For many startups in the U.S., securing funding is one of the biggest challenges on the path to developing groundbreaking technologies. The Small Business Innovation Research (SBIR) program offers a unique opportunity: non-dilutive funding that helps small businesses turn innovative ideas into commercial successes.

This article from ERB explores what SBIR is, why it matters for startups, and key tips to maximize your chances of winning SBIR funding.

What is SBIR?

The SBIR program is a federally funded initiative that supports small businesses conducting high-risk, high-reward research and development (R&D). It helps startups build and commercialize cutting-edge technologies in fields like healthcare, defense, energy, and aerospace.

The program is structured into three phases:

• Phase I: Proof of Concept ($50K–$300K, 6–12 months)
  - Startups conduct feasibility studies to validate their technology.

• Phase II: Prototype Development (Up to $2M, up to 2 years)
  - Companies refine and develop their technology for commercialization.

• Phase III: Commercialization (No direct SBIR funding)
  - Startups secure private investment, government contracts, or licensing deals.

Key Benefit: Unlike venture capital, SBIR funding is non-dilutive—you don’t give up equity!

Who is Eligible?

To qualify for SBIR, your startup must meet these requirements:
✔ U.S.-based and for-profit
✔ 500 or fewer employees
✔ At least 51% owned by U.S. citizens or permanent residents
✔ Principal investigator (lead researcher) must be primarily employed by the company

If your business meets these criteria, you can apply for funding from federal agencies like:
- National Science Foundation (NSF) – Science & Technology
- National Institutes of Health (NIH) – Healthcare & Biotech
- Department of Defense (DoD) – Aerospace & Security
- Department of Energy (DOE) – Renewable Energy & Sustainability
- NASA – Space Technologies

Each agency has different research priorities, so identifying the right funding opportunity is crucial.

5 Tips to Win SBIR Funding

1. Align Your Idea with Agency Priorities

Each SBIR-funding agency has specific focus areas. For example, the NIH funds health-related innovations, while the DoD prioritizes defense technologies. Review agency solicitations at SBIR.gov to find the best match for your startup.

2. Write a Strong Proposal

SBIR proposals must clearly outline:
- The problem you’re solving (market need & innovation)
- The technical feasibility of your solution (R&D approach)
- A roadmap for commercialization (how you’ll bring it to market)

Pro Tip: Emphasize how your technology is different from existing solutions and its potential for commercialization.

3. Build the Right Team

SBIR reviewers assess team expertise—strong leadership and technical capabilities improve your chances. If needed, collaborate with universities, national labs, or industry experts to strengthen your application.

4. Plan for Commercialization Early

Winning an SBIR grant is just the beginning. Investors and government agencies want to see a clear commercialization strategy. Consider:
- Who will buy your product? (Market size & potential customers)
- How will you scale? (Manufacturing, distribution, partnerships)
- What’s your funding plan for Phase III? (Venture capital, licensing, or government contracts)

5. Leverage SBIR Success for Future Growth

Winning an SBIR grant validates your technology, making it easier to attract venture capital or corporate partnerships. Many SBIR-funded startups later secure millions in private funding or government contracts.