 months and ranges from $750,000 to $1,500,000 depending on the agency (NIH does offer 'Hard Cap' waivers for certain topics).
Program Basic Structure for Both SBIR and STTR
Feasibility study, proof-of-concept
Full research and development effort resulting in a prototype
- Commercialization Stage
- Seek External Funding [No Use of SBIR/STTR funds]
- Non-SBIR/STTR federal funding or
- Private sources
It should be noted that during Phases I and II of an SBIR or STTR award, the research funds are to be used for technical research, not for market research or for seeking investors. However, since these awards are made to private for-profit companies, a for-profit fee is awarded for up to 7% of the total Direct and Indirect costs. This amount can be used for any purpose at the discretion of the small business.
Each Agency Administers Its Own Program
- Department of Agriculture SBIR Only
- Department of Commerce - NOAA SBIR Only
- Department of Commerce - NIST SBIR Only
- Department of Defense SBIR and STTR
- Department of Education SBIR Only
- Department of Energy SBIR and STTR
- Department of Health & Human Services SBIR and STTR
- (Includes National Institutes of Health, Centers for Disease Control and Food and Drug Administration)
- Department of Homeland Security SBIR Only
- Department of Transportation SBIR Only
- Environmental Protection Agency SBIR Only
- National Aeronautics & Space Administration SBIR and STTR
- National Science Foundation SBIR and STTR
For Further Information
For further information about SBIR awards, please see: https://www.sbir.gov/about/about-sbir
Information about the STTR program can be found at: https://www.sbir.gov/about/about-sttr
For those working with Texas Tech, you may contact the Director of the Texas Tech SBIR/STTR Resource Center, Susan Back