SBIR 2026 Explained in 20 Minutes

In this presentation today, I'm just going to go over what is SBIR and STTR program. We're going to go over eligibility because it's really, really important, and some of the really big changes that are happening in 2026 after the reauthorization thankfully has passed. And in my biased opinion, I find the SBIR and STTR program, which stands for the Small Business Innovation Research or the Small Technology Transfer Research Program, is probably one of the best ways to fund early-stage, high-risk R&D startups. That are making really exciting technology innovations that can make big changes from the industry. One of the biggest things about this program is that it gives founders like you guys non-diluted capital, and this means that you do not have to give away any equity to your company. The SBIR program is also high-res R&D, so we're looking for the risky R&D programs. They're not looking to fund like e-commerce sites or like small consulting firms. We want something that's really groundbreaking and innovative in order to qualify for this program. A lot of these programs here also have mission statements that can, based on the agency's priorities of what they want to fund. And this is also a great program if VCs aren't ready yet just to fund your application. This is a good way just to take that risk, back a high risk or really innovative idea before VCs or outside investors come into play. And so why does that program exist? If we have this really big idea that needs like a lot of capital to build in technology or an R&D idea, SBIR program is the best place to start. Sometimes a lot of VCs or angels said it's a little bit too early in order to invest in your company, or they want to see data, they want to see you be further along to de-risk your startup. The SBIR program is a great way to kind of fill that gap in between. And this also can kind of get you further along without giving your equity so that down the road when VCs and outside investors come to play, you'll be in a much stronger negotiation stage. So the SBIR program comes in 3 different phases. This is Phase 1, all about developing that proof of concept. So this is usually when a founder at this earlier stages, so where they had that big idea, and so they need some funding anywhere from like $200K to $300K, sometimes even $500K to kind of get that proof of concept validated to show there's commercial potential. Usually Phase 1 goes anywhere from 6 to 12 months, sometimes longer, and that gives you funding through different agencies. Now, if you were lucky to get a Phase 1, able to validate technology and say it has commercialization potential, you can go into Phase 2. And this is kind of where you continue your efforts in the R&D commercialization stage so that you can validate the technology and then go for commercialization efforts, validate scalability, validate clinical efforts, get ready for a clinical trial, or even start conducting a pilot with a, a partnership. And so typically these phases go anywhere from 1 to 2 years. Up to $1 to $2 million depending on the agency, further progress throughout. And then Phase 3 is finally where you kind of graduate from the program, where it's not SBIR dollars, but rather getting matching funds or funds outside of the SBIR program that would fund and kind of take that to the next level. And so everyone has eye on that Phase 3 efforts. Couple of cool things here, there's something called Direct-to-Phase 2, where if you are a little bit further along, you have really good data, and you show that there's commercial viability, In some programs, you can skip Phase 1 and go to direct Phase 2. There's also something called a fast-track program where you can kind of squeeze your timeline and put Phase 1 and Phase 2 together. We have the timelines, um, in the SBIR program. So who funds the SBIR program? So pretty much all the major federal agencies, um, have an SBIR program. This is a $4 billion program that kind of gives out 6,000 to 7,000 awards every year. The biggest program is the DOW, or the DOD as as they know, which is Department of Defense, and they are looking for dual-use technologies that can help give us a benefit for our warfighters. The next one's also the HHS or the NIH sector, which is our human health, along with the National Science Foundation. Other programs that have SBIR programs are the DOE, which we hope to come back online very, very soon, DHS, NASA, DOC, USDA, Transportation, also ARPA-E, ARPA-H, just have smaller SBIR programs. And so there's a lot of different agencies out there, and they all have their different mission statements. How important it is to win these applications by making sure you're developing and your goals, your specific goals, are aligned to the agency's priorities. And that'll just help accelerate and give you the best chances to get better funding. And so after the overview of the SBIR program, let's go over eligibility. So not all the startups are eligible for this SBIR program. First, you have to be a US for-profit entity, whether you're an established LLC, a C-Corp, a B-Corp, an S-Corp, or a partnership. If you're spinoff technology from a university or startup, you want to get started on your registrations right away, which means you get your EIN number, you gain your for-profit entity set up. Next, as a small business program, you have to have lower than 500 employees. Ownership and control, you have to be at least 50% of your company has to be owned or