The Small Business Innovation Research (“SBIR”) program provides funding that start-ups can use to develop and de-risk products without diluting equity. For founders, non-dilutive funding is almost universally welcome. Assuming your company meets the eligibility requirements, key questions in assessing fit will likely include whether your venture is competitive for funding, and whether it is worth the investment of time to apply.

SBIR is a competitive program. Taking the eleven participating agencies as a whole, acceptance rates for Phase I and Phase II proposals are roughly in the range of 15% and 50%, respectively. And, SBIR proposals require a considerable investment of time, so the process is not to be undertaken on a whim. Fortunately, some ventures have substantially higher odds of receiving SBIR funding than others, and there are steps that can be taken to assess your chances of success at relatively low cost.

To begin, it can be helpful to consider that SBIR is intended to fund research and development. To be competitive for funding, therefore, a venture should be able to identify a technical barrier to success, a credible technical approach (led by qualified individuals) by which it proposes to overcome that barrier, and a metric by which progress toward the solution can be measured. Many companies will, of course, have projects that meet these criteria and other projects that do not.

A reasonable next step is to consider which agencies and topics may align with your technology. Each participating agency solicits and reviews proposals on topics that relate to the agency’s mission. And, importantly, agencies take different approaches to the types of topics they offer. Department of Defense (DOD) topics, for example, typically seek solutions to specific problems. An exemplary topic: an autonomous guided vehicle that can be used to operate both outdoors and indoors, including through inclined tunnels found in the Defense Logistics Agency Distribution Center at the Hill Air Force Base. If your technology is responsive to one of these topics, submitting a proposal may achieve both funding and a path to a high-value customer.

At the other end of the spectrum lies the National Science Foundation (NSF), which views SBIR not as a means to purchase solutions, but instead as a lever to promote U.S. small business and innovation. NSF topics are therefore broad and open-ended. A few examples: “Artificial Intelligence,” “Internet of Things,” “Digital Health,” and “Biomedical Technologies.” Applicants for NSF funding can generally find a responsive topic, so a competitiveness assessment may focus more on the impact of the proposed technology, as well as the merits of the technical approach.

The topics offered by the other nine participating agencies lie on a spectrum between the solution-based approach employed by DOD and the seed-fund based approach employed by NSF. Since DOD and the Department of Health and Human Services (HHS) together constitute a large percentage of total SBIR awards made in a given year, pursuing SBIR funding may be more attractive if your technology can be credibly aligned to the missions of one of these two agencies.

After identifying a target agency (and possibly topic), you can take steps to vet whether your venture is truly competitive for that funding opportunity. There are a few ways to approach this task. In many cases, it is possible to contact an official at the agency who is responsible for fielding questions on the topic of interest. You may also be able to review prior successful awards at that agency, which can provide helpful context as to the types of ventures that the agency funds.

Often, the most effective option is to speak with professionals who have experience with SBIR proposals at that agency. Some of these professionals operate businesses directed to helping ventures obtain SBIR funding, and others are associated with incubators or universities. We maintain relationships with advisors in the SBIR industry, and we are happy to help our clients connect with qualified individuals in their area of interest.

In sum, SBIR funding may be worth pursuing if you are engaged in high-impact research and development and have a well-qualified team, or if your technology aligns well to topics offered by solution-focused agencies such as DOD. Before investing significant time into preparing a proposal, you may also consider contacting officials at the agency or others who have experience obtaining funding from the agency to confirm that your proposal will be competitive for funding.

The information contained in this posting does not, and is not intended to, constitute legal advice. If you would like to obtain legal advice relating to the subject matter addressed in this posting, please consult with us or your attorney.