How to Win SBIR/STTR Awards: 12 Tips to Help You Secure Non-Dilutive, Early-Stage Funding

February 05 | insights

Also known as America’s Seed Fund, the Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) Program is the nation’s largest source of non-dilutive early-stage startup funding for research and development. Each year, 11 federal agencies award over $4 billion to small businesses developing cutting-edge, high-risk technologies.

Many companies fail to gain traction in their early stages because investors deem their company or product too risky. That’s why the impact SBIR/STTR awards can have on a company is immense. Since SBIR/STTR awards are non-dilutive, these awards are ideal for developing a proof of concept, hiring subject-matter experts who can advance critical technologies, purchasing materials or equipment and more without the fear of losing stakes or shares in your business. In other words, you’re “de-risking” your technology. This can set you up for success when seeking funding from more traditional sources of investment.

With coaching and resources from the Florida High Tech Corridor and its ecosystem partners, several Florida companies have already secured SBIR/STTR funding and are leveraging their awards for business growth. (You can read about the success of two fast-growing, women-owned startups here.)

Powered by a grant from the U.S. Small Business Administration’s Federal and State Technology (FAST) Partnership Program, The Corridor provides crucial advice and guidance on how to navigate the complexities of SBIR/STTR awards, including where to search for opportunities and how to apply.

If you’re a first-time applicant or an entrepreneur with some experience applying for but not receiving SBIR/STTR awards, here are the team’s top 13 tips for SBIR/STTR applicants:

1. Make sure you meet the minimum requirements.

Review The Corridor’s checklist to verify if your business meets the minimum requirements for an SBIR/STTR award here.

2. When searching for award topics, keep an open mind.

Don’t assume you know which agencies are most likely to fund your technology. Review the topics from all federal agencies involved in the program; you may be surprised by the variety of technologies each of them funds. Click here to search technology topic areas that agencies are interested in funding right now.

Additionally, every federal agency has a unique timeline for how often and when they release topics. It is important to understand this when planning your submissions. You never know what unexpected topic might appear that fits with the focus of your research. You can visit each agency’s website to see if they have announced dates for upcoming solicitations, or you can look at the previous solicitations to get a sense of the approximate timing.

This chart shows the approximate timing across all agencies:

 

Note: This chart was last updated by the SBA Sept. 12, 2023, and is subject to change. For the latest information, visit https://www.sbir.gov/solicitations.

3. Know the difference between SBIR and STTR awards.

While the application requirements are similar for both SBIR and STTR award types, there is one key difference:

  • SBIR awards allow the involvement of a university or other nonprofit research institution as a partner completing up to 30% of the work for a Phase I award or 50% of the work for a Phase II award.
  • STTR awards require the involvement of a university or other nonprofit research institution as a partner completing at least 30% of the work for a Phase I award or up to 60% for a Phase II award.

This distinction can lead to differences in your proposal strategy, structure and budget. We can help you navigate these differences, assist with the application process and even identify a university research partner.

Topics are typically designated as SBIR or STTR. However, there are topics that allow you to submit your proposal for either an SBIR or STTR award, if you meet the requirements and the federal agency funding the awards allows it. Most of the funds distributed through America’s Seed Fund are SBIR awards.

4. Know the difference between Phase I and Phase II awards.

SBIR/STTR awards are distributed in two phases. Phase I SBIR/STTR awards are intended to support feasibility studies or proof-of-concept research in which companies evaluate the most critical and risky underlying technical concepts of their project or product. If your technology proves viable, Phase II SBIR/STTR awards are intended to continue the work completed in Phase I to develop the full prototype and commercial feasibility.

In almost all cases, you need to earn a Phase I award and show progress in your technology before moving on to Phase II. There are rare cases in which organizations will fast-track projects to Phase II or combine Phase I and Phase II. Those instances are especially difficult for first-time applicants without a history of following through on SBIR/STTR proposals.

Be sure to specify in your proposal that you need both Phase I and Phase II to develop your technology. Government agencies are more likely to fund high-risk technologies that require both Phase I and Phase II awards to be successful. The goal of America’s Seed Fund is to develop innovative technologies that may have been deemed too risky for other investments. Government agencies understand this requires extensive research, hardware or access to informational databases that can exponentially raise costs.

5. Seek agency-specific topic and proposal insights.

No two federal agencies are the same. What one federal agency might typically focus on when providing SBIR/STTR awards can vary wildly from another. If you’ve never applied for an SBIR/STTR award, these differences can compound any difficulties you might experience as a first-time applicant.

Several federal agencies have created resources to help entrepreneurs new to the SBIR/STTR program submit proposals. These programs range from providing sample proposals to pre-submission support directly from the agency in the form of a “Phase 0” program. These are free resources provided directly by the agencies and can help tailor your approach for a specific agency should you choose to apply.

Our partners at the University of South Florida have compiled a number of these agency-specific programs here.

