Small Business Innovation Research (SBIR)
SBIR is a competitively awarded, set-aside program for entrepreneurs and small businesses to engage in federal research and development – with potential for commercialization. The program encourages entrepreneurs and small businesses to explore their technological potential and provides the incentive to profit from its commercialization. By including qualified small businesses in the nation's R&D arena, high-tech innovation is stimulated and promotes the growth of new business and entrepreneurialism as it meets the country’s specific R&D needs. To qualify for the program, small businesses must meet certain eligibility criteria to participate:
- American-owned and independently operated
- For-profit
- Principal researcher employed by business
- 500 employees or less
The SBIR System – Over $2 billion a year in awards…
Each year, 11 federal departments and agencies are required by SBIR to reserve a portion of their R&D funds for award to small businesses. Over $2 billion was awarded through the program in 2005 and virtually all scientific disciplines are represented in the various agency topic indexes of the departments and agencies below.
- Department of Agriculture
- Department of Commerce
- Department of Defense
- Department of Education
- Department of Energy
- Department of Health and Human Services
- Department of Homeland Security
- Department of Transportation
- Environmental Protection Agency
- National Aeronautics and Space Administration
- National Science Foundation
These agencies designate R&D topics and accept proposals at various times throughout the year. Agencies are increasingly developing their own rules & regulations. Funding ceilings, R&D topic areas, and length of performance can vary widely for each participating agency.
Three-Phase Program
Following submission of proposals, agencies make SBIR awards based on small business qualification, degree of innovation, technical merit, and future market potential. Small businesses that receive awards or grants then begin a three-phase program.
- Phase I is the startup phase in which the small business works to prove feasibility/proof of concept. Awards of up to $100,000, for approximately six to nine months, support exploration of the technical merit or feasibility of an idea or technology.
- Phase II awards average from $500,000 to $750,000, but can go as high as $1 million with some agencies. This phase may last up to two years and has a focus of expanding Phase I results. During this time, R&D work is performed, the developer evaluates commercialization potential, and prototype development and field testing is conducted. Only Phase I award winners can be considered for Phase II.
- Phase III is the period during which Phase II innovation moves from the laboratory into the marketplace. No SBIR funds support this phase. The small business must find funding in the private sector or through other non-SBIR federal funding. Highly successful small businesses are eligible to receive sole-source funding from the government during Phase III.