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SBIR 101 Overview


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Introductory information about the federal SBIR/STTR grant program.

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SBIR 101 Overview

  1. 1. SBIR/STTR INNOVATION WORKSHOP DECEMBER 9, 2015 SBIR and STTR 101 Small Business Innovation Research Small Business Technology Transfer Karmjot Grewal Program Manager Office of Community and Economic Development Email:
  2. 2.  At ~$2.5B, SBIR/STTR is the largest Federal program available to help small business inventors negotiate the innovation ecosystem:  >Over $40B and 145,000 awards since 1982  Averaging 10 patents/day  For innovation investors, SBIR/STTR is non-diluted funding (no equity taken) used to reduce risk, accelerate technology, and preserve your IP rights.  This Fall Regional SBIR/STTR Innovation Summit in Austin is a one-stop entry into SBIR/STTR for entrepreneurs – a great chance to talk directly with funders.  SBIR/STTR reauthorization in 2011 focused on commercializing technology: on delivering product or process to a customer. Why SBIR/STTR? 2
  3. 3. Why SBIR/STTR? (cont.)  Government’s incentives  Test drive small business capability  Proactive risk reduction  Early/high-risk S&T with SBIR/STTR funding  Competing approaches open up additional technology alternatives  Non-competitive follow-on awards  High level of matching funds  Small Business’ incentives  Largest source of early stage R&D funds for small firms  Company retains data rights for 4 years (5 for DoD)  Builds credibility of company’s research  Follow-on awards are non-competitive 3
  4. 4. Program Overview Small Business Innovation Research (SBIR): a set-aside program created by Congress in 1982 for small business concerns to engage in Federal R&D -- with potential for commercialization. Small Business Technology Transfer (STTR): a set-aside program created by Congress in 1992 to facilitate cooperative R&D between small business concerns and U.S. research institutions -- with potential for commercialization. 3.0% FY2016 0.45% FY2016 SBIR and STTR were reauthorized by Congress in P.L. 112-81 for 2011 – 2017, with annual increases in the assessment of Federal extramural RDT&E funds. 4
  5. 5. SBIR & STTR Funding Levels  Agencies allocate a percentage of their extramural R/R&D budgets for the SBIR & STTR programs  SBIR: 3.0% (FY 2016), for agencies with >$100B in extramural R/R&D  STTR: 0.45% (FY 2016), for agencies with >$1B in extramural R/R&D  Congress has increased the allocation percentages since the programs were initiated $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 1980 1990 2000 2010 2020 $B 0.0% 1.0% 2.0% 3.0% 4.0% 1980 1990 2000 2010 2020 SBIR STTR ALLOCATION PERCENTAGEAVG AMOUNT AWARDED* *source:, 5/15/2014 5
  6. 6. Program Goals SBIR est. 1982  Stimulate technological innovation  Use small business to meet Federal R&D needs  Foster and encourage participation by minorities and disadvantaged persons in technological innovation  Increase private-sector commercialization innovations derived from Federal R&D STTR est. 1992  Stimulate and foster scientific and technological innovation through cooperative research and development carried out between small business concerns and research institutions  Foster technology transfer between small business concerns and research institutions 6
  7. 7. SBIR Program Eligibility  Organized for- profit U.S. business  500 employees or fewer, including affiliates  More than 50% directly owned and controlled by one or more individuals who are citizens or permanent resident aliens of the United States  PI’s primary employment must be with the small business concern New eligibility authority available to Agencies from reauthorization:  More than 50% directly owned and controlled by one or more for-profit businesses, each being more than 50% owned and controlled by one or more individuals  NIH initiative: Be a concern which is more than 50% owned by multiple venture capital operating companies, hedge funds, private equity firms, or any combination of these. No single venture capital operating company, hedge fund, or private equity firm may own more than 50% of the concern. 7
