SBIR : Moving from Phase I to Phase II
For SBIR/STTR Programs, federal agencies explicitly want to see the complete vision from research through commercialization. Phase 1 proposals should articulate how the work connects to Phase 2 development, and eventual market deployment. It is important in a Phase 1 proposal to demonstrate a broad vision that affords flexibility in the path to implement changes based upon the Phase 1 findings. The key is to provide strategic thinking without rigid commitment - know where you're headed but remain adaptable to discoveries and changing circumstances along the way.
Key takeaways for transitioning from Phase 1 to Phase 2 SBIR awards:
Execution is Everything. Successfully complete all Phase 1 deliverables on time and budget.
Commercialization Takes Center Stage. Phase 2 is fundamentally about proving market viability, not just technical feasibility.
Customer Validation is Critical Having actual customers, letters of intent, or pilot programs significantly strengthens your proposal.
Competition is Tight. Phase 2 has much lower acceptance rates (typically 15-25% vs 40-50% for Phase 1) due to larger award amounts and longer durations.
Technical Risk Must Be Managed. While Phase 1 proves feasibility, Phase 2 must show a clear path to a marketable product with manageable technical hurdles.
Team Strength Matters More. Demonstrate you can execute a complex, multi-year project with internal infrastructure to meet government requirements.
Financial Planning is Essential. Phase 2 awards are 5-10x larger than Phase 1 and require detailed budgets, burn rates, and cash flow projections.
Start Phase 2 Prep Early. Begin preparing your Phase 2 proposal during Phase 1 execution. The timeline between phases is often tight.
Bottom Line:
The fundamental shift is from "can we build it?" in Phase 1 to "can we sell it profitably?" in Phase 2. The purpose of Phase II is to provide funding to continue the research and development you began in Phase I.
You are permitted to submit only one Phase II proposal per Phase I award. Be sure that your Phase 2 proposal is well planned!
Deep Dive Resources
