The Valley of Death and the Opportunities STRATFI/TACFI Provides to Fill This Gap

Some big news last month in the world of government funding was the opening of STRATFI/TACFI submissions. For many, particularly those who exist primarily in the commercial sphere, a lot of questions arise around what these programs are and why they are important. A lot of these questions can point to a single obstacle that those who pursue federal funding often face- the valley of death. Whether you are currently involved with the federal market, or you operate in the commercial market but are looking to learn more about SBIR and the DoD, it is important to first understand the valley of death, and then learn about how STRAFI/TACFI helps small businesses to overcome this hurdle.

The Three Phases

To understand STRATFI/TACFI, you first need to know the three phases of AFWERX funding.

1. Phase I is the first step of the AFWERX Small Business Innovative Research (SBIR) program, a highly competitive award-based program designed to encourage small businesses to contribute essential technology to the DoD. In the first phase, the goal is "concept development.” The rewards are lower in this phase (usually from $50K to $250K) because the idea of this funding is to support about six months to a year of basic development on the concept before any type of production begins.
2. Phase II is centered around prototype development. The awards for this phase are typically a little more significant (ranging from $500K to $1.5M) By this point, your general concept should be pretty fleshed out, and you should start looking toward developing a prototype that you can bring to market.
3. This then brings us to Phase III, where your goal is commercialization. At this point, you are no longer receiving SBIR funding. Phase I and II of the SBIR program are designed to get you to this point where your technology now has sole-source authority. This authority then gives you access to the larger pool of money set aside by Congress for the Department of Defense. This year, that budget was set at over $700B.

The Valley of Death

The valley of death occurs between phase II and phase III because, unfortunately, after phase II many technologies are still not quite mature enough to stand without some type of additional SBIR funding. What happens in these cases is they simply don’t make it. This place that they land, or fail really, is known as the valley of death, and it is problematic for both small businesses and the government.

• Small businesses: The valley of death is an obvious issue for small businesses because, in the valley of death, the technology dies. It is lacking the necessary funding to get to market, and when a technology does not make it to market, it has no place to go. In many cases, there are years of work and personal funding that die along with the technology, which can be detrimental to a small business.
• The Government: Small businesses are not the only entities impacted by the success or failure of a technology looking to go to market. The Department of Defense is always seeking the best technologies, and SBIR is an essential tool to find these technologies. If a technology makes it all the way through SBIR Phase I and II only to fall off before Phase III, then not only does the small business suffer from the waste of time and money, but the government does as well. The DoD aims to get the best technology to the warfighter. The valley of death interferes with this mission.

The "Why" of TACFI/STRATFI

The good news? While this current gap between Phase II and Phase III is cumbersome, major strides are taking place to fund these gaps, and this allows for budgetary cycles to line up larger program dollars while funding this in-between stage for tech companies. Although it’s a big gap to fill, in recent years, we have seen more and more government customers experience the benefit of SBIR, and many of our warfighters are learning about and pulling in these technologies to meet their needs. This increases the priority to provide adequate funding to bridge a way for a technology to cross over the valley of death and get to market. STRATFI/TACFI is one of these programs set in place to bridge this gap. STRATFI/TACFI is a program offered through AFWERX, but it operates in a structure that differs from the traditional SBIR/STTR rounds. One of the most evident differences is the matching system. All applicants must also have a third-party partner buy-in, which will require more upfront work than the traditional SBIR/STTR rounds but will also yield a much higher award. This funding can play a significant role in helping a technology, which otherwise might have landed in the valley of death, to instead mature and be ready to go to market.

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Is the valley of death a major barrier for your company in your pursuit to get your technology to market? Does it play a role in your hesitancy to seek federal funding in the first place? While we understand that barriers of this magnitude can be frightening, we are also encouraged by the federal response as it begins seeking ways to educate and fill these gaps, with STRATFI/TACFI being a major contributor to this mission. Is STRATFI/TACFI the right move for your company to ensure a smoother transition to Phase III? Read more about this step in our blog, STRATFI/TACFI 2022- A Reasonable Step After Phase II? or contact Long Capture today to begin conversations with our experienced team of past Military Contracting Officers to help develop your best plan forward.