SBIR and STTR Grants

There are generally two categories of SBIR/STTR applications: (1) investigator-initiated applications and (2) responses to a funding opportunity announcement (FOA), which include requests for applications (RFA) and requests for proposals (RFP). The recommended approach is to identify an RFA or RFP that corresponds to an academic entrepreneur's interest area - typically, federal agencies offering SBIR/STTR funding will have information outlining their emerging interests and areas of high priority on their corresponding websites. A compilation of current FOAs can be found under "Funding Topics" on the SBIR/STTR government-sponsored website.

An important preliminary consideration when preparing an SBIR/STTR application is to define the degree of involvement of research partners, particularly the laboratory principal investigator if the applicant is themselves not the lead investigator behind the research being proposed. Agreement from the laboratory PI should be solicited before proceeding, and receiving this agreement from the PI may involve negotiating intellectual property and equity issues. Negotiations with PIs are frequently a balancing act between offering enough IP/equity to maintain their engagement and not being too generous so that the rest of the team is undermined. Defining clear expectations from PIs and the academic entrepreneur can often be a challenging conversation, and obtaining an outside second or third opinion is fundamental to ensuring that both parties are satisfied with any agreements that may result from the negotiation process.

In general, the structure of SBIR/STTR grants closely resembles other research grant applications, with some important differences. SBIR/STTR applications will have a "Specific Aims" section that is similar to an NIH R03 or R21 application, with the addition of one–two paragraphs discussing commercialization potential and market size. Writing the "Specific Aims" is often the most time-consuming part of the application, and applicants should plan approximately four weeks to prepare in order to get the input of all the members of the team; once this is agreed upon, the "Research Plan" can flow naturally from this framework. In the "Grant Budget" section of the application, a key difference from more traditional grant budgets is the requirement of sharing 30%–60% of the budget with the corporate entity, depending upon the type of grant. University indirect costs come directly out of the budget, rather than added on top as with traditional grants. Notably, companies are permitted to include 7% of the costs outlined in the grant budget as profit. In some cases, universities will allow academics to receive a salary both from the university subcontract (to do the research at the university) and also as an employee of the company; this can be an additional $10,000–$20,000. Specific policies will vary depending on the university, and time should be allotted accordingly during the application process (approximately one–two months) with the potential for these discussions in mind. For more information on preparing an application, refer to the additional chapter on SBIR/STTR grants.