controlled by US citizens or permanent residents. With the new preauthorization act, the foreign involvement on your cap table and your partnership is going to be under much more scrutiny than ever before. Majority of your company is owned by US citizens or permanent residents. Next, you as the PI, which is typically the founder, you have to be at least more than 50% of your time working at the small business. If you are from academia and you're applying to the SBIR program, a lot of times you can apply for as an STTR, which you have a partnership with a university or research entity that way. But typically, if a lot of you guys have a full-time job, you can still apply for the SPR program, but knowing upon time of award, you have to dedicate at least the majority of your time in the small business. Finally, the work has to be performed in the US. This is a research-based program, so they want to spur economic development in the US. So if you do have foreign partnerships or manufacturing or supply chain partnerships overseas, ideally, it would be great to find a US-based entity that can also help the work. Yes, there are instances where you can qualify for a foreign entity to participate with your— in your project or a partnership when you go after these programs. 6, you as a small business must be the primary applicant. So small businesses and early-stage startups, they will be the ones that have to be applying and take the full ownership and responsibility of leading the efforts. A lot of times, many people partner with a bringing research hospital or a university, which is also encouraged, but the small business must be established and needs to lead the efforts, not the university, or as far as TTR applications are funding companies and startups that are going after research and development efforts. And so what does that mean? A lot of scientists and engineers and clinicians might have this big idea, and we want to break down that big idea by 3 to 4 experiments, probably in SBIR Phase I, of how you can validate your technology. What are things you need big capital for in order to de-risk those efforts in order to validate that you have something that's commercializable. Not all startups might qualify for the SBIR program under this qualification. Making sure that what you're developing meets the requirements of the agency that you're going after. You might see here I wrote close enough does not work here. A lot of people might have technology and they're like, oh, I could think of I can talk enough more, might fit into this niche, or I can try to tweak my innovation in a way that would make sense with the DOE. Every time people do that, I just don't find it leading to a nice funded value. So making sure that what you're developing is aligned to the agency's goal and also aligned to your own goal to market is going to be very critical in order to secure these applications. How do you actually win these proposals? Let's go over what that looks like. These are big applications. SBIR Phase I applications, with or without AI, can take anywhere from 50 to even 100 hours to prepare. Phase IIs, like the Phase IIs or Fast Tracks, can be even larger applications, up to 200 pages, that can take, you know, double the time, again, with or without AI. One, again, is this a technical fit and a mission fit? Does your R&D goals and the problem you are solving address a technical gap? That is called for in the solicitation, and we want a direct alignment based on what the agency is going to fund and also what you're developing. Also, the stage must meet what the agency is looking for. Phase 1s might be looking for something a little bit earlier stages, whereas Phase 2s might be looking for something at later stages. So your TRL, your technology readiness level, if you're going for, you know, dual-use defense or a DOE application, must match the solicitation of the Phase 1 or Phase 2. If you're at earlier stage, thinking about how do we get funding to validate an idea, idea, you're more appropriate for a Phase I. If you have pilot data, if you have customer validation, and you have good R&D research results, you might be a good fit for Phase II and the bigger dollars. What does a winning proposal look like? So there are 5 high-level things I highlighted out just for your consideration as you prepare these applications. One, I always recommend, think about what your specific aims or your technical objectives are. In other words, what's the high-level goal and how do you break down those goals into 2 to 4 experiments that will validate the idea. That's always the first thing I do with my startup clients to make sure, nail down the problem being solved. What is the solution or innovation we're trying to target? What do we want to use the money for? Two, technical plans. Once you lay out your objective of the experiments you want to pursue, they're going to want a rigorous R&D plan to think about what are your milestones, your quantitative success criteria. I can't emphasize how important it is, quantitative success criteria. What does success look like and how do you measure it? That's really going to help you differentiate your proposal from everyone out there. 3, commercialization plan. Even though these are R&D grants, they want to know how you're going to make money. We want to see the government as your investor that's taking a risk on you. Why should they fund you? What is your go-to-market goal? We always want to include a paragraph that we know the market, we know the customer, and that we know how do we plan to make money. 