Think Your Company is Too Big for SBIR Funding? Think Again.
Tags: Entrepreneur, federal funding, innovation, proposals, SBIR, STTR
More than $2 billion in R&D grants and contracts is awarded every year to innovative small companies by 11 federal agencies through the SBIR and STTR programs. It’s generally (mistakenly) believed that these two programs …Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) … are only for early-stage companies. While it’s true that the majority of awards go to companies with fewer than 25 employees, any company with less than 500 employees is eligible to compete, assuming they also meet the other eligibility requirements. Here’s just a glimpse of the 2010 awards made by the largest agencies:
It’s a fact the money’s out there. But why should more established companies investigate SBIR/STTR as an opportunity and what do they need to be successful?
The SBIR/STTR programs are all about innovation and commercialization. Established small businesses know how to commercialize a product or they wouldn’t be “established.” They exist today because they excel at serving the needs of their customers. That experience gives them a decided advantage over companies that are still developing their first product or service.
The more important question is how do more established companies rate on the innovation scale? To answer that question each company should evaluate its capabilities and track record. Does it actively engage in research and/or new product development? Have these activities resulted in marketable products? Does the company have experience in-licensing technology? Has it ever collaborated with a university or other research organization?
Expertise in new product development is essential for companies to be competitive in SBIR/STTR. Assuming that capability exists, a company can use these programs to supplement their internal R&D budget or to partially fund diversification into new business areas. Possible scenarios for diversification include:
- High-risk/high-reward projects that do not meet the criteria for internal funding
- Development of a new technology that is in-licensed
- A new product idea that is being jointly developed with another company
Innovation implies technical risk. If there’s no risk involved, the project is primarily an engineering exercise and outside of the scope of SBIR/STTR. Remember, whether the project succeeds or fails, the SBIR/STTR award need not be paid back … and if any new intellectual property is created it belongs to the company.
This federal funding might be “free” money but it’s not “easy.” Companies should plan to spend significant time and energy in learning the rules of the game, identifying the appropriate projects and collaborators, and writing a competitive proposal. Fortunately, help is available. For example, the state of Michigan funds an SBIR/STTR assistance program through BBC that can provide support at every step of the process. Click here to learn more about the Michigan program. BBC also works in many other states. Check out our capabilities here, or contact us at 734-930-9741 or firstname.lastname@example.org.
Michael Kurek, PhD, is Partner at BBCetc