Small Business Innovation Research (SBIR): History, Activities & Purpose

Instructor: LeRon Haire

LeRon Haire is an education professional with over 5 years experience in higher education within the University System of Georgia. Haire has received an MBA with a marketing undergraduate concentration and has the Georgia Assessments for the Certification of Educators, certified in Business Management.

In this lesson, we will introduce the Small Business Innovation Research program, define its purpose, cover its history, and discuss the phases used to award grants.

What Is the SBIR?

When trying to start a small business, many people first take a look at what resources are needed to help determine whether or not they have enough money to start it. Although many small businesses require a minimal amount of money to start, ones related to science and technological innovation need much more.

Due to its detailed nature, research and development involves constant experimenting, which can become costly.

Enter The Small Business Innovation Research (SBIR) program. So you've never heard of it? Don't worry, most people are unaware that such a program exists.

The Small Business Innovation Research (SBIR) program is for smaller businesses that wish to take part in research and development for science and technology innovations.

One of the caveats is that the project must hold the potential for commercialization, along with fulfilling research and development needs required by the U.S. Government. The other requirements for SBIR are as follows:

  • Must be American-owned
  • Must be for-profit
  • Size of company must be no more than 500 employees
  • The primary researcher must be employed by the business

SBIR History and Purpose

The SBIR program was set up under the Small Business Innovation Development Act of 1982, and was initially reauthorized until September 30, 2000. Currently SBIR has been granted an extension up until the year 2017 and approved through Congress.

The initial purpose of The Small Business Innovation Development Act of 1982 was to help those small businesses focused on science and technology by providing federal funds for research and development.

Due to the nature of its industry, science and technology innovation field is very costly. During the early stages of a project, many investors and capital firms are skeptical to provide funding because they are unsure if the project will be successful, thus putting their funds at risk.

The SBIR provides this funding at an early stage of the innovation process, making it easier to get off the ground and to complete a thorough research and development process. This encourages people who are aren't socially or economically advantaged to participate in the future of US innovation.

The contributions provided by SBIR have improved the nation's defense and enhanced our capabilities of managing data and information.

SBIR Phases

Grants and contracts are two of the primary resources used for the SBIR. The SBIR program is very competitive and awards grants in three phases.

Phase one is designed to measure the potential of the proposed research and development efforts to determine whether or not the project should be funded. Awards in phase one do not typically exceed $150,000 in costs over a six-month span.

The goal of Phase II is to proceed with the research and development endeavors started in Phase I. Subsidizing depends on the outcomes accomplished in Phase I and the logical and specialized legitimacy and business capability of the undertaking proposed in Phase II. Only Phase I awardees are qualified for a Phase II grant. SBIR Phase II grants ordinarily don't surpass $1,000,000 for two years total.

The goal of Phase III is to seek commercialization destinations for small businesses coming about because of the Phase I and II research and development. The SBIR program does not monetarily support Phase III.

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