4, your team. Is your team uniquely qualified to go after these applications? Because especially in the early stages, they're going to be looking at you as the PI. They're going to be evaluating, are you the right lead for this? And do you have the right tools in your toolkit in order to carry the proposal out? In other words, do you have the right team members in place? And even though this seems kind of self-intuitive, I've come across a lot of proposals that may not have the right expertise on the team, and then the reviewers will see that as a gap and might ding your application. And finally, the budget and budget justification. Save this last, but don't leave this to the last minute. Because this is what you're going to be developing, proposing. This is what I'm going to use the money for. So as you're thinking about how to break down your experiments and how to carry your proposal in that, like, Phase I and Phase II frame, what does your budget look like? Who's going to be paid as a salary? What materials are you going to use? Do you need travel? What do your indirect costs look like? Based on the numbers that you put in there, you also have to justify the numbers. Why does this person need the salary? What are you using the materials for? How do you need to travel? And so that's going to be another portion of your proposal that you would critique. And so, like I mentioned, I want to emphasize the quantitative technical milestones. They make the biggest difference in the world. So what are some examples of what does a strong milestone look like? So for example, if someone say the success criteria is to demonstrate the feasibility of proposed research, when I was a reviewer, I will look at that and say, you know, what does that even mean? And so a stronger milestone would have quantitative metrics. That is time-bound, specific. So achieving 85% detection accuracy with 500-sample database by month 4. Wow, that gives me confidence that you as the PI know exactly what success looks like. Conduct experiments and collect data. If I see that's a milestone, I'll be thinking, what experiments? What data? Does the PI even know what success looks like, or do they even know what data they want to collect? A stronger milestone in that sense is to complete 3 synthetic runs confirming yields by month 6. And again, you know, deep science and research, and sometimes it doesn't put us plans. So we just want to give the impression that we think if all goes well, this is what success might look like. But they understand as you go through the application and the milestones and research, things might change. Budget basics. So there are 3 main categories about the budget: the direct costs, the indirect costs, and the small business fee or the profit. The direct costs are anything directly tied to your proposal. So if you're proposing X amount of people, you need materials and time for experiments to run. Those are going to be your direct costs. When you flesh out your proposal, the direct cost is the first thing you want to tackle. Once you have the direct cost, the next thing you go for is your indirect cost. This is usually done as a rate, anywhere from 30 to 40% of direct cost. So for example, if your direct cost is $100K, you can propose a 40% indirect cost as overhead or your G&A costs, and then that will lead to $40K as indirect cost. So, so far a total of $140K in your budget. And then the small profit business fee is kind of the government's way to thank you for doing these R&D efforts and the work. Another 7% on top of your direct and indirect costs. So the 7% in this example of $140K can be your small profit fee. But the beauty of the for-profit is that you can use this for anything. All right, let's go over why I've seen proposals fail. Number 1, solicitation misalignment, not a right fit. And 2, vague or weak milestones. This is going to be very important to show quantitative success criteria. 3, commercialization plan. We want to show them how you're going to make money and outline them, you know, your go-to-market plan. It's going to be very important. 4, overly ambitious and academic frameworks. They love startups coming out of academia, right, and research groups. This is like a core reason why NSF program exists. But the way you position your go-to-market in your commercialization plan and the way you write an academic grant is going to be very different compared to go for an SBIR application. So a lot of academic founders might need help to kind of position their narrative towards the commercialization side. 5, last-minute submissions. Even with AI, there is a lot of things that you have to go through, including your registrations as a company, which can take up to a month, making sure your narrative is sound, and that does take quite a bit of back and forth. They're going to be looking for ways to reject your application because that's one less application that they have to review on their end. They're getting a lot of junk and volume is going to be— so make it as easy as possible to have reviewers who want to review your application and start early. We cannot emphasize how important it is to start early, especially in this time where everything was on a hiatus for 6 months. The next couple of cycles across agencies, Your time is going to be very compressed. 6, eligibility oversight. They're going to be way more— they're going to scrutinize much more by eligibility, foreign risk