In every corner of the globe, once unlikely competitors are slowly chipping away at the United States’ status as the global furnace of innovation and fresh thinking. In nearly every industry, American businesses face tough competition for resources and human talent. They’ll need all the help they can get if they want to create products and services that change the way humans live and simultaneously form the backbone of a strong, dynamic American economy.
In light of that reality, it is imperative that American businesses, research organizations, and nonprofits have the incentives and tools they need to work together to solve problems. Only then will they be able to grow small ideas into actionable, effective strategies for addressing the issues of our time.
In an effort to do just that, the National Science Foundation has undertaken several measures that aim to encourage research and development of new technologies and to create an overall culture of innovation and entrepreneurship in this country.
Innovation Corps Teams
One of these measures is the NSF’s establishment of so called Innovation Corps Teams (I-Corps Teams). The purpose of these I-Corps Teams is to identify current, NSF funded researchers that are deserving of additional support to accelerate innovation that can attract third party funding. The desired outcome of I-Corps Teams will be to:
- Give an affirmative or negative decision regarding the viability of certain products and services.
- Develop transition plans for those projects deemed worthy of additional support.
- Help develop a technology demonstration for potential third party partners.
The establishment of the NSF’s I-Corps Teams encourages the growth of high tech industries and the creation of high-tech products built right here in the United States. When even one of those ventures succeeds and creates an amazing product built around groundbreaking new technology, the effect only serves to reinforce itself. That’s because even one successful project will mean new jobs, more opportunity for research and development, and the creation of even more goods and services that will make America and the world a better place to live.
The NSF and Small Business
Federal grants aim to solve a number of these key issues facing small businesses around the country.
If what you read about the state of competition is true for all American businesses, it’s especially true for small ones. More than ever, small businesses face an uphill battle when it comes to getting funding to explore new ideas and turn them into commercially viable products. Whether it’s the cost of employing top-notch talent, the difficulties of accessing seed money, or the lack of knowledge about how to turn a great idea into a great product, American small business could use a hand.
Congress understands this reality all too well and that’s why they’ve taken measures to help small business compete. One of those measures is to continue the use of decades old grant programs. These grants are still around because they’ve been amazingly effective in encouraging small businesses and research organizations to collaborate, get the ball rolling, and work together towards actionable solutions.
The two programs that you will learn more about here offer a great start for plenty of small businesses that want to see their ideas take flight. Although each is meant to be a starting point, they could help your organization take the critical first step towards creating an amazing new product.
The Small Business Innovation Research (SBIR) Program
Created by an act of Congress in 1982, SBIR has administered more than $26.9 billion through roughly 112,500 grants to small businesses all over the United States.
How Does It Work and Who Administers It?
The SBIR is a highly competitive program whereby American small businesses are encouraged to engage in competition for federal research and development. Special consideration is given to research and development that appears most likely to yield commercially viable products. The program encourages individual businesses to provide answers to tomorrow’s problems and simultaneously fosters an entrepreneurial spirit in the American business community.
— SBA (@SBAgov) March 17, 2015
Every federal agency with an extramural research budget exceeding $100 million is required to allocate 2.8% of their research and development budgets to SBIR programs. That agency designates R&D topics and reviews and accepts all proposals from qualified small businesses. For a complete listing of those agencies, click here. Each agency administers its own SBIR program under the oversight and coordination of the US Small Business Administration.
Who’s Eligible for These Grants?
The SBIR program is open to American small businesses that meet the following criteria:
- Every business must be organized for profit and located within the United States.
- Every business must be more than 50% owned and controlled by one or more individuals that are citizens or permanent residents of the US.
- No business may employ more than 500 people, including affiliates.
- An awardee may be owned or controlled by a venture capital firm, a hedge fund, or a private equity firm, so long as that firm doesn’t control a majority of stock.
- For a more detailed look at eligibility requirements, consult this compliance guide.
What’s the Goal of the SBIR Program?
By administering grant funds to appropriate applicants, this program aims to:
- Stimulate technological innovation.
- Meet Federal research and development needs.
- Foster and encourage participation in innovation and entrepreneurship by socially and economically disadvantaged persons.
- Increase private-sector commercialization of innovations derived from Federal research and development funding.
The SBIR is important from a research and development standpoint because it aims to bridge the gap left by large, institutional investment bodies. The United States is a hub for the development and production of high tech products, as well as the capital necessary to get those projects off the ground. Unfortunately, a great deal of that money comes from large investors that put those funds in the hands of large, established research bodies.
While that research and development creates amazing products and huge economic benefits for the country as a whole, it fails to take advantage of what every American business can offer. Smaller businesses, which may be able to contribute just as much, if not more, than their larger counterparts need help getting their ideas off the ground. By giving small businesses around the country an incentive to prioritize research, development and production of new products, the SBIR program creates a culture of innovation in the United States and ensures that the products the whole world will need tomorrow are being developed today.
