Many clients who are in the early stages of small business activity are interested in but relatively unfamiliar with the Small Business Innovation Research (SBIR) program. We do our best to not only help our clients apply for funding but also to educate them on the programs to which they are applying. We like our clients to understand where funding comes from, what it is for, and what the odds are of winning an award. Below are some key pieces of information for those interested in pursuing SBIR.
Small Business Innovation Funding or SBIR is a non-dilutive funding program administered by the United States federal government to promote the research and development of innovative ideas, concepts, and products. There are 11 agencies administered by the SBA through the
- Department of Agriculture
- Department of Commerce
- 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
The annual budget includes a ~$3.2 billion minimum spend each year. While individual amounts vary by year and agency, winning companies can expect a Phase I award (including modifications) up to $259,613 and a Phase II award (including modifications) up to $1,730,751
How competitive is SBIR Funding?
Success rates vary by agency and can be anywhere from 7% to 20% depending on the agency as well as the funding pool that year. Slight variations in the annual SBIR funding budget can alter each agency’s success rate slightly. While these are slim chances for winning, the payoff of the program is worth it.
Companies can increase their chances of winning by following each agency’s specific recommendations and guidelines for proposal preparation. Some general tips for creating a competitive proposal to apply for SBIR funding include determining your team early, developing a reasonable budget, asking questions of your program contact, engaging in customer discovery, and identifying technical risks, and developing a robust research plan.
While SBIR Funding is competitive and has relatively strict regulatory and reporting requirements, it provides a clear-cut path to commercialization and is a great credential/bragging right for your small business.
One of the most appealing aspects of the SBIR Funding program is it enables testing to be completed on unproven technologies while encouraging the company to develop a commercialization plan for attracting customers upon program completion. The other important aspect of SBIR Funding is that it is completely non-dilutive. Unlike an angel investor, VC, or some accelerators, there are no equity or IP sharing requirements with government-sponsored SBIR grants.
Need help? If you think you could be a fit for SBIR schedule a consult call today.