The Phases of SBIR & STTR: From Feasibility to Commercialization

The journey from a groundbreaking idea to a fully commercialized product is a complex one, especially for small businesses with limited resources. However, the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs make this journey more feasible by offering a structured, phased approach to R&D and commercialization.

The SBIR and STTR programs are divided into three distinct phases, each designed to help small businesses progressively develop their technology from concept to market.

Phase I: Feasibility & Proof of Concept

The first phase of both SBIR and STTR is dedicated to proving that the idea is technically feasible. During this phase, small businesses receive up to $150,000 in funding for a period of six months. The goal is to explore whether the proposed solution can work as intended.

Phase II: Full Research & Development

Once a business successfully completes Phase I, it can apply for Phase II funding. Phase II focuses on scaling up the R&D to create a fully functional product. In this phase, companies can receive up to $2 million over a period of two years.

Phase III: Commercialization

Phase III is all about bringing the product to market. Unlike the previous two phases, no direct SBIR/STTR funds are awarded during Phase III. However, businesses that complete Phases I and II are often well-positioned to secure non-competitive follow-on contracts with federal agencies. These contracts can provide an ongoing source of revenue and validate the technology in the marketplace.

Why this Phased Approach Works

The phased approach of SBIR and STTR programs helps minimize risk for both the business and the federal government. By requiring businesses to prove the feasibility of their concept in Phase I before receiving more substantial funding in Phase II, the programs ensure that only viable ideas move forward.

Conclusion

The SBIR and STTR programs provide a well-defined roadmap for small businesses to bring innovative solutions to market. By guiding companies through feasibility studies, R&D, and commercialization, these programs support small businesses in transforming groundbreaking ideas into commercial success stories.