What Does the Program Look Like?
The administration of SBIR funds happens in a three-phase process.
- In Phase I, the technical merit, feasibility and commercial potential of a proposed program are determined. These grants typically do not exceed $150,000 over a period of 6 months and aim to paint a clearer picture of which projects are realistically feasible and which deserve further attention and funding.
- In phase II, the research and development proposed in Phase I is finally undertaken. Only those who have been awarded Phase I funding are considered for Phase II. The funds do not typically exceed $1,000,000 over two years.
- In Phase III, small businesses pursue the commercialization objectives that are a result of the research and development undertaken in Phases I and II. It is important to note that this phase doesn’t apply to every project, and that the SBIR program itself doesn’t allocate funding for it. Depending on the federal agency administering the grant, there may be funding in the form of contracts for products, services and processes to be acquired by the US government.
The SBIR program is an amazing opportunity for any small business owner or researcher to take their idea from the drawing board all the way to the sales floor. Although it’s no substitute for creative thinking and the hard work that’s critical in the development of any innovative product, a SBIR grant could be exactly what’s needed to help turn your idea into an amazing product that will change the world.
Small Business Technology Transfer (STTR) Program
How Does the Program Work and Who Administers It?
The Small Business Technology Transfer program is very similar to the SBBR program in that it aims to increase funding for the research and development of economically viable products and services. The principal difference between this program and its counterpart, the SBBR, is that in Phase I and II, small businesses are required to formally collaborate with a research institution.
This grant is also special in that it aims to expand and develop the partnership between the public and private sectors to include joint venture opportunities for small businesses and non-profit institutions.
Every federal agency with an annual research and development budget exceeding $1 billion is required to reserve .3% of that budget for STTR awards. Each agency designates R&D topics and evaluates every proposal on an individual basis. Currently, 5 agencies participate in the program:
- Department of Defense
- Department of Energy
- Department of Health and Human Services
- National Aeronautics and Space Administration
- National Science Foundation
Who Is Eligible For These Grants?
Only US small businesses that meet the following criteria are eligible for STTR grants:
- Must be organized for profit at a location inside the US.
- Must be at least 51% controlled by one or more persons who are citizens or permanent residents of the US.
- May not employ more than 500 persons, including affiliates.
The non-profit institution that is required to partner with the small business involved in this program must also meet the following criteria:
- Located in the US
- Meets one of three definitions
- Nonprofit college or university
- Domestic nonprofit research organization
- Federally funded research and development center
What’s the Goal of the Program?
The principal function of this grant is to bridge the gap between the performance of basic science and research and the commercialization of the resulting innovation.
The primary goals of the program are to
- Stimulate technological innovation.
- Foster technology transfer through cooperative R&D between small business and research institutions.
- Increase private sector commercialization of innovations derived from federal research and development.
What Does the Program Actually Look Like?
The STTR program, just like the SBIR program, is organized into three critical phases.
- In Phase I, the technical merit, feasibility, and commercial potential of proposed research and development is explored. These grants are typically for no more than $150,000 over a 6-month period.
- In Phase II, the proposed research and development initiated in Phase I is undertaken. As such, only those organizations that have received Phase I funding are eligible for this award, which does not typically exceed $1,000,000 over the course of 2 years.
- In Phase III, the commercialization of the research and development achieved in the first two phases is prioritized. The STTR program itself does not administer funds for this phase. Depending on the agency under which this grant is administered, funds may be available in the form of US Government contracts for the products and services developed in Phases I and II.
What Else Is Unique About STTR?
- The SBC and its partnering institution are required to establish an intellectual property agreement detailing the allocation of intellectual property rights and rights to carry out follow-on research, development or commercialization activities.
- STTR requires that the SBC perform at least 40% of the R&D and the single partnering research institution to perform at least 30% of the R&D.
- Unlike the SBIR program, STTR does not require the Principal Investigator to be primarily employed by the SBC.
The criteria and descriptions that you just read are heavy on government lingo and don’t give a particularly realistic explanation of how the programs work or what types of projects they empower. By taking a closer look at a couple examples of how these grants operate in reality, you can see that both the SBIR and STTR programs allow small business to develop amazing technology, contributing to a culture of creation and entrepreneurship as well as a strong, vibrant American economy.
Waste2Watergy is an Oregon based startup that needed funding for a revolutionary new technology that could change the way many foodservice organizations do business. They developed a microbial fuel cell that cleans wastewater at breweries and other beverage producers while simultaneously generating electricity.
The company was recently granted $225,000 under the Phase I of the Small Business Technology Transfer (STTR) program to further work on their fuel cell in partnership with Oregon State University. Although that amount is more than the average awarded to programs under this grant, it will still go to helping Waste2Watergy develop effective methods of scaling their technology and bringing it to wastewater treatment centers around the country and around the world.
