How to Get Your Prototype Funded- Introduction to the SBIR Program

The Small Business Innovative Research (SBIR) program is an opportunity for small businesses with less than 500 employees to receive funding for their innovative ideas. Why should you care? Imagine receiving funding from a potential customer to develop a new solution without losing any equity or intellectual property rights. It’s just not something you’re going to find in the private sector.

Through the SBIR program, the federal government will potentially fund your idea from a feasibility study through prototype development. As mentioned, one of the biggest draws of this program is that you get your prototype development paid for AND companies get to keep the intellectual property rights for several years after development.

As a quick note- nothing in this article is new and most the information can be found on However, not many companies know about this opportunity so that’s why I wanted to take a minute to discuss some of the basics of the program to generate interest.

A quick overview: There are 11 different federal agencies that participate in this program. The way it works is that throughout the year these agencies post topics relating to issues that they’re facing. They’re looking for new and innovative ideas to solve their problems. For an opportunity to win, companies must submit a white paper on the topic with their proposed solutions.

Usually several small businesses are chosen and if your white paper is selected, the Phase I award tends to be around $150,000 depending on the agency. Phase I is an opportunity for small businesses to test feasibility and technical merit. At the end of the 6 months of performance a proposal will be requested for Phase II. Typically less companies are selected for Phase II awards, but funding amounts are as much as $1,000,000 or even $1.5M for some Department of Defense awards. This funding goes to actually developing the prototype.

From there, and a less understood part of the program, is the Phase III award. Many agencies post these topics based on an ongoing issue. After the prototype is developed and tested, there should be opportunity for a contract to actually go and implement that technology to solve the original problem.

Finally, one last facet to this program I’d like to cover today is that one of the evaluation criteria is commercialization potential. This means that when the government evaluates your proposals, they not only wants to see new innovative solutions to their problems, but they also want to see how the technology translates into the commercial market.

Bottom line is that the SBIR program is a great opportunity for small businesses to fund their innovative ideas directly from a potential customer without losing equity or intellectual property rights. It’s hard to beat.

In later blogs we’ll flush out some of the advantages this program specific to investors. To stay up to date, check out my website, or follow LCCM on Facebook at where I post live videos and offer opportunities to ask questions.



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