When it comes to funding innovative research and commercialization in the United States, small businesses often face hurdles in gaining the resources they need for groundbreaking ideas to take flight. This is where programs like the STTR (Small Business Technology Transfer) come into play. Offering equity-free, non-dilutive funding, the STTR program gives startups and research-focused businesses the means to develop advanced technologies without giving up ownership or control.
This guide will break down everything you need to know about the STTR program, from its history and purpose to the eligibility requirements and application process. By the end of this blog, you'll understand whether STTR is the right fit for your innovative business.
The Origins of the STTR Program
The Small Business Technology Transfer program began in the 1990s as part of the U.S. government’s push to stimulate research and development (R&D) across various industries. It was created to complement its sister program, the SBIR (Small Business Innovation Research), which launched a decade earlier.
While the SBIR focuses solely on small businesses, the STTR was specifically designed to promote collaboration between small businesses and nonprofit research institutions, such as universities and federal labs. The idea is to take innovative research generated by these institutions and bring it into the private market through commercialization.
What Makes STTR Unique?
Unlike typical startup funding, the STTR program provides government grants and contracts instead of equity-based investments. The funding is non-dilutive, meaning you won't need to give up ownership in your business to gain access to resources.
What sets the STTR program apart is its requirement for businesses to collaborate with nonprofit research institutions. This partnership allows startups to leverage the expertise, facilities, and talent at institutions while retaining the rights to commercialize the resulting technology.
Unique Features of STTR:
Collaboration Requirement: Startups must work with a U.S.-based nonprofit research institution, such as a university, federal lab, or research center.
Equity-Free Funding: Funding is provided as grants or contracts without requiring ownership shares.
Smaller Pool of Agencies: Only five government agencies participate in the STTR program, compared to 11 in its SBIR counterpart.
Detailed Project Shares: At least 40% of the work must be completed by the business, and 30% by the nonprofit research institution.
STTR Eligibility Requirements
Before applying, your business must meet several eligibility criteria. Here’s a quick overview:
General STTR Eligibility:
• Location & Ownership: Your business must be a for-profit entity located in the U.S., with over 50% ownership by U.S. citizens or permanent residents.
• Small Business Size: The business must have fewer than 500 employees, including affiliates.
• Collaborative Partner: You must have a formal partnership with a U.S.-based nonprofit research institution, which could include:
• Universities
• Federally funded research development centers
• Nonprofit research organizations
Partnership Agreement:
STTR projects require a formal Intellectual Property (IP) Agreement between your business and the partnering institution. This is vital because technology development responsibilities are shared, and disputes about ownership rights must be resolved upfront.
For additional details, you can review NIH's complete STTR eligibility requirements here.
Benefits of Choosing STTR Funding
Applying for an STTR grant can unlock unique advantages for businesses in the early stages of R&D.
Why Go for an STTR Grant?
Access Expertise: Leverage the resources and experience of leading research institutions.
Boost Competitiveness: Collaborating with a respected institution can strengthen your proposal and impress reviewers.
Flexible Resource Allocation: STTR allows up to 60% of the work to be subcontracted to experts, broadening your operational capabilities.
Market Readiness: By transferring cutting-edge research into viable products, you gain a competitive edge in commercializing your innovation.
The STTR Phase I Explained
The STTR program follows a three-phase structure designed to transition technology from concept to commercialization. The first phase is:
Phase I: Feasibility Study
• Goal: Establish the technical and commercial viability of the project.
• Funding Amount: Up to $314,363.
• Duration: Usually 6-18 months.
• Focus: Basic R&D work to prove your concept.
Only businesses that succeed in Phase I can qualify for Phase II awards, and Phase III requires developing external funding or partnerships.
Participating STTR Agencies
STTR grants are offered through five federal agencies, each with its own focus areas:
Department of Defense (DoD): The largest R&D funder, emphasizing defense-related innovations like cybersecurity and advanced materials.
NASA: Supports aerospace technologies and tools for space exploration.
National Science Foundation (NSF): Funds innovative ideas in AI, biotech, and clean energy to tackle global challenges.
Department of Energy (DOE): Prioritizes green energy solutions, nuclear security, and environmental sustainability.
Department of Health and Human Services (HHS): Includes agencies like NIH and FDA, focusing on medical, public health, and pharmaceutical advancements.
Research each agency’s specific solicitation to align your project with their funding priorities.
Key Differences Between SBIR and STTR
While similar, STTR differs from SBIR in a few important ways:
If your project would benefit from dedicated research resources and collaborative expertise, STTR may be the better choice.
Is STTR Funding Right for You?
Ask yourself:
• Do I have limited resources for in-house research?
• Could a partnership with an academic/research institution elevate my project?
• Is my goal to commercialize technology rooted in rigorous research?
If the answer to these questions is yes, pursuing an STTR grant can provide the funds and connections your business needs.
Whether you're a startup founder or small business owner dreaming up the next big thing, tapping into the STTR program might be the key to turning those plans into reality.
Secure Your First STTR Grant
With over $400 million in annual funding, the STTR program is one of the best avenues for innovative startups to access critical resources. Preparing a strong application may take time, but the rewards—financial backing and a head start on commercialization—are well worth it.
TurboInnovate can give you the tools and data you need to create a strong application by uncovering best fit STTRs, connecting you with the right academic partners, competitive landscape analysis, application writing, and more. TurboInnovate is designed to address common data and connection stress areas to save you time, money, and resources.
How do we do it? Discover academia experts with our advanced search tool and connect directly through our software. We can generate a comprehensive market research report and competitive landscape analysis based off of your proposed technology in seconds. Our custom grant writing tool is designed specifically for each agency and can write the first draft of your application in seconds with our PhD-level grant writing software. From application discovery to application submission, TurboInnovate is here to help. You can explore the tool for yourself for free today.
