The fact is, an SBIR or STTR award must go to a small business (for profit, under 500 employees).  Why then, would a university researcher even consider looking at SBIR or STTR solicitations for possible funding opportunities?

The reasons may be even more important than you realize:

• Federal agencies have been placing increasing emphasis on the importance of industry collaboration when awarding university research grants.  Establishing such collaborations through SBIR/STTR awards can significantly enhance your potential for winning other research grants.

• Montana small companies have been successfully establishing and building some very innovative and successful advanced technology businesses.  Never underestimate the potential for creative new ideas to be developed through collaboration with these businesses.

• University scientists are usually more familiar with STTR (Small Business Technology Transfer),  because subcontracts to a research institution (e.g. university) are required, and the percentage allowed to be subcontracted is larger (see below).  However, for both SBIR and STTR, the amount subcontracted to the university over the full project (Phase I & II) can amount to several hundred thousand dollars, and SBIR awards are roughly ten times as common as STTR awards.  Moreover, SBIR awards are more likely to go on to Phase III (follow-on contracts and/or commercial sales), which can result in valuable royalties to the university collaborator (see below).

• The STTR program requires that at least 30% of a Phase I  award goes to a research institution, and up to 60% of the award may go to the research institution and/or other subcontractors of the small business.  For typical Phase I awards of $100K, this could be $30K to $60K over six months (more for NSF STTR grants, now at $150K), which can fund some very useful research work. 

• For SBIR, even just the value of a Phase I can be nearly as high as for STTR.  Up to 1/3 of a Phase I SBIR (i.e. $33K typically) may be subcontracted, such as to a university.  Since the SBIR program as a whole is approximately 10X the size of the STTR program, there are considerably more opportunities to get funded.
  • Companies are often motivated to subcontract to a university for an SBIR proposal, to gain the advantage of research facilities, credible research expertise, and even proposal writing expertise. 
  • An informal SBA analysis determined that the single greatest factor for success in a Phase I SBIR proposal is the participation of a university scientist, because of the factors noted above.

• Always think beyond Phase I:  For a "typical" Phase II SBIR or STTR, total funding may be up to $750K over two years.  For an STTR, with the same 30% - 60% subcontract to a research institution as for Phase I, funding to the university can amount to $225K up to $450K.  For a Phase II SBIR, up to 50% (e.g. $375K) may be subcontracted - providing the potential for very significant research funding!  Also note that while some agencies (e.g. NIH and some DoD Components) have already been issuing some SBIR awards that are well over $1 million, future program changes may allow any participating agency to issue awards over $1 million.

• Looking past Phase II to Phase III: The SBIR and STTR programs are focused on development and commercialization of new technologies and products (in practice, SBIR tends to be somewhat more commercially focused than STTR).  New technologies developed by university researchers, or jointly developed by the company and the university researcher, can result in long-term royalty income to the inventors.  Consider this as an outlet for creative ideas that can make a real impact in the world, as well as a potential source of additional future income.

• For some agencies, such as DoD and NIH, the Principal Investigator on an STTR award may be employed by the university (NSF now allows the university researcher to be a Co-PI on an STTR).  For other agency STTRs, and all SBIRs, a university researcher may still do significant research as a subcontractor (or even consultant), without leaving the security of university employment.
  • Some university faculty have actually started their own businesses, using SBIR/STTR for start-up funding.  If you do have this entrepreneurial interest, we have programs that can provide help.

• SBIR and STTR research topics range from a narrow, specific focus (often the case with DoD) to very broad areas of research interests (e.g. for NIH).  The diversity of topics and subject matter may surprise you, and most researchers can easily find a topic of interest to them.  As a simple exercise, go to http://www.zyn.com/sbir/ and use a few keywords to search their "Open SBIR/STTR Solicitation Topics."  Potentially more helpful would be searching the "Closed SBIR/STTR Solicitation Topics" to find other agencies which have had a specific topic in the past, and may have similar topics in the future.

• If all the above has not been enough to convince you to look at the SBIR/STTR program, consider that you could actually get paid up to $500 just for working with a new company and helping to write and submit an SBIR or STTR proposal.  The SBIR Partnerships Development Program provides specialized support and financial incentives to facilitate such collaborations between MUS researchers and Montana companies, designed to increase the success of Montana companies in the SBIR/STTR programs, and increase the contribution of MUS research to Montana's economic growth.  The state, the universities, and the individuals involved all can benefit from the the increased success now being developed in the SBIR and STTR programs.  TechLink's SBIR/STTR assistance programs have so far helped clients win over $85 million in Phase I, II, and III awards, and award rates for our clients are more than twice the national averages:
  • About 1/3 of recent participants in the SBIR Partnerships Development Program won Phase I awards, compared to a roughly 15% award rate nationally.
  • Montana companies with a Phase I award may receive special assistance through the Phase 1.5 Program, which provides special focus on Commercialization Planning.  About 80% to 90% of recent participants have won Phase II awards, compared to roughly 30% to 40% nationally.
  • While TechLink's Phase II assistance helps companies get on track for future commercial success, we can provide additional follow-on support to clients for winning Defense Phase III contracts, and going on to develop successful products to serve our nation's Defense needs - while providing the basis for sustained business growth and economic success. 
  • Due in large part to these assistance programs, Montana now consistently ranks in the top ten states for SBIR/STTR awards compared to population or Gross State Product (GSP).  For FY2002, Montana was 2nd in the nation (after Massachusetts) for Phase I SBIR/STTR awards per GSP.  For 2007, Montana's award rate for Phase I SBIRs was 2nd in the nation.

Finally, if you're a scientist/inventor contemplating how you might find financing to turn your innovative concept into commercial reality, here are a couple of additional things to consider:

• The total amount of federal funding coming into the state through SBIR/STTR (now over $10 million annually) may appear small compared to some other sources, but this is specialized seed capital that has been helping to grow advanced technology companies that contribute to a much brighter economic future for our state.  Montana companies started with SBIR/STTR funding have gone on to become commercial successes, and attract much larger sources of funding.

• SBIR/STTR funding in Montana is far greater than higher profile Venture Capital (VC), and goes to far more companies.  It's important to note that a start-up company's chances of getting VC or "angel" funding is much smaller than winning an SBIR/STTR award, and the loss of equity ownership can be onerous - there's never a loss of equity for SBIR/STTR funding.  Even more importantly for our state, of the few Montana start-ups that attract potential VC investment, most find that moving out of state (to be closer to the investors) is a requirement for accepting VC funding.   The SBIR/STTR programs provide start-up funding for promising technology companies in Montana, without losing them to states like California or Massachusetts.

For any questions about SBIR or STTR, and the specialized assistance programs available, please contact:

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