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Giving thanks: An ode to the DOE SBIR/STTR Program

By Posted on November 16, 2015

DannyDanny Allen
Manager, Venture Services, NextEnergy

Around this time every year, the Thanksgiving holiday prompts us to consider the things in our lives and the world for which we are thankful. Friends, family, health, and wealth generally top the list for many of us. Since this blog seeks to constrain itself to musings and advice on funding for energy and transportation tech companies, let us celebrate in the spirit of Thanksgiving and give thanks to a primary anchor of technology innovation in the US: the Department of Energy (DOE) Small Business Innovation Research/Small Business Technology Transfer (SBIR/STTR) program.

Why give such enthusiastic thanks for a federal program? The DOE SBIR/STTR program is a veritable cornucopia of funding for research and development of the most cutting edge energy and transportation technologies. Since 1982, when the Small Business Innovation Development Act was signed into law, the DOE has awarded over 7000 Phase I awards to small businesses in every state in the U.S. except for Alaska (come on Alaska!). DOE SBIR/STTR has funded critical projects developing technologies in renewable energy generation, efficient internal combustion engines, advanced materials, bioenergy and more.

Not only has the program spurred investment in critical technologies that solve some our most pressing energy problems, but it has also served as an economic development engine for high-tech small businesses. According to the SBA, small businesses provide 55% of all jobs and 66% of all net new jobs since the 1970’s, and the number of small businesses in the United States has increased 49% since 1982. According to one Harvard study in 1999, compared to similar small businesses, “SBIR awardees enjoyed substantially greater employment and sales growth,” and significantly more likely to receive venture capital funding in the years after the SBIR award. In other words, technology innovation + small business = economic competitiveness.

Let’s bring it back to basics. The DOE SBIR/STTR program semi-annually releases a solicitation seeking to fund small businesses (companies with <500 FTE’s) with proposals addressing the accompanying research subtopics, or individual technology areas the DOE is prioritizing. STTR awards require the proposing small business to partner with a university or other non-profit research organization on their project. Applicants to either SBIR or STTR first submit proposals to a subtopic for a Phase I award for up to $225,000 for 9 months of proof-of-concept R&D. If the applicant is awarded the Phase I, and that project successfully hits key milestones, the DOE will invite the awardee to apply for a Phase II award. Awarded Phase II projects entail the principal R&D effort over a two-year time span, and receive up to $1.5M from the DOE. Upon successful completion of the Phase II project, the DOE may provide even further commercialization or R&D support in a Phase III award.

DOE SBIR/STTR awards are given in the form of grants, disbursed through a blend of payments at the beginning of the project and payments upon submission of deliverables. The non-dilutive, carefully phased funding approach of the SBIR program represents an excellent way for small businesses to fund their tech R&D. The program is quite competitive, however, as only 10% of Phase I proposals and 50% of Phase II proposals are awarded. Additionally, awardees must comply with federal grant accounting principles and disclose any IP generated from the funded research.

What I find most interesting about the DOE SBIR/STTR program, and for which NextEnergy is very thankful on behalf of its clients as an energy and transportation incubator, is its versatility. First, the program is versatile in terms of the technology areas it funds. Unlike other R&D funding programs within the DOE, whose individual technology offices fund certain technologies maybe once every several years, the SBIR program funds many areas spanning the gamut of energy and transportation technologies on an annual basis. For example, the most recent solicitation’s subtopics include funding for R&D on nuclear material spectrometry, solid-state lighting, hybrid electric vehicle batteries, sensors, and bioenergy feedstock handling, all in one FOA. The annual release of broad subtopics gives companies some flexibility in timing, as opposed to having to wait a couple years until a more specific FOA is released.

Second, the DOE SBIR/STTR program is versatile in how it supports small businesses’ R&D, depending on their goals. We’ve seen SBIR’s awarded to new startups who are looking to validate their technology concept and then use the R&D to build their first commercial product. Established small companies who have been selling the same product for decades have used DOE SBIR to branch into a new technology and keep their business fresh. There are also small companies with significant R&D capabilities that use SBIR’s on an ongoing basis to fuel IP generation that they can then license or commercialize themselves. Small companies are able to mold SBIR awards to serve different purposes that advance their overall R&D and business strategy.

I highly encourage innovating small businesses to hover over the Thanksgiving tech R&D buffet that is the most recent SBIR/STTR Phase I subtopics list. If a subtopic appears to be a good fit with your technological capabilities and research plans, I recommend a 3-step process:

  1. Read the subtopic carefully and thoroughly, and research the state of the art on the topic, including academic articles that the subtopic references.
  2. Send an email to the DOE program manager listed with the subtopic with any questions you have, potentially asking to schedule a phone call. Prepare specific questions about the subtopic’s research priorities and how it correlates to your technology, but avoid making a sales pitch about your technology.
  3. Reach out to BBC Entrepreneurial Training & Consulting to learn how they can support your proposal preparation. BBCetc are the foremost experts on developing successful SBIR/STTR proposals, and their support for Michigan companies is subsidized by the Michigan Economic Development Corporation.

On behalf of NextEnergy and the innovative small companies with energy and transportation technologies across the country, thank you Department of Energy SBIR/STTR program!

My hope is that as you’re celebrating Thanksgiving with family and friends and reaching for that next piece of pie, you will think about the well-crafted proposal you plan to submit to advance your company’s R&D. Please reach out to me at if you have any questions or would like advice on the DOE’s SBIR/STTR program.


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