SBIR / STTR: Is It Innovative?

By Leon Wolf

The SBIR/STTR programs award over $4B annually for innovative technologies being developed by small businesses.  But what exactly is “innovation”?  And how innovative does a product concept need to be for an agency to consider it worthy of funding?

Photo of a lab beaker: Is Your Tech Innovative Enough for SBIR?

First, some background:  In 1982, the Small Business Innovation Research (SBIR) program and later, the Small Business Technology Transfer (STTR) program was formed when Congress passed the Small Business Innovation Development Act.  This legislation was intended to boost the role of small businesses in federally funded research and development.  The goal was to seed the creation of high growth industries and bridge the gap between basic research and marketable products.  The federal government desired to keep the United States competitive globally, both on a technology basis and an economic one.

Is Your Technology REALLY Innovative?

Literally, innovation is simply the process of developing a new idea into a product, method or service that solves a problem and creates some form of value.  There can be many types of innovation, such as technical innovation, business innovation, or process innovation. In the context of an SBIR grant, however, innovation must be a product that has the many of the following key elements:

  • The innovation has a basis in novel scientific, mathematical or engineering principles.

  • The innovation has a powerful value proposition that solves a problem for a customer and leads to business growth.

  • The innovation is sufficiently differentiated from existing ways that these customers fulfill this market need.

Additionally, in SBIR/STTR, agencies like National Science Foundation (NSF) use terms like “game-changing” or “disruptive”.

There are further ways to help define an innovative SBIR/STTR technology.  Having a patent does not, by itself, guarantee that an idea is innovative enough for an SBIR proposal.  Many patents have been awarded to novel technologies that are impractical to implement or do not have enough customer value.

Simply combining two well-established technologies is also not sufficient enough for an SBIR/STTR proposal unless there is some degree of risk and invention in the combination. For example, using a standard manufacturing process to create a new material at scale for the first time is not necessarily innovative, but if the small business has some form of “secret sauce” – that is, a process recipe, equipment modification or new method that leverages scientific principles with new results, then that may qualify.

Though, Not Always the Case

There are outliers and exceptions to these guidelines.  A company with a “fintech” invention (i.e., blockchain) may qualify if the technology has some core elements that meet the scientific threshold and the needs of the agency, like the Department of Homeland Security’s, for example.  The USDA SBIR/STTR Program’s Rural Development topic area has a very liberal interpretation of innovation as long as the idea leads to economic development or quality of life improvements in rural areas.

Finally, an important consideration is having the right degree of technical risk to develop the concept.  The idea that the outcome of the product development is deterministic; that is, easily being able to get to market with the application of enough money and resources, is a sign that the product is probably not innovative enough or past the stage that a Phase I or II grant would be meaningful. Alternatively, if there are many technical unknowns, it may be a sign that the concept is too early or unrealistically broad.

If you are still unsure of whether your company’s innovation qualifies for the SBIR/STTR program, please contact the WV SPRINT Program at USRIA, and you will receive assistance for USRIA’s many experienced experts!  

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