What Do SBIR Grants Fund?

Business man holding a lightbulb to represent ideas that receive SBIR grants

By: Micki Vandeloo, President, Lakeview Consulting

One of the longest standing funding programs for for-profit companies has been the Small Business Innovation Research (SBIR) Program.  This program provides grant funding for ground-breaking research that meets two criteria:

  • Intellectual Merit – The innovation must be ground in science.
  • Broad Societal Benefit – The innovation must not result in a benefit to only a few people but society in general.

SBIR does not fund projects that involve the purchase of equipment, commercialization of an existing technology or very low risk research.

The goals of the SBIR grant program are to meet federal research and development needs; increase private-sector commercialization of innovation derived from federal R&D; stimulate technology innovation; and foster and encourage participation in R&D by women and disadvantaged populations.  SBIR funding supports research a for-profit company does on its own or with a research institution as a partner.  SBIR/STTR programs are highly competitive with only about a 33% success rate for 1st time applicants.  While for-profit companies can be the applicant, it is a generally widely regarded best practice to partner with a research entity such as a university.

Examples of Projects Funded by the SBIR Program

There are a wide variety of projects that have received SBIR grant funding through the years. The examples below demonstrate just how diversely these funds are distributed:

  • Auxiliary Propulsion for Silent Operation of Combatant Craft – Triton Systems, Inc received funding to develop a Silent, Deployable and Rugged Ocean Propulsor (S-DROP) for use in small naval combatant craft.
  • Defect Detection in Metal Additive Manufacturing – Product Innovation and Engineering, LLC received funding to develop a real time detection method that engineers can use to prevent further defects from happening.
  • Measuring Stormwater Overflow with Synthetic Aperture Radar – Wolverine Radar Company received funding to use its technology to create a more proactive system for measurement of storm water retention.

Interesting Facts About the SBIR Program[1]:

  • The SBIR grant program accounts for 3.2% of the extramural research budget for agencies, or approximately $3.2 billion dollars annually.
  • There are over 5,000 new awards made every year.
  • There are three phases of SBIR awards:
    • Phase I – Concept Development, projects are 6 months to 1 year in length, awards are from $50,000 to $250,000
    • Phase II – Prototype Development, projects are up to 24 months in length, awards from $500,000 to $1,500,000
    • Phase III – Commercialization, not supported by SBIR funding.
  • For SBIR funding, a for-profit company can subcontract up to 33% of the total budget for Phase I and up to 50% for Phase II.
  • There are 11 federal agencies that participate in SBIR funding awards:
    • US Department of Agriculture (USDA)
    • Department of Commerce (DoC)
    • Department of Defense (DoD)
    • Department of Education (ED)
    • Department of Energy (DOE)
    • Department of Health and Human Services (HHS)
    • Department of Homeland Security (DHS)
    • Department of Transportation (DOT)
    • Environmental Protection Agency (EPA)
    • National Aeronautics and Space Administration (NASA)
    • National Science Foundation (NSF)
  • Each agency sets its own topics for funding that align with the agency and federal priorities. For example, DOE is currently funding zero emissions technologies due to the federal priority to develop innovative clean energy technologies.

Pursuing SBIR Grants

If you are interested in pursuing SBIR funding, there are some great tutorials and other information on the SBIR website, www.sbir.gov.  I highly recommend clients get very familiar with this funding stream prior to applying and search past awards to see if grants have been awarded for anything similar to what they are proposing and to get more familiar with the technologies SBIR funds.

While the funding for SBIR is competitive, there are many for-profit companies who have gotten their start with an SBIR funded innovation.  If you are prepared to be persistent and submit more than once, your chances of funding increase with each submittal.  In addition, SBIR agencies provide very detailed feedback to help you refine your submission with each review.

I hope this brief tutorial has helped you better understand SBIR grants. If you have any further questions, contact me.  I am happy to help!

Free Download: The Complete Manufacturer's Gudie to Grant Funding

[1] https://www.sbir.gov/sites/default/files/SBA_SBIR_Overview_March2020.pdf

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