For all founders interested in understanding whether SBIR is worth looking at, Agency Capital put together a free guide just for you. It’s a quick read and should help you get oriented to the program.
In the guide, “A Startup’s Guide to SBIR,” author and CEO Geoff Orazem explains the intricacies of the business grant program ‘Small Business Innovation Research’ (SBIR) in detail, including its purpose, goals, impacts, and information on qualifications for SBIR applicants.
Orazem describes SBIR as “a kickstarter in reverse.” Dispensing over 3 billion dollars annually to suppliers, it provides them the opportunity to offer solutions to government needs while being financially supported in developmental endeavors. Consequently, the government receives a solution for a need and the supplier keeps equity in the finished result. In short, SBIR spurs innovation by incentivizing the creation of necessary solutions where none previously existed.
There are two types of SBIR awards; the Tradition award and the Dual Purpose award. While the Tradition award is strictly for new and unproven solutions, the Dual Purpose award includes existing, functioning commercial solutions. However, despite the government being more open to unproven solutions, technical review for a Traditional award is lengthy, while Dual awards tend to be more fast-tracked.
When a solution is proposed and an SBIR award is granted, the quantity of funding ranges most often between $150,000 to $1 million. In addition to the original funding, some SBIR programs will provide suppliers even more money if they receive private investor funding outside of SBIR. Some states also have supplemental funding for SBIR winners.
There are many qualifications to apply for an SBIR award, including U.S. citizenship, for-profit status, existing with fewer than 500 workers employed at the company, and other criteria. Even so, with the quantity of funding available to SBIR award winners, selection for SBIR awards remains competitive. Orazem notes that the Phase I SBIR win rate is a mere 15 percent while Phase II is 50 percent. Applications are held to a high standard, with applicants expected to spend over 100 hours preparing their proposal. However, despite the rigor and selectiveness of SBIR, receiving one such award is a great accomplishment and a worthwhile objective for any aspiring and SBIR-relevant company.