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Funding

SBIR & STTR

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR)

VIPC’s Federal Funding Assistance Programs identify and accelerate opportunities for Virginia’s small technology businesses to obtain SBIR, STTR and other government contracts. These programs provides guidance, direction, training and valuable resources to enhance the competitiveness of SBIR/STTR proposal strategies.

VIPC is the lead organization in Virginia for SBIR/STTR support. VIPC’s Federal Funding Assistance Program works to support Virginia’s early stage technology firms in their efforts to learn about and apply for federal SBIR and STTR awards. Small Business Innovation Research (SBIR) grants and Small Business Technology Transfer (STTR) grants provide $150K to $1.5M to high risk, high payoff R&D that supports the missions of the 11 participating federal agencies. Virginia ranks 3rd in the US in awards with over $130+M in SBIR/STTR funding in 2017. VIPC’s Federal Funding Assistance Program works with over 250 start-ups, university researchers, and young technology firms each year to educate, mentor, train and support SBIR/STTR applications.
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A Comprehensive Overview Of The Basics Of SBIR/STTR Funding

SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) programs, two competitively-awarded, three-phase Federal Government programs, are designed to stimulate technological innovation and provide opportunities for small business. These programs provide “seed funding” for early stage R&D projects that would otherwise not be funded by typical funding sources such as Venture Capital and Angel Investors due to the high risk and early-stage nature of the technology. More than $2.5B is available for small business concerns via these programs.

The R&D in these programs is typically for new, innovative, and here to unknown and unproven technology. These projects are in response to a solicitation by the agency that describes a current problem and or need that the agency has identified as something they would like to address.
Phase I, II, and III of these programs are described below.

The SBIR Program

  • By federal mandate, participating agencies must set aside 3.2% of their extramural R&D budget for SBIR initiatives.
  • These agencies are: Department of Agriculture, Department of
    Commerce, Department of Defense, Department of Education,
    Department of Energy, Department of Health and Human Services
    (HHS, includes NIH, CDC and FDA), Department of Transportation (DOT), Environmental Protection Agency (EPA), National Aeronautics and Space Administration (NASA), Department of Homeland Security (HSARPA), and the National Science Foundation (NSF).

Standard SBIR/STTR Process

  1. Agencies describe R&D topics in solicitations that open and close at various times throughout the year at different intervals and frequency for each agency.
  2. Small business concerns prepare short (usually 20 page) proposals.
  3. Agencies evaluate proposals based on technical merit, firm’s qualifications, and commercial potential or societal benefit.
  4. Agencies make Phase I Awards.
  5. Agencies make Phase I Awards.

STTR Program

  • .45% of extramural R&D budget set aside for STTR initiatives.
  • Program is based on small business/nonprofit research institution partnerships.
  • Minimum of 40% must performed by small business concern, and minimum of 30% by a US Research Institution. The remaining 30% can be used by either.
  • Award is always made to the small business concern, with the research partner acting as a sub- contractor.
  • Participating Agencies: DOD, HHS, NASA, DOE, and NSF.
  • Advance planning is key to developing a good relationship with a research institution, as IP agreements must be developed prior to the submission of the proposal. These are difficult to complete in a short amount of time, so be prepared.

There are three main benefits to STTR not found in SBIR.

  1. The amount of the awards are almost the same as in SBIR.
  2. There is typically less competition compared with SBIR.
  3. The Primary Investigator on the project can be employed by a university. (This does not apply to the National Science Foundation program).

A Three Phase Program

Phase I

  • A feasibility study, providing $100K-$225K for a 6-month SBIR project or 12 month STTR project. Amount and duration can be different at each agency.
  • Up to 33% of a Phase I SBIR project can be completed by consultants and other research institutions. This is important, as you need to show how your team is better than other teams, has the expertise, experience, and/or unique capability to address this project. Both intellectual resources and equipment resources may be addressed with this part of the funding.
  • Funding can’t pay for work that you have already performed – it is for proposed research.
  • Meant to test high-risk “innovative” ideas that have not yet been proven – if you’ve already proven your idea, and started to work on it, you can’t use SBIR or STTR funds to further develop it. There are other methods and strategies available. That said, you can use the funds to test your idea in new environments, scenarios and situations – as long as there is real research that needs to be done to test your theory and the feasibility of your solution in that situation.

Phase II

  • Prototype development, providing up to $750K for a 2 year project.
  • You must submit a Phase I proposal first – you can’t skip the feasibility stage and go straight to the prototype development. Some agencies do have Direct to Phase II programs and/or special topics.
  • Up to 50% of a Phase II SBIR and 60% of a Phase II STTR can be completed by research institutions.
  • Some agencies (typically the contracting agencies) require that an official invitation be extended to a Phase I winner by the agency before a Phase II will be accepted. Granting agencies don’t normally have this requirement, allowing any successfully completed Phase I project to submit a Phase II proposal.