  8. 8. STTR Program Eligibility  Applicant is a small business concern Formal cooperative R&D effort Minimum 40% by small business Minimum 30% by U.S. research institution  U.S. Research Institution College or University; other non-profit research organization Federal R&D center (added by reauthorization statute)  Intellectual property agreement Allocation of data rights for four years Right to carry out follow-on R&D and commercialization via Phase III contracts and investment 8
  9. 9. PHASE II Full Research, R&D to Prototype  Award Guideline: $1M (SBIR)/$1M (STTR) … varies by Agency … can rise to $1.5M, or more with waiver  Duration: 2 years PHASE III Commercialization  Subsequent investment to achieve commercialization, or sale  Use of non-SBIR/STTR Funds PHASE I Feasibility Study  Award Guideline: $150K … varies by Agency … can rise to $225K  Duration: 6 months (SBIR)/12 months (STTR) SBIR/STTR: 3-Phase Competitive Program 9
  10. 10. PHASE II Full Research, R&D to Prototype  SBIR: 33% of Awards | 74% of Funds | Average Size $919,943  STTR: 30% of Awards | 67% of Funds | Average Size $862,820 PHASE III Commercialization  Use of non-SBIR/STTR Funds PHASE I Feasibility Study  SBIR: 67% of Awards | 26% of Funds | Average Size $158,304  STTR: 70% of Awards | 33% of Funds | Average Size $189,530 SBIR/STTR: Phases by the Numbers (FY2014) 10
  11. 11. What Are My Funding Options? 11 Discovery Proof-of Concept Product Design Product Development Manufacturing/ Delivery Idea Pre-seed Funding Seed Funding Expansion/Mezzanine Operating Cap. Friends and Family Angels Seed Funds Venture Funds Founder Institutional Equity Loans / BondsAngel Groups Start-up Funding SBIR Phase I Phase II Phase III
  12. 12. SBIR and STTR Awards  Critical Early Stage R/R&D funding  The SBIR & STTR programs provide funding for high risk, innovative projects  SBIR & STTR awards provide credibility when seeking funding or partners  SBIR/STTR awards are executed as grants or contracts  No repayment  No dilution of company equity  No cost sharing is required for Phases I and II. Cost sharing may not be used as an evaluation criteria. 12
  13. 13. What Does a SBIR/STTR Firm or Entrepreneur Look Like? 13  Doesn’t have to have yet formed the company  Company must be for profit, US owned and operated, and under 500 people  Typically they are primarily a R&D organization both in what they do and their staff. Average firm size is 9. As they get larger (over 30) you see balance or product development and sales in addition to R&D  Focus is on performing R&D – Not for purchasing equipment, commercializing a technology that has already been developed, or one that has very low risk and only needs capital
  14. 14. Intellectual Property  Patent rights  Small business concerns normally retain the principal worldwide patent rights to any invention developed with Government support  Government Use  The Federal Government receives a royalty-free license for Federal Government use 14
  15. 15. Data Protection  Protection Period  Data generated from your R/R&D is protected from public disclosure for a minimum of 4 years (civilian agencies) or 5 years (DOD) after the conclusion of your award (Phase I, Phase II, or federally funded Phase III)  Government Use  The Government retains a royalty-free license for Government use of any technical data delivered under an SBIR award, whether patented or not 15
  16. 16. 16 BUDGETS
