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SBIR/STTR Re-Authorization Update

SBIR/STTR Innovation WorkshopDecember 9, 2015

SBIR and STTR 101Small Business Innovation ResearchSmall Business Technology TransferKarmjot GrewalProgram ManagerOffice of Community and Economic DevelopmentEmail:

SR: Updated

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.


SR: Updated to reflect new numbers

Why SBIR/STTR? (cont.)Governments incentivesTest drive small business capabilityProactive risk reductionEarly/high-risk S&T with SBIR/STTR fundingCompeting approaches open up additional technology alternativesNon-competitive follow-on awardsHigh level of matching fundsSmall Business incentivesLargest source of early stage R&D funds for small firmsCompany retains data rights for 4 years (5 for DoD)Builds credibility of companys research Follow-on awards are non-competitive3


Program OverviewSmall 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%FY20160.45%FY2016SBIR 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

SR: Updated to reflect FY2016

SBIR & STTR Funding LevelsAgencies allocate a percentage of their extramural R/R&D budgets for the SBIR & STTR programsSBIR: 3.0% (FY 2016), for agencies with >$100B in extramural R/R&DSTTR: 0.45% (FY 2016), for agencies with >$1B in extramural R/R&DCongress has increased the allocation percentages since the programs were initiated $BAllocation PercentageAvg amount Awarded**source:, 5/15/20145

Program GoalsSBIR est. 1982 Stimulate technological innovationUse small business to meet Federal R&D needsFoster and encourage participation by minorities and disadvantaged persons in technological innovationIncrease 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


SBIR Program EligibilityOrganized for- profit U.S. business500 employees or fewer, including affiliatesMore than 50% directly owned and controlled by one or more individuals who are citizens or permanent resident aliens of the United StatesPIs primary employment must be with the small business concernNew 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 individualsNIH 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.


STTR Program Eligibility Applicant is a small business concern Formal cooperative R&D effort Minimum 40% by small businessMinimum 30% by U.S. research institutionU.S. Research InstitutionCollege or University; other non-profit research organizationFederal R&D center (added by reauthorization statute)Intellectual property agreementAllocation of data rights for four yearsRight to carry out follow-on R&D and commercialization via Phase III contracts and investment


PHASE II Full Research, R&D to PrototypeAward Guideline: $1M (SBIR)/$1M (STTR) varies by Agency can rise to $1.5M, or more with waiverDuration: 2 years

PHASE III CommercializationSubsequent investment to achieve commercialization, or saleUse 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 Program9

PHASE II Full Research, R&D to PrototypeSBIR: 33% of Awards | 74% of Funds | Average Size $919,943STTR: 30% of Awards | 67% of Funds | Average Size $862,820

PHASE III CommercializationUse of non-SBIR/STTR Funds

PHASE I Feasibility Study SBIR: 67% of Awards | 26% of Funds | Average Size $158,304STTR: 70% of Awards | 33% of Funds | Average Size $189,530

SBIR/STTR: Phases by the Numbers (FY2014)10

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What Are My Funding Options? 11DiscoveryProof-ofConceptProductDesignProductDevelopmentManufacturing/DeliveryIdeaPre-seedFundingSeed FundingExpansion/MezzanineOperating Cap.

Friends and FamilyAngelsSeed FundsVenture FundsFounderInstitutional EquityLoans / Bonds

Angel GroupsStart-up FundingSBIRPhase I Phase II Phase III


SBIR and STTR AwardsCritical Early Stage R/R&D fundingThe SBIR & STTR programs provide funding for high risk, innovative projectsSBIR & STTR awards provide credibility when seeking funding or partnersSBIR/STTR awards are executed as grants or contractsNo repaymentNo dilution of company equityNo cost sharing is required for Phases I and II. Cost sharing may not be used as an evaluation criteria.


What Does a SBIR/STTR Firm or Entrepreneur Look Like?13Doesnt have to have yet formed the companyCompany 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

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Intellectual PropertyPatent rightsSmall business concerns normally retain the principal worldwide patent rights to any invention developed with Government supportGovernment UseThe Federal Government receives a royalty-free license for Federal Government use14

Data ProtectionProtection PeriodData 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 UseThe Government retains a royalty-free license for Government use of any technical data delivered under an SBIR award, whether patented or not15


SBIR/STTR Budgets by Agency, FY 2015~$2.5B in FY15across all agenciesAgencies with SBIR & STTR ProgramsBudgetDepartment of Defense (DOD)$ 1.070 BDepartment of Health and Human Services (HHS): National Institutes of Health (NIH)*$797.0 MDepartment of Energy (DOE), including Advanced Research Projects Agency (ARPA-E)$206.1 MNational Science Foundation (NSF)$180.1 MNational Aeronautics and Space Administration (NASA)$ 176.0 M

Agencies with SBIR ProgramsBudgetU.S. Department of Agriculture (USDA)$20.3 MDepartment of Homeland Security (DHS): Science and Technology Directorate (S&T) and Domestic Nuclear Detection Office (DNDO)$17.7 MDepartment of Education (ED)*$8.4 MDepartment of Transportation (DOT)$7.9 MDepartment of Commerce (DOC): National Oceanic and Atmospheric Administration (NOAA) and National Institute of Standards and Technology (NIST)*$7.5 MEnvironmental Protection Agency (EPA)$4.2 M

GrantsContracts*NIH and ED also issue contracts; Within DOC, NIST issues grants and NOAA issues contracts 17

SR: Updated with new numbers

Snapshot Across the US (FY2011-2014)18Top total award dollars went primarily to 10 states: CA, MA, VA, MD, NY, CO, TX, PA, OH and FL

SR: Added from other presentation

Agency SBIR DifferencesGranting Agencies Investigator initiates approach Less-specified topics Assistance mechanism More flexibilityDODDHS HHS/NIH NASAEPADOT DOCContracting Agencies Agency establishes plans, protocols, requirements Highly focused topics Procurement capability More fiscal requirements HHS/NIH NSF USDA DOE DoED



Identifying Agencies With Topic Areas Aligned With Your Interests/TechnologiesSearch Agency SolicitationsAgency Websites: available at and, SBIR Gateway: up with agency personnel listed with individual topicsAttend SBIR Conferences: national, regional, and stateOne-on-one meetings with agency program managers21


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Fastest Way to Find Topics That Relate to Me? Use www.zyn.com24

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