Can an SBIR Grant help you over the “Valley of Death?”

I recently returned from a national SBIR/STTR conference in Madison, Wisconsin, where I learned a great deal about the SBIR/STTR program and met many participants in the program from companies and academic institutions.  At the conference, I also learned about the “Valley of Death” faced by many innovative small businesses and how the SBIR program can help companies surmount this hurdle.

The federal government’s SBIR program is based on the premise that small businesses and academic institutions are key drivers in bringing new technologies and new products to the marketplace. 

Between 1980 and 2005, virtually all net new jobs in the United States were created by firms that were less than five year old or less.  However, bringing new technologies and products into the marketplace is a challenge for many small businesses and SBIR grantees.  At several presentations, speakers talked about the “Valley of Death,” the major hurdle for small companies. 

While federally funded research can create new ideas, often they cannot attract sufficient financial support.  Capital is needed to help transform ideas, and without capital new ideas and products may become dead ideas and stillborn products.  This is the “Valley of Death.”

The SBIR program helps innovative small businesses test new ideas and successfully cross the “Valley of Death” through a three-phased grant award process.  SBIR’s program features the following:

  • Phase I (feasibility research) and Phase II (research toward prototype) demonstrates proof of concept.
  • Phase III product development can lead to sole-source federal contracts and the commercial market.
  • Eleven federal agencies invest approximately $2.5 billion a year in the SBIR program.
  • Each agency uses its funds to support research by small companies to meet its unique mission needs.

The US Department of Defense has the largest SBIR program.  Annually, it awards about $1.4 billion in SBIR grants, more than half of the total SBIR budget.  Most DoD SBIR awards are focused on the warfighter.  About 22 percent of Department of Defense SBIR proposals are funded.  The other federal agencies have lower average winning award percentages ranging from approximately 10 to 20 percent.

Small businesses that are developing innovative ideas and products should look into the SBIR program.  It may help them leap over the “Valley of Death” by bringing their products to the marketplace and to government agencies in the form of contracts.

For more information, visit the SBIR conference Web site at conferences/sbir2011.  Almost all conference presentations can be downloaded as PowerPoint files.  Learn if the SBIR program can help your small business.

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