Although there’s a long way to go before Waste2Watergy is ready to put their product on the market, they have the help they need to get the ball rolling. If they’re successful in Phase I of the grant process, there will only be more help waiting to take their innovative thinking and turn it into a real product, ready to solve problems and generate a healthy income.
Caption: Waste2Watergy co-founder Hong Liu examines her company’s microbial fuel cell. Source: Craft Brewing Business
You can read more about Waste2Watergy on their Oregon State University website, here.
NBD Nanotechnologies is a Boston based firm that is dedicated to environmentally supported water acquisition, prevention and management. NBD stands for Namib Beetle Design and each project the firm undertakes is inspired by the ability of the Namibian Desert Beetle to harvest drinking water from the fog.
Their work develops “novel coatings that enhance condensation heat transfer, a critical phenomenon in many industrial applications, power generation facilities, and thermal desalination plants.”
NBD has recently been awarded Phase II funding for the development of their surface coatings, which promote the enhanced efficiency of industrial condensers.
After receiving Phase I funding for its project, NBD was able to demonstrate the efficacy of its technology and the need for larger-scale pilot testing. NBD was also able to use the funds awarded in Phase I to establish partnerships with firms in the energy industry that will allow pre-commercialization validation studies to quantify just how much their technology can benefit prospective customers.
This grant, like all grants awarded under the SBIR program, will allow NBD to take the necessary steps to improve their technology and bring it one step closer to being market ready. Again, the award of funds under the SBIR program doesn’t represent the end of the road, but rather the beginning of a process whereby NBD develops amazing new technology and invigorates the American economy in the process.
You can learn more about NBD on their website by clicking here.
Important Considerations For Every Applicant
If there’s one characteristic that both the SBIR and STTR grant programs share, it’s that the awards are competitive. As such, it behooves every applicant to understand a few critical components of the application process in hopes of getting the funding they need to begin their projects.
This Grant Is Designed to Be Just the Beginning.
If your small business receives funding under one of these programs, it’s likely that the amount you get won’t be enough to take your idea from the drawing board to the marketplace. Instead, it’s better to look at the grant as a good place to start. The money should be used to make as much progress as possible, in hopes of attracting further funding from private investors.
As such, don’t worry that there’s uncertainty and ambiguity inherent in the process of completing your project. If every investor only made bets they were sure about, the world would look much different than it does now. So don’t worry if your idea seems like a long shot; if it really is a good one and you think it has the potential to succeed, there’s no telling how far it can go.
The Light at the End of the Tunnel: Commercialization
Let’s get one thing straight: As great as an idea may be, the end product can’t improve lives and create financial gain if it isn’t commercially viable. Don’t think that because you’re pitching your idea to a government agency that the standards for commercialization will be any less strict; if it doesn’t have any potential to eventually sell, your idea is unlikely to receive funding under either program.
Make sure that when you begin creating your proposal, you give special attention to the end result of your work. Show a clear path to creating a commercially viable product, and make the reader understand how you’ll complete every necessary step. You may fall flat on your face long before you ever get to the point of selling your product, but you won’t ever get started if it isn’t at least conceivable that the work you’re doing will result in a commercially viable product.
Remember, Someone’s Going to Read Your Application
Of course this program is administered through several agencies of the Federal Government, which means that the application process is far from sexy or exciting. With that said, don’t ever forget that a real live human being is going to read your application, and eventually decide whether you deserve to get funding.
Your job is to illustrate why your project is important, how it will have a positive impact on society, and how it’s ripe for commercial possibilities. So tell a story, grab ahold of your reader’s attention, and force them to understand that your project needs funds and isn’t going to fail.
While it may feel like there’s no shortage of bureaucratic headaches and red-tape that you’re going to have to cope with (cope is definitely the right word), it pays to remember that at the end of the day this project is about innovation. So don’t worry if your proposal doesn’t sound “official” or isn’t peppered with the dry, unintelligible lingo that defines government interaction. Make your proposal something a real human could relate to, and it’s more likely that one actually will.
The Government WANTS to Give This Money Away
At the end of the day, innovation and development are what drive a strong economy, improve living standards, and cement America’s reputation as a global superpower. As such, the Federal Government has a vested interest in encouraging businesses of all size to tackle new challenges and develop new solutions. So if you have an idea that you think could make a positive impact, don’t trick yourself into thinking that there’s no way they’d ever give you a loan. Nothing could be further form the truth, and in fact these agencies can’t wait to help you start. Just like everything else in life, the worst thing you can do is not even try.
— NCATS (@ncats_nih_gov) March 19, 2015
Both the SBIR and the STTR grant programs aim to foster the development of new products and services that will make a positive impact on society and contribute to a vibrant, healthy economy right here in the United States. The process of applying for and receiving these grants is one that every business owner should consider. No matter the specifics of your latest idea or innovation, this program might be exactly what you need to get started and begin the process of creating the next product that no one can live without. If you want more information on applying for an SBIR/STTR grant, or you think you may need help completing the process, please reach out.