Phase III

  • Other funding outside of the SBIR and STTR program needed to produce a product.
  • Phase I and Phase II projects for Angel, VC and other external funding, as well as working with the agency who funded the research to begin with.

The “Unsolicited” Proposals

All proposals in the SBIR and STTR programs are solicited, which basically means that you must respond to a specific solicitation. A slight exception to this rule is NIH, as they have what could be called an “other” category – as long as your proposal is meeting their mission, they will review it and consider it.

You do have the ability to suggest topics for future solicitations however. This can only be done by developing a relationship with a targeted agency, and can take some time – it can and does work though!

Finding a Topic

Each agency has between one and three “solicitation cycles” per year. Each cycle is between 1-2 months long, during which time you can submit your proposal. Some agencies, like DOD, will announce their topics in a pre-solicitation announcement – you can contact the agency during this time to discuss the topics and your solutions and receive valuable feedback that can be incorporated into your proposal. While agencies vary, most restrict the amount of conversation that can take place when a cycle officially opens. The Contracting agencies typically follow this “rule” more strictly than the granting agencies.

  • A solicitation search engine is located at www.sbir.gov. A key word search feature for current open topics as well as past “closed” topics is available (a great way to see who was interested in your technology in the past, and a way to find out what companies were awarded the funding).
  • Solicitation Search Services are available from Virginia’s Procurement Technical Assistance Centers (PTAC). The benefit of this service is it can be done daily, with no work from you, and can provide SBIR, STTR, Broad Agency Announcements, State, and Local opportunities. The service does not provide an ongoing list of open topics though – so other than the day the topic is officially opened, it won’t appear on the search.

Commercialization Focus

  • While you are solving an agencies “problem” or “need” as stated in the solicitation announcement, it is important to remember that this is an economic development program, with a primary focus on the development and commercialization of technology.
  • Developing new products, growing your company, hiring more employees, adding to the local tax base, and helping the economy grow are important issues to address in your proposal and to consider before you enter the program.
  • This is not research for the joy of doing research.
  • The agencies are not fond of awarding funds to companies that never produce commercial products.
  • Those who plan to participate in the program long term will be evaluated on their successful development of products in this program.

Contracting vs. Granting Agencies

If you wish to participate effectively in the SBIR and STTR programs, it is imperative that you get to know the agency you are targeting, as all agencies are not alike.

Some agencies (DOD, NASA, DHS, DOT, EPA, HHS/NIH, ED and DOC) use the SBIR and STTR programs as a procurement tool, addressing the needs of their agency. These agencies are more commonly referred to as Contracting agencies — topics for these will be more focused, with more fiscal requirements, and the agency establishes the plans, protocols and requirements.

Other agencies use the program to help solve societal problems (NSF, USDA, DOE, HHS/NIH and ED), and will have broader topic descriptions. These agencies are more commonly referred to as Granting agencies.
Here, the investigator will initiate the approach, the topics are less specific,
and there is generally more flexibility in the program.

As you can see, HHS/NIH and ED have both contracts and grants, so be sure to know what you are  responding to in order to address the different perspectives.

The Odds of Winning

More than half of all Phase I’s are awarded to companies who have never won before, so if you are new to the program, you are not penalized. It is a highly competitive program though – while agencies vary in win ratio’s, one in about nine Phase I proposals are funded. Almost half of Phase II proposals receive funding.

Ways to improve your odds

  • Use resources such as VIPC for training, strategy development, consultation, commercialization planning, market assessments, solicitation search, and more.
  • Don’t judge an agency’s interests by its name — your technology may have a use in many agencies.
  • Select topic carefully to make sure it’s a good fit for your company – Don’t force the square peg into a round hole.
  • Understand the agency’s mission & needs – Get to know your agency Program Manager by calling, emailing, and/or visiting them.
  • This is not unlike any other business development approach. By treating the agency as if they are your customer, you remain focused on developing a solution to their problem.
  • Read solicitation and follow instructions – as in all federal proposals, you must be compliant.
  • Simple errors can get your proposal thrown out before they even review your technical solution.
  • Frugality is key – no one is going to get rich off of these programs by themselves, and the agencies know that the funding amounts are relatively small – don’t be too ambitious with what you can do.
  • Applications may be submitted to different agencies for similar work. Awards may not be accepted from different agencies for duplicative projects however.

The Primary Investigator

Unless specifically stated, the primary investigator (PI) does not have to have a Ph.D. They do need to have the ability to oversee the project scientifically and technically. If the PI is going to be a university professor/researcher, they must get a leave of absence from the university if the project is an SBIR.

Note: Collaborations with universities are encouraged as a way to fill in recognized gaps in your technical abilities.