  17. 17. SBIR/STTR Budgets by Agency, FY 2015 DOD NIH* DOE NSF NASA All Others ~$2.5B in FY15 across all agencies Agencies with SBIR & STTR Programs Budget Department of Defense (DOD) $ 1.070 B Department of Health and Human Services (HHS): National Institutes of Health (NIH)* $797.0 M Department of Energy (DOE), including Advanced Research Projects Agency (ARPA-E) $206.1 M National Science Foundation (NSF) $180.1 M National Aeronautics and Space Administration (NASA) $ 176.0 M Agencies with SBIR Programs Budget U.S. Department of Agriculture (USDA) $20.3 M Department of Homeland Security (DHS): Science and Technology Directorate (S&T) and Domestic Nuclear Detection Office (DNDO) $17.7 M Department of Education (ED)* $8.4 M Department of Transportation (DOT) $7.9 M Department of Commerce (DOC): National Oceanic and Atmospheric Administration (NOAA) and National Institute of Standards and Technology (NIST)* $7.5 M Environmental Protection Agency (EPA) $4.2 M Grants Contracts *NIH and ED also issue contracts; Within DOC, NIST issues grants and NOAA issues contracts 17
  18. 18. Snapshot Across the US (FY2011-2014) 18 $3,790,314,574.23 $289,879,650.33 $432,061,165.72 $433,781,861.53 $452,770,411.58$467,026,829.68$532,377,340.20 $543,594,132.06 $634,710,717.00 $1,333,573,513.20 $2,283,767,814.83 All Other States & US Territories FL OH PA TX CO NY MD VA MA CA Top total award dollars went primarily to 10 states: CA, MA, VA, MD, NY, CO, TX, PA, OH and FL
  19. 19. Agency SBIR Differences Granting Agencies  Investigator initiates approach  Less-specified topics  Assistance mechanism  More flexibility DOD DHS HHS/NIH NASA EPA DOT DOC Contracting Agencies  Agency establishes plans, protocols, requirements  Highly focused topics  Procurement capability  More fiscal requirements HHS/NIH NSF USDA DOE DoED 19
  20. 20. 20 TOPICS
  21. 21. Identifying Agencies With Topic Areas Aligned With Your Interests/Technologies  Search Agency Solicitations  Agency Websites: available at   and,  SBIR Gateway:  Follow up with agency personnel listed with individual topics  Attend SBIR Conferences: national, regional, and state  One-on-one meetings with agency program managers 21
  22. 22. 22
  23. 23. 23
  24. 24. Fastest Way to Find Topics That Relate to Me? Use 24 Search with key words that describe your tech expertise, such as “additive manufacturing”
  25. 25. Search Results on for “Additive Manufacturing” Topics National SBIR/STTR Gateway Search Service Results by Zyn Search© Searched SBIR/STTR Topic files for "additive manufacturing" and found 25 matches. (SBIR) Air Force - Electron-Beam Additive Manufacturing Process Control for Titanium Alloys Score: **** Electron-Beam Additive Manufacturing Process Control for Titanium Alloys Air Force SBIR 2009.1 - Topic AF091C- 002 Aviation and Missile RD&E Center (Missile) - Otho Thomas - (256) 842-9227 Opens: December 8, 2008 - Closes: January 14, 2009 AF091C-002 TITLE: Electron-Beam Additive Manufacturing Process Control for Titanium Alloys TECHNOLOGY AREAS: Materials/ Processes.... (SBIR) Navy - Additive Manufacturing for Transducer Development Score: **** Additive Manufacturing for Transducer Development Navy SBIR 2012.1 - Topic N121-094 ONR - Ms. Tracy Frost - Opens: December 12, 2011 - Closes: January 11, 2012 N121-094 TITLE: Additive Manufacturing for Transducer Development TECHNOLOGY AREAS: Materials/Processes, Sensors ACQUISITION PROGRAM: This topic is intended to benefit future FNC projects for ASW, MIW & UUVs.... (SBIR) Air Force - Method for Evaluating Candidates for Additive Manufacturing (AM) Processes Score: **** Method for Evaluating Candidates for Additive Manufacturing (AM) Processes Air Force SBIR 2014.1 - Topic AF141- 213 Opens: December 20, 2013 - Closes: January 22, 2014 AF141-213 TITLE: Method for Evaluating Candidates for Additive Manufacturing (AM) Processes KEY TECHNOLOGY AREA(S): Materials / Processes ... (SBIR) Navy - Aluminum Alloy Development and Use in Additive Manufacturing Process Design for Drive System Gear Boxes Score: **** Aluminum Alloy Development and Use in Additive Manufacturing Process Design for Drive System Gear Boxes Navy SBIR 2014.1 - Topic N141-062 ONR - Ms. Lore Anne Ponirakis - Opens: Dec 20, 2013 - Closes: Jan 22, 2014 N141-062 TITLE: Aluminum Alloy Development and Use in Additive Manufacturing … 25 This search engine finds relevant Topics published by various Agencies.
