November 21, 2019
Deciding which program — SBIR or STTR — is appropriate for you and your proposal is one of the first tasks when preparing to apply for funding. Each program has its own goal and distinct award structure that support research and development conducted under different circumstances. Understanding these key features will help you to determine which program is right for you.
The appropriate program for your proposal is determined by who you are — a company or a collaboration between a company and an academic partner — and how the award will be spent.
SBIR — The SBIR program supports research and development for small businesses, with or without academic partners, in which the majority of the cost associated with developing the product will be borne by the company. In calculating 67% of the total costs, the company’s portion includes their direct costs, indirect costs, and fee.
STTR — The STTR program supports research and development for small businesses with academic collaborators and allows for the majority of the cost associated with product development to be borne by either the company or the academic collaborator, who must receive at least 40% and 30% of the award, respectively. The remaining 30% can be spent as necessary to suit the project, allowing the academic collaborator to receive up to 60% of the award.
In addition to considering your circumstances as either a small business applicant or a partnership between a small business and an academic collaborator, you should also consider who will be the Principal Investigator (PI) on your proposal. The SBIR and STTR programs have rules regarding the employment of the PI. For an SBIR award, the PI’s primary employment must be with the company, while for an STTR award, their primary employment can be with either the company or the partnering institution. While this might seem to discourage academic researchers from taking advantage of the SBIR program, this barrier can be overcome. If you are an academic research scientist with a proposal that fits within the SBIR program (for example, where the development work will be performed by a company without the involvement of a partnering institution), you can retain your primary employment with your academic institution by recruiting someone to your company who will oversee the company’s efforts as the PI. This person does not need to be employed by the small business until the time of award.
SBIR/STTR Budget Allocations
Potential STTR applicants are sometimes worried by the relatively small number of awarded STTR grants. While the SBIR program has a larger share of the available funds (3.2% NIH FY19) and awards more grants, it also receives more applications than the STTR program (0.45% NIH FY19). It is best to apply for the program that best fits your company and proposed project.