Lowest Price Does Not Win

  • Unlike other federal work, the lowest price contract in SBIR or STTR does not win. The funding available in each award is relatively small enough that you don’t have to worry about under-bidding.
  • They expect you to propose using most of the funds available in an award. NIH even suggests that if you need to bid more than the amount available in the award, justify it and bid it.

Proposals Evaluations

  • Your proposal will be reviewed by various types and numbers of people, depending on the agency.
  • Some, like NIH, DOE, NSF, USDA and DoED use external peer reviewers – these are typically experts in the field, with the capability of reviewing the technical merits of proposals. If there is someone you want to specifically exclude from being on a review committee for your proposal, due to a conflict of interest, you can indicate that in your proposal.
  • DOD, NASA, DOT, EPA, DHS, and DOC use an internal review panel, typically of 3-5 people.
  • In most cases, you will not know who the reviewers are.
  • Strict confidentiality clauses are followed by all reviewers, and there is no know breech of confidentiality to have occurred.

Proposals Evaluations

  • DOD, NASA, DOT, EPA, DHS, and DOC use an internal review panel, typically of 3-5 people.
  • In most cases, you will not know who the reviewers are.
  • Strict confidentiality clauses are followed by all reviewers, and there is no know breech of confidentiality to have occurred.

Requirements to Participate in SBIR and STTR Programs

  • Organized for-profit U.S. business, with 500 or fewer employees.
  • At least 51% U.S.-owned and independently operated Small Business located in the U.S.
  • P.I.’s (Primary Investigator) primary employment with small business during project.
  • All work must be completed in the United States.
  • Eligibility is determined at time of award, not at the time of submission.

Support from VIPC

VIPC can provide some valuable assistance to Virginia companies submitting Phase SBIR/STTR proposals, including: Low-cost training workshops, discounts with proposal consultants (proposal prep & proposal review), discounts on proposal preparation software, intro to 3rd party capital, referral to law firm for free IP and patent consultation, referrals to outsourced cost accounting solutions, SBIR strategy consultation, and funding assistance for select companies seeking their first Phase I or II award (to help pay for some of the above services). 

For additional help in securing your SBIR or STTR funding, contact:

Robert Brooke
Director, Federal Funding Programs
Virginia Innovation Partnership Corporation
2214 Rock Hill Rd., #600
Herndon, VA 20170
703-689-3080
Robert.brooke@VirginiaIPC.org

SBIR/STTR Basics  

VIPC consistently ranked 3rd in the country in SBIR/STTR Funding - $130M~per year

VIPC trains 300+ companies and
researchers annually in SBIR/STTR

VIPC holds 6-8 SBIR/STTR Workshops each year in regions across Virginia

Reasons to Seek SBIR/STTR Funding

  • Over $2.7 Billion available each year
  • NOT a loan — no repayment
  • Provides recognition, verification and visibility for your company.
  • Provides seed money to fund high-risk projects.
  • Potential leveraging tool to attract venture capital/other sources of financing.
  • Intellectual property rights are normally retained by the small business.
  • Fosters partnerships (e.g., large corporations, academia)
  • Creates jobs and generates tax revenues
  • Potential leveraging tool to attract venture capital/other sources of
    financing.
  • Small business concerns are recognized as a unique national resource of technological innovation.
  • Provides economic and societal contributions.

VIPC Supports Virginia’s Phase I and Phase II SBIR/STTR Applicants

  • SBIR strategy consultation and mentoring
  • Low cost Phase I and Phase II proposal training and review courses
  • The agencies are not fond of awarding funds to companies that never produce commercial products.
  • Discounts with proposal consultants (proposal prep & proposal review)
  • Discounts on proposal preparation software
  • SBIR strategy consultation and mentoring
  • Referral to law firm for free IP and patent consultation
  • Referral to federal cost accounting solutions and CPA services
  • Commercialization plan assistance
  • ​VC/Angel Capital “Readiness” review
  • Funding assistance to qualified first time Phase I and/or Phase II applicants to help pay for proposal development resources

​SBIR/STTR Training Programs

As the lead organization in Virginia for SBIR and STTR support, VIPC hosts several low-cost SBIR/STTR training courses throughout the year to assist Virginia-based firms in their efforts to learn how to compete more effectively in many stages of the SBIR/STTR program.

We encourage interested firms to take advantage of these training opportunities at the appropriate time as VIPC puts significant costs into the planning and implementation of these events.

Full day workshops take place at locations across the Commonwealth each year in Northern Virginia, Blacksburg/Roanoke, Charlottesville, Richmond, and in Norfolk/Hampton. Special roadshows are often planned to provide shorter training sessions in other parts of the state.

Some training sessions may be focused on a specific agency, while others are “all-agency” training sessions. Additionally, special webinars are held on a periodic basis to facilitate training on short topics. These webinars are recorded for follow on viewing.

​All events are low cost for Virginia based firms and Virginia based university researchers.

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