Ever heard of Symantec Corporation? You know, that company that protects your computer from all the nasty viruses out there. You may be surprised to hear that Symantec got its initial funding from the Federal government’s Small Business Innovation Research (SBIR) program. SBIR began as a pilot program in 1979, with Symantec being one of the first grant recipients. In 2013 eleven federal agencies granted approximately $2.5 billion to over 4000 small business with the goal of evaluating feasibility and commercializing new technologies.
SBIR awards have a three tiered approach. Phase I awards are up to $150,000 for a six month feasibility study. If the Phase I projects project shows good results applicants can apply for a Phase II grant of up to $1 million and two years to fully develop the product and explore commercialization options. Phase III is the time when the product moves from the laboratory to commercialization. No additional federal funding is available for Phase III. Companies must find other sources of funding to launch and market the product.
SBIR awards are available to for profit companies with under 500 employees, however a large majority of awardees are companies with fewer than 10 employees. The Principal Investigator of the grant must be employed at least 51% through the applicant company. In considering whether your company should apply for an award ask yourself whether your company has the capability of developing a product that can provide value to a government agency. Some agencies, like the Department of Defense, send out contract notices where they detail the scope of projects and request proposals from applicants. Other agencies, like the National Institutes of Health, send out Requests for Proposals in which they describe broad priorities and allow the applicant to describe how they would address these priorities. In either case you should not expect the money to arrive quickly. Once a submittal is made the review process can take 3 – 6 months, and then another 3 – 4 months before the award is finalized.
Five federal agencies (DOD, DOE, NIH, NASA, NSF) also participate in the Small Business Technology Transfer program. Applicants for these awards must team up with a university or other non-profit research institution. The grant is awarded to the small business who must perform at least 40% of the work while the research institution must perform a minimum of 30%. The STTR program is significantly smaller than the SBIR program with about $250 million awarded in 2013. Applicants for SBIR awards can team up with a research institution, but it is not required.
The odds of a successful proposal for the entire US is about one out of eight for Phase I applications, however because the federal government strives for an equal distribution among the population the odds for Alaskan applicants are higher. Alaskan companies have won the fewest of any state with only 80 awards since program inception. The next lowest state is West Virginia with 211 and Mississippi with 257. The SBDC TREND (Technology Research and Development of Alaska) recently won a FAST (Federal and State Technology Partnership Program) grant to promote increased applications from Alaskan companies. Phase 0 grants of up to $5000 will be available to assist with application development. For more information on TREND please visit www.TrendAlaska.org. For more information on the SBIR/STTR program please visit www.sbir.gov.
Written by Mark Malagodi, AKSBDC Anchorage Business Adviser
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Last modified: July 21, 2014