Definition · Plain-language
SBIR / STTR
SBIR and STTR are federal programmes, branded "America’s Seed Fund", that award non-dilutive R&D funding to small US businesses to commercialise innovative technology.
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How SBIR and STTR work
SBIR and STTR are coordinated by the US Small Business Administration but implemented by individual agencies (including NIH, NSF, DoD, DOE and NASA), each of which must set aside a percentage of its extramural R&D budget. Awards are highly competitive and intended to move promising research toward the market. Because they are grants or contracts rather than investment, the funding is non-dilutive — the small business does not give up equity to receive it.
The phased structure
Both programmes are typically structured in phases. Phase I funds feasibility and proof of concept over a short period with a modest budget; Phase II funds fuller research and development for companies that succeed in Phase I; and Phase III concerns commercialisation, pursued with non-SBIR/STTR funds. This staged model lets agencies test ideas cheaply before committing larger sums, and gives small businesses a structured path from concept to product.
How STTR differs from SBIR
The central difference is collaboration. STTR requires the small business to partner formally with a non-profit research institution, such as a university or federal laboratory, and specifies minimum work shares for each partner. SBIR has no such partnering requirement, though it permits subcontracting. STTR is therefore designed to bridge the gap between academic discovery and commercial development, while SBIR centres on the small business itself.
Key facts
At a glance
- Definition: federal small-business R&D funding programmes
- SBIR: Small Business Innovation Research
- STTR: Small Business Technology Transfer
- Branding: "America’s Seed Fund"
- Coordinated by: US Small Business Administration (SBA)
- Funding: non-dilutive, typically phased (I, II, III)
Common misconceptions
What people often get wrong
Often heard: SBIR and STTR are venture-capital investments.
Actually: They are non-dilutive federal grants or contracts; the small business does not give up equity, unlike venture-capital funding.
Often heard: SBIR and STTR are interchangeable.
Actually: STTR mandates a formal partnership with a research institution and sets minimum work shares; SBIR has no such requirement.
Often heard: One agency runs SBIR/STTR for everyone.
Actually: The SBA coordinates the programmes, but each participating agency runs its own competitions with its own priorities and solicitations.
Going deeper
