SBA Seed Fund: SBIR/STTR
What are SBIR and STTR?
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are highly competitive federal initiatives that fund U.S. small businesses to conduct R&D with the potential for commercialization.
With over $4 billion awarded annually across 11 federal agencies, these programs offer a powerful pathway to develop and scale innovative solutions — especially for companies new to government contracting.
Why Pursue SBIR/STTR?
Non-Dilutive Funding
You are not required to give up equity, ownership, or control of the company for funding.
Dual-Use Market Potential
Position your technology, innovation, model, or idea for both commercial and government adoption.
Entry Point into GovCon
Ideal for nontraditional firms and startups looking to break into the federal market.
Credibility
with
Agencies
Federal R&D support builds trust and validation with government buyers and primes.
Direct Award Contracting
(Phase III)
SBIR/STTR work can lead to direct awards in any federal agency.
Keep Your Intellectual Property
You retain your IP, enabling innovation to stay protected while growing in commercialization.
Who Qualifies?
To qualify for SBIR/STTR, your business must:
For-Profit
Your company must operate for profit and have a primary place of business in the United States.
Small Business
The total number of employees, including affiliates, must not exceed 500 to meet SBA small business standards.
U.S. Citizens
Majority ownership and control must be held by individuals with U.S. citizenship or lawful permanent residency (green card holders).
Work in the U.S.
At least 50% of the R&D effort must take place within the United States to ensure domestic job and tech growth.
How Is SBIR/STTR Structured?
Three Phases, One Strategic Path
Phase I – Feasibility Study
Typical Award: ~$50K–$275K
Duration: 6 to 12 months
Goal: Determine whether the proposed innovation is scientifically and technically feasible.
Phase I is where the government funds an initial study to see if your idea could work. It’s a low-risk way for agencies to explore cutting-edge technology — and a major opportunity for you to validate your solution. Awards are relatively small and competitive, but a successful Phase I lays the foundation for future funding.
Phase II – Development & Prototyping
Typical Award: ~$500K–$1.5M+
Duration: 12 to 24 months
Goal: Continue the R&D effort begun in Phase I, to produce a working prototype or deployable solution.
Phase II is about refining your technology, developing a prototype, and working toward meeting government requirements. Many agencies require a commercialization strategy and technical milestones. Increased focus on strong customer engagement to set you up for Phase III success.
Phase III – Commercialization & Contracting Authority
Typical Award: Unlimited (but no SBIR/STTR dollars)
Duration: Varies by agency and contract type
Goal: Transition your SBIR/STTR-developed technology into the federal market or commercial world.
Phase III is the ultimate objective, where your SBIR/STTR work transitions into real-world application. While no additional SBIR dollars are provided, federal agencies can issue direct award contracts for work that derives from, extends, or completes the efforts funded in Phase I or II. This includes productization, scaling, integration, or any logical continuation of the innovation. Phase III can lead to multi-million dollar contracts and long-term program of record opportunities.
STTR vs. SBIR: What’s the Difference?
STTR (Small Business Technology Transfer) requires a formal partnership with a nonprofit research institution, such as a university or federal lab. While structurally similar to SBIR, STTR emphasizes collaboration between small businesses and academic or research partners.
In STTR:
The small business must perform at least 40% of the work.
The research institution must perform at least 30%.
A formal agreement outlining IP rights and collaboration terms is required.
Frequently asked questions
What’s the difference between SBIR and STTR?
Both programs fund small business-led R&D, but STTR requires a formal partnership with a nonprofit research institution (like a university or lab), while SBIR allows — but doesn’t require — external collaborators.
Do I need to already be a government contractor to apply?
No — SBIR/STTR is one of the best entry points for nontraditional and first-time government vendors. You don’t need a prior contract or facility clearance to apply.
Who actually provides the funding?
Funding comes from 11 participating federal agencies, including DoD, NASA, NSF, DOE, DHS, HHS, and more. Each agency manages its own topics, timelines, and selection process.
Can I apply to multiple agencies?
Yes, however, you may only accept an award from one agency. You may not accept multiple awards for the same innovation.
Do I need a working product to apply?
No. Phase I funding is specifically for feasibility studies, so it’s acceptable to be early-stage — as long as your concept is technically sound and addresses an agency need.
Can I make money from SBIR/STTR?
Yes — not only is the funding non-dilutive, but incorporation of overhead, general and administrative (G&A), and profit on the Phase I and Phase II efforts is required by the government. Ultimately, success in Phase I and II paves the way to direct-award Phase III authority, unlocking multi-million-dollar federal contracts and creating opportunities for commercial sales.
How competitive is the program?
Very. Phase I win rates range from 10% to 25% depending on the agency, but strong preparation, alignment to agency needs, and support from experts like Agility can dramatically improve your odds.
Is this considered a grant or a contract?
It depends on the agency. Some agencies use contracts (like DoD), others use grants or cooperative agreements (like NIH or NSF). The structure impacts oversight, deliverables, and reporting.