  26. 26. What Does A Defense Topic Look Like? 26
  27. 27. What Do Health/Medical Topics Look Like? 27
  28. 28. 28 APPLICATIONS
  29. 29. Keys to Submitting a Good Application  Read and understand the topic  Communicate with the technical person at the agency responsible for the topic if you require clarification on the topic scope  Agencies, particularly contracting agencies, may have periods when you cannot communicate directly with their personnel to ask questions because of fairness requirements  Comply with the application requirements (read the solicitation)  Get registrations done early  Include required documents; pay attention to word and page limits  Don’t submit at the last minute! 29
  30. 30. Review of Applications  Granting agencies  Typically use external peer review  Reviewers agree to keep application information confidential and certify that they don’t have conflicts of interest  Contracting agencies  Typically utilize agency personnel for review 30
  32. 32. Commercialization  “Commercialization” refers to technology maturation and customer capture, whether by direct sale or license of a technology, or integration into a larger product.  Since the SBIR and STTR programs were created there has been increasing emphasis on increasing positive commercialization outcomes from SBIR and STTR awards  The 2011 Reauthorization statute mandated these changes  Implementation of Transition Rate metrics  Increased flexibility for Technical/Commercialization Assistance  Sequential Phase II awards  Commercialization Readiness Pilot Program for Civilian Agencies 32
  33. 33. Commercialization Transition Rate  The SBIR/STTR Reauthorization Act of 2011 required all agencies to implement two transition rate metrics  Phase I  Phase II transition rate  Applies to companies that have received > 20 Phase I awards in the past 5 years  Metric calculation example for FY 2014 33 𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝑷𝒉𝒂𝒔𝒆 𝑰𝑰 𝑨𝒘𝒂𝒓𝒅𝒔 𝑭𝒀 𝟐𝟎𝟎𝟗 − 𝟐𝟎𝟏𝟑 𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝑷𝒉𝒂𝒔𝒆 𝑰 𝑨𝒘𝒂𝒓𝒅𝒔 𝑭𝒀 𝟐𝟎𝟎𝟖 − 𝟐𝟎𝟏𝟐 ≥ 𝟎. 𝟐𝟓
  34. 34. Commercialization Transition Rate (cont.)  Phase II  Phase III success rate  Applies to companies that have received > 15 Phase II awards during the last 10 fiscal years, excluding the two most recently completed fiscal years  Metric calculation example for FY 2014  Companies that fail to meet either metric will be ineligible to apply for any Phase I awards for 1 year  Prior to submitting your application, companies can see if they fail to meet either metric by checking the SBA company registry ( 34 𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 + 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑓𝑟𝑜𝑚 𝑃ℎ𝑎𝑠𝑒 𝐼𝐼 𝐴𝑤𝑎𝑟𝑑𝑠 𝐹𝑌 2002 − 2011 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑃ℎ𝑎𝑠𝑒 𝐼𝐼 𝐴𝑤𝑎𝑟𝑑𝑠 𝐹𝑌 2002 − 2011 ≥ $100,000 OR 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑃𝑎𝑡𝑒𝑛𝑡𝑠 𝑓𝑟𝑜𝑚 𝑃ℎ𝑎𝑠𝑒 𝐼𝐼 𝐴𝑤𝑎𝑟𝑑𝑠 𝐹𝑌 2002 − 2011 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑃ℎ𝑎𝑠𝑒 𝐼𝐼 𝐴𝑤𝑎𝑟𝑑𝑠 𝐹𝑌 2002 − 2011 ≥ 0.15
  35. 35. Commercialization Assistance  Technical/Commercialization Assistance Programs  $5000 during Phase I and $5000/year in Phase II  Agencies provide these services through one or more contractors  Small businesses may elect to specify their own vendor instead of using the agency’s contractor(s)  The goal of these assistance programs is to improve commercialization planning and outcomes 35
  36. 36. Commercialization Readiness Programs  Commercialization Readiness Program (CRP) at DOD  The purpose of the CRP is to accelerate the transition of SBIR and STTR funded technologies to Phase III, especially those that lead to programs of record and fielded systems  Commercialization Readiness Pilot Programs at Civilian Agencies  Pilot programs being initiated at some of the agencies  10% of SBIR and STTR funding may be used towards improving commercialization outcomes 36
