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The Purpose of the SBIR Program
The Small Business Innovation Research Program (SBIR) is the method by which government agencies invest in innovative ideas that they believe will further their missions by bringing a new technology to market.
The SBIR’s charter addresses these goals:
» Facilitate technological innovation
» Meet Federal R&D needs through small businesses
» Encourage socially and economically disadvantaged small businesses to participate in innovation (including women-owned businesses)
» Increase commercialization of innovations derived from Federal R&D
» Select technologies/ideas with high potential for commercialization
» Provide seed capital for early stage R&D that has commercial potential
Program Structure
The SBIR program has 3 phases. Agencies award grants based on small business qualifications, the degree of innovation, technical merit, and future market potential.
» Phase I: Concept phase. 6-12 months of support for exploring the technical feasibility/merit of an idea or technology.
» Phase II: Research & Development phase. Up to 2 years of support for work expanding upon the Phase I results.
» Phase III: Commercialization phase. This is when the product moves from the laboratory to the marketplace. This is not supported by SBIR funds.
SBIR Phase I awards are about the same size as the checks angel investors might write: $50k-$250k. To be eligible, the small business must be American-owned, organized as a for-proft entity, and have less than 500 employees.
The SBIR does not fund work that was previously completed. It funds novel approaches to solving problems identified by the funding agency. The solutions should have an element of technical risk and be unproven. Those applying should have expertise in the applicable area of technology. The proposal should clearly demonstrate innovation.
Benefits of the SBIR
SBIR awardees receive funding to conduct R&D while retaining the intellectual property they develop. Winning a Phase I SBIR allows awardees to apply for Phase II funding.
The SBIR is a highly desirable form of funding for biotech startups because it is non-dilutive, the company retains their intellectual property, and it’s not a loan.
Watch for the next summary coming out 2/10/21.