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HomeFederal FundingLeverage is a powerful tool…. NSF SBIR/STTR Awardees Should Consider Phase IB and Phase IIB Options

Leverage is a powerful tool…. NSF SBIR/STTR Awardees Should Consider Phase IB and Phase IIB Options

October 3rd, 2012 | by Jayne Berkaw
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If you’re a National Science Foundation awardee, this is an opportunity you should not ignore.  NSF has several programs to provide supplemental funding to SBIR/STTR awardees to help bridge the gap between Phase I and Phase II, while encouraging partnering as a means to increase the potential for successful technology commercialization. In a recent “Dear Colleague Letter,” the agency announced that it will again offer the Phase IB Option for fiscal year 2013.

The Phase IB option can provide additional funds to Phase I grantees that are able to obtain third party investment to support the project. The objectives of the Phase IB option are:

  • To extend the R&D efforts beyond the current grant to meet the requirements of a third party investor,
  • To accelerate the Phase I project to the commercialization stage, and
  • To enhance the overall commercial potential of the subsequent Phase II project.

The Phase IB option extends the Phase I grant for six months, and the combined Phase I and IB project will typically not exceed one year for the SBIR grant and one-and a-half years for the STTR grant. The Phase IB option only applies to Phase I grants that are active on the day these supplemental requests are due.

Highlights for the Phase IB Supplement:

  • Overview: The Phase IB supplement is intended to further active SBIR/STTR Phase I grantee research and attract third party investment from industrial partners, venture capitalists, angel investors, and state and federal governments. The maximum supplemental award is 20% of the Phase I award (generally a maximum of $30,000 of NSF funding based on $60,000 of outside investment, or 1 to 2 ratio). When the supplement is awarded, the period of performance of this original grant is extended by up to six months.
  • Deadlines: There are two – October 15th and/or April 15th. Note: Eligible SBIR Phase I grantees have one option to submit a Phase IB supplement request.  STTR Phase I grantees also have one option but two potential submission dates.
  • Eligibility for Phase IB:  1) You must have an active Phase I SBIR or STTR grant; and 2) You must have obtained a fully executed investment commitment from a third party investor (for more on this see “Outside Funds Eligibility“) greater than $30,000.
  • Proposals must address two issues:  1) The research activities that will be funded by the NSF to strengthen scientific and engineering feasibility; and, 2) The business development and marketing activities which will be supported by the outside funds.
  • PI Eligibility: The Principal Investigator must be the PI of an active SBIR/STTR Phase I award.
  • Limit on Number of Proposals: One per active Phase I grant.

A similar program matching third party investor funds, the Phase IIB Option, is also available. Phase II SBIR or STTR grantees are eligible to begin the Phase IIB vetting process any time during the life of their Phase II project, but the request to start the Phase IIB process must be made at least 30 days prior to the expiration of the Phase II award. The outside investor must commit a minimum of $100,000, and NSF will match up to 50% of funds received. The SBIR/STTR Phase II awards will be made for a maximum of $750,000 and the Phase IIB additional supplement will be made for a maximum of $500,000. The total cumulative award for the Phase II plus the Phase IIB match cannot exceed $1,250,000 (excluding any additional supplements).

For details on the Phase IB and Phase IIB Options, visit NSF’s supplemental funding opportunities web page.  Your ability to raise third party funding is greatly increased when you bring leverage to the table!  Our advice?  Go for it! If you’d benefit from assistance with preparing to raise the third party funds, and/or with your Supplement proposal, BBCetc is here to help.


Becky Aistrup, Principal Consultant, BBCetc

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