  37. 37. Commercialization Paths  The path to commercialization requires many small businesses to successfully navigate a path that involves additional investment (federal and private), a choice of business models (licensing vs. manufacturing), and partnering arrangements 37
  38. 38. Tracking Commercialization Outcomes  Improving Commercialization  Agencies and SBA are gathering commercialization outcomes in order improve the operation of the SBIR and STTR programs  The National Academy of Sciences is required to carry out a study every four years on the SBIR and STTR programs  Data Requests  Please comply with requests to submit data on your follow-on investments and revenues as part of these efforts  Individual small business data will be kept confidential 38
  40. 40. Funding Related Provisions FY Set-aside SBIR Set-aside STTR 2011 2.5% 0.30% 2012 2.6% 0.35% 2013 2.7% 0.35% 2014 2.8% 0.40% 2015 2.9% 0.40% 2016 3.0% 0.45% 2017 3.2% 0.45% Section 5102 – SBIR and STTR Allocation Increase 40
  41. 41. Funding Related Guidelines Section 5103 – SBIR and STTR Award Levels Allowed to increase by up to 50% over guidelines after which need SBA Waiver * Agency waiver from SBA required to exceed award + 50% Program Phase I Phase II Previous SBIR $150,000 $1,000,000 150K/1M STTR $150,000 $1,000,000 100K/750K Program Phase I Phase II Previous SBIR $225,000 $1,500,000 Flexible STTR $225,000 $1,500,000 Flexible 41
  42. 42. Provisions Impacting SBCs  Section 5108 –Special Acquisition Preference Agencies, prime contractors shall issue Phase III awards to the greatest extent practicable.  Section 5125 – Definition of Phase III “Phase III is work that derives from, extends or completes efforts made under prior SBIR/STTR funding agreements.”  Section 5138 – Technology Insertion Reporting Phase III award data must be included in SBA’s annual report to Congress.  Section 5144 – Simplified Paperwork Requirements SBA shall issue guidelines to ensure that each Federal agency simplifies and standardizes the paperwork requirements of small businesses.  Section 5162 – Competitive Selection Procedures All awards must be made pursuant to competitive and merit-based selection procedures. 42
  43. 43. Provisions Impacting SBCs  Section 5104 – Agency and Program Flexibility  A firm may receive a Phase II award from an agency that is not the one that awarded their Phase I award.  A firm may receive a Phase II award under a program that is not the one that they received their Phase I award under.  Section 5105 – Elimination of Phase II Invitations Invitation, pre-screening and pre-selection processes are no longer permitted for Phase II proposal submission.  Section 5106 – Pilot to Allow Phase Flexibility Authorized to establish a Pilot Program that will allow for a Phase II award to be made without regard to whether or not the firm received a Phase I award. 43
  44. 44. Provisions Impacting SBCs  Section 5107 – Participation by VC Firms Firms majority-owned by venture capital operating companies, hedge funds and private equity are now included in the SBIR program.  NIH, DOE, NSF up to 25% NIH has implemented  DoD and other agencies 15%  Section 5109 – Collaborating with Federal Labs No waiver is required for partnership with Federal Labs and Centers.  Section 5111 – Additional SBIR/STTR Awards Firms are eligible to receive one additional Phase II award for continued work.  Section 5121 – Technical Assistance for Awardees The amount allocated for Technical Assistance for awardees is increased to $5,000 per award per year. Phase II and STTR awards now included. 44