6. Know the difference between “grant” and “contract” awards.

Generally, a “grant” SBIR/STTR opportunity issued by a federal agency is very broad and allows the company to determine the specific technology to be developed in the proposal, while a “contract” SBIR/STTR opportunity is very specific and tells the company exactly what problem they must solve. Some agencies issue both grant and contract opportunities.

One advantage of SBIR/STTR contracts is the opportunity they create for an ongoing relationship with the agency that issued the award. Contract engagements may turn into longer-term customer relationships for companies that build rapport and deliver the right technology solutions for the government agency.

7. Read all solicitation and topic documentation carefully.

There are technical differences among all federal agencies, and some requirements may change slightly from year to year. Read all solicitation and topic documentation before you start preparing your proposal and supplementary documents. Small deviations from what is listed in the solicitation, such as using the wrong font, can cause your proposal to be rejected.

In some cases, particularly for the Department of Defense, the solicitation document will list important differences among various divisions within the agency. For example, the maximum award amount may differ between the Army and the Air Force on the same solicitation.

Additionally, a project can evolve rapidly over the course of its lifetime. As your project advances and budget needs arise or get altered, ensure you or someone on your team is constantly verifying that your project complies with the clauses and regulations set out in your award.

If you aren’t sure if your project has remained compliant, don’t hesitate to reach out to grant management sales specialists, contracting officers, program directors and others for help.

8. Talk to a program manager before writing your proposal.

All SBIR/STTR topics will have a program manager at the federal agency. When possible, and particularly for contract topics, it is in your best interest to communicate with the program manager to get answers to any specific questions you might have about the topic. This may help clarify expectations and can inform what you include in your proposal.

You may only be allowed to talk with a program manager at specific times, so pay close attention to the solicitation. If you have questions about the submission process, there will often be a “Help Desk” contact for those questions.

9. Search past awards for insight to plan your proposal.

All SBIR/STTR awards are public information. Prior to preparing a proposal, particularly if you are new to the SBIR/STTR program, review the abstracts of proposals recently funded by the federal agencies you are considering. This allows you to have a better idea of what type of work the agencies are funding. It also allows you to ensure that you are differentiating your approach from previously funded awards.

Each agency will list the awards that they have funded on their own websites, but all SBIR/STTR awards are compiled on SBIR.gov in a database open to the public (it can take several months for this database to be updated).

10. Carefully prepare a tailored budget.

No two budgets are the same. Tailor the budget in your application to coincide with the budget requirements of the federal agency funding your topic. Depending on the agency, they might have different limitations than what you initially outlined or anticipated.

Most SBIR/STTR budgets are not cost competitive, meaning it is not in your best interest to cut corners to propose something cheaper than other applications. The agencies know they are funding high-risk projects, and it takes money to prove your concept and continue to evolve your technology. However, agencies do want to see an effort to be fiscally responsible; ensure that your budget matches your technology, and you are thinking logically about getting the most out of the money you are asking for.

Don’t wait until the last minute to develop an outline of your project needs. By building your budget while building your project, you’ll have a better understanding of what each step of your project is going to take financially and logistically. Finally, make sure not to include unallowable costs in your proposal. Unallowable costs are expenses necessary for the running of your business, but cannot be subsidized with federal funding. This can include, but is not limited to, patent expenses, interest expenses, advertising, marketing, fundraising and other related business development activities.

11. Demonstrate commercialization potential.

As with any technological improvement, SBIR/STTR funds are intended to help solve real-world problems. It is vital to show that you understand the problem you are solving in your application. Government agencies value companies that have undergone the process of customer discovery, including talking with stakeholders to fully understand the issue, determining concrete goals for the technology and understanding the path to market.

Most SBIR/STTR proposals require that you write a “Commercialization Plan” that outlines the path to market for your technology. Use the data from customer discovery and research to justify your path to market and your technical approach. A strong commercialization plan can be particularly impactful in “grant” topic proposals.

12. Keep your documents organized to avoid future headaches.

When applying for an SBIR/STTR award, you’ll be dealing with a plethora of documents, letters, reports, budget tracking sheets and more. Use organizational and project management tools, such as a spreadsheet, to track the status of required documents and stay on top of deadlines.

You may need to utilize several online systems to submit an SBIR/STTR depending on the federal agency, such as Grants.gov, Research.gov, eRACommons and others.  Each system will require a unique set of login credentials that can cause confusion. It’s best to register for these systems as early as possible to prevent delays and keep track of your usernames and passwords in a spreadsheet, document or other organizational tool.

More SBIR/STTR Resources

Developing SBIR/STTR award proposals requires a significant time commitment, attention to detail and patience to overcome the roadblocks that are inevitable with any major project. We hope these tips will help simplify the process for you and keep you on track toward securing critical funding for your small business.

In addition, The Corridor offers the following resources for companies pursuing SBIR/STTR awards:

For individualized support, complete this form and a member of our team will follow up with you.

We also provide training and a support network for ecosystem builders who want to increase their support of entrepreneurs pursuing SBIR/STTR awards. You can register to join our monthly virtual meetings here or watch our archived meetings here.

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