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Government Grants: A Source of Funding to Move Forward with your Technology

Thursday, January 19, 2017

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs can be a great way to fund technology development without giving up equity in your company or taking on debt. These programs serve as a great source of non-dilutive capital for your business.

These are three-phase programs where your company can identify and service government needs to fund development of technology you can then move into a broader market. Phase I is a proof-of-concept phase where you can test the scientific, technical, and commercial merit and feasibility of a concept that lasts roughly six months. Award of a Phase II grant depends on your success with Phase I. This is a two-year prototype phase where you mature your technology to the point you can pursue non-SBIR revenue. Phase III is the capture of this non-SBIR revenue. This revenue can in the form of B2B or B2C sales, or can consist of follow-on government contracts to deploy the technology.

Funding is available from most of the major government agencies. The key is determining research of interest to one or more government agencies from the published research topics that aligns with your company’s goals and core competencies. It is important to realize that more than one agency could have an interest in your technology. For example, a device that is of interest to NASA might also be of interest to the DoD for the Air Force.

Keeping in mind that the goal is commercialization, you will need a short commercialization plan for your Phase I proposal, and then a more detailed plan for Phase II. For best results from start to finish, it is best if you have the technology roadmap and market introduction thought through at the onset. Presenting a comprehensive, well-considered plan at Phase I that remains consistent into Phase II and can be executed to achieve Phase III revenue increases your chances for success, both in winning an SBIR award and in actually bringing your technology to market.

As part of rating your proposal, your commercialization plan will be rated on your knowledge of the market, not just your technology. Being able to clearly elucidate your target market, its size, forecasted growth, market drivers, and barriers to entry, as well as including a competitive analysis demonstrate you’ve done sufficient market research. Giving consideration to required regulatory approvals, channels strategies, and partnering opportunities lend credibility to your ability to realize revenue by commercializing your technology.

To add a cautionary observation, from start to finish, Phase I through Phase II to achieving Phase III revenue can be a three-year process. If your window of opportunity for your technology in your target market is shorter, then SBIR funds can supplement other sources of funding, but the prolonged timeline precludes you from relying solely on SBIR / STTR funding.

To end on a high note, many companies have successfully leveraged SBIR / STTR funding to develop and advance a technology and achieve commercial success. Developing a well-considered commercialization plan with measurable milestones and tracking to it are good business practices in general, but will certainly serve you well for success within the SBIR and STTR programs.


Ed Kase has been focused in strategic marketing and business development for more than 20 years, helping companies understand market conditions and implement go-to-market strategies. His expertise includes commercialization of government-funded technologies, with particular focus on the SBIR program. Technologies include software, medical devices, scientific instrumentation, aerospace systems, and pharmaceutical technologies. 

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