  45. 45. Provisions Impacting SBCs  Section 5122 – Commercialization Readiness Program at DoD  The Commercialization Pilot Program is no longer a pilot, and is called the Commercialization Readiness Program.  Program is extended to STTR.  Section 5123 – Commercialization Readiness Pilot Program for Civilian Agencies Allows Civilian agencies to allocate not more than 10% of SBIR funds to establish commercialization readiness pilot programs.  Section 5126 – Shortened Award Decision Period Selections must be made within 90 days of the solicitation close. NIH & NSF one year from solicitation close. 45
  46. 46. Provisions Impacting SBCs  Section 5140 – Consent to Release Information Firms must give consent before their information is released to Economic Development Organizations.  Section 5143 – Reducing Fraud, Waste and Abuse SBA must include measures in the SBIR Policy Directive to prevent fraud, waste and abuse in the SBIR/STTR programs.  Section 5165 – Commercialization Success  Federal agencies must establish a system to measure a firm’s success rate of moving from Phase I to Phase II and from Phase II to Phase III.  Agencies must establish a minimum threshold for these rates.  If a firm does not meet these minimum thresholds, they will be suspended from the program for one year. 46
  47. 47. Reporting Related Provisions  Section 5138 – Technology Insertion Reporting Phase III award data must be included in the annual report to Congress.  Section 5161 – Report on SBIR/STTR Program Goals Federal agencies will develop and report metrics that evaluate the effectiveness and benefit of the SBIR/STTR programs to the people of the United States.  Section 5167 – Report on Manufacturing Activities The Manufacturing report is now included in the Annual Report to Congress. 47
  48. 48. Audit/Study Related Provisions  Section 5136 – Accuracy in Funding Base Calculations GAO will complete an annual fiscal and management audit.  Section 5137 – Evaluation by National Academy  The National Academy of Sciences (NAS) will evaluate the SBIR/STTR Programs.  The NAS will evaluate the number of positions created by each SBIR award.  Section 5139 – Intellectual Property Protections The Comptroller General must conduct a study of Intellectual Property Protections in the SBIR program.  Section 5142 – GAO Study of VC Comptroller General shall conduct a study of the impact of requirements relating to VC operating company, hedge fund, and private equity firm involvement in the SBIR/STTR programs. 48
  49. 49. Status of SBIR/STTR Reauthorization Provisions  Phased implementation of reauthorization provisions commenced 28 January 2013 and is well underway  Policy Directives are issued and available at  Eligibility and other rules are described in detail in individual Solicitations: read the Solicitations carefully!  Coordinate with SBA and other agencies  See Agency-specific talks for details! 49
  50. 50. 50 FAQs
  52. 52. What Federal Agencies Are Interested in My Technology? 52  Go to  Find “Agency Microsites” on the homepage.  Review Agency snip-its and websites describing Agency mission, website, uniqueness, budget, topic announcement schedule and other information. Department of Defense Microsite
  53. 53. Proposals that Win SBIR/STTR Awards Results differ by Agency, but government-wide about one- third of FY awardees are newcomers each year. You can do this! 53
  54. 54. Intellectual Property, Data Rights Issues  While Federal guidance is available from the U.S. Patent & Trade Office (USPTO), many states provide assistance – learn how to search for it.  USPTO Pro Bono Program attorneys are available here for consultation – remaining space subject to availability 54
  55. 55. FY2016 Outreach Planning 55
  56. 56. Questions? 56