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Understanding SBIR and STTR Grants: A Comprehensive Guide for Life Science Startups

May 31, 2023 | Cubio

Last week, Mariana from CUBIO interviewed Amanda Chadee, Ph.D., a consultant with consultCUBIO and a mentor specializing in business development and funding strategies for early-stage startups in the life sciences. The discussion revolved around the key differences between SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) grants, their suitability for small businesses aiming to commercialize their R&D projects, and the eligibility criteria for NSF SBIR/STTR grants. Amanda also shared insights on common mistakes made by small businesses in grant applications and highlighted the benefits of her NSF grant review services. Keep reading as we’ll delve deeper into these topics and explore the nuances of SBIR and STTR grants for entrepreneurs like you seeking federal funding.

Understanding SBIR and STTR Grants:

SBIR and STTR grants are vital sources of early-stage technology funding for small businesses based in the United States. They offer non-dilutive funding, making them highly attractive but also fiercely competitive. Both programs aim to promote technological innovation and help small businesses commercialize their research and development efforts. However, there are several key differences between the two.

a) Partnerships:
SBIR grants do not require partnerships but allow collaboration with other organizations if desired. On the other hand, STTR grants mandate a formal partnership with a research institution, typically a university.

b) Budget Requirements:
For SBIR Phase I grants, small businesses can subcontract a maximum of 33% of the total budget, meaning the majority of the work must be done in-house. In contrast, STTR grants have higher subcontracting allowances, allowing up to 60% of the budget to be outsourced.

c) Principal Investigator:
Both SBIR and STTR proposals require a designated Principal Investigator (PI) who holds the primary responsibility for project success and direction. However, SBIR mandates that the PI be primarily employed by the small business, while STTR allows the PI to be employed by either the small business or the partnering research institution.

Eligibility Criteria for NSF SBIR/STTR Grants:

The National Science Foundation (NSF) and other government institutions offer SBIR and STTR grants, for which certain eligibility criteria must be met. Phase I awards range from $275,000 for 6-12 months, while Phase II awards amount to $1 million over 24 months. The following eligibility requirements must be fulfilled:

a) Business Size and Location:
Small businesses must have 500 or fewer employees and be located within the United States. NSF typically sees Phase I grants awarded to businesses with 1-10 employees, with a focus on early-stage startups.

b) For-Profit Entity:
Only for-profit entities are eligible for SBIR and STTR grants. Non-profit organizations are not eligible.

c) Ownership:
The small business must be primarily owned (at least 51%) by a U.S. citizen or a permanent resident. Additional eligibility requirements may apply for businesses with venture backing.

d) Research and Development:
All research conducted, including work by consultants or contractors, must be carried out within the United States.

Common Mistakes and NSF Grant Review Services:

During the podcast, Amanda Chadee shed light on common weaknesses found in small business grant applications and discussed how her NSF grant review services can address these issues. Some of the notable points include:

a) Technical Merits and Broader Impact:
Applicants must clearly articulate the technical merits of their projects, including their innovative and transformative aspects. Additionally, they should emphasize how their product addresses an unmet need and provide a well qualified team, whether employed directly or as external consultants.

b) Facilities and Resources:
While early-stage companies may lack dedicated facilities, they must demonstrate the availability of supporting facilities to carry out experiments effectively. This could include partnering with institutions, accelerator programs, or incubators, and providing letters of support from organizations offering facility spaces can be advantageous.

c) Commercialization Plan:
Emphasizing the commercialization potential of the project is crucial. NSF reviewers seek a clear understanding of how the product will impact customers and the market pull it possesses. Grant applicants should connect technical merits to broader impacts and outline their plans for commercialization.

In conclusion, SBIR and STTR grants serve as valuable funding sources for small businesses seeking to commercialize their research and development efforts. Understanding the key differences between these grants, meeting the eligibility criteria, and submitting a well-crafted application are critical steps for success. Small businesses can benefit from consulting, such as Amanda’s NSF grant review services with consultCUBIO, which can help identify and address weaknesses in their applications. By leveraging these opportunities, entrepreneurs can secure funding, accelerate their R&D projects, and contribute to technological innovation around the world.

To schedule your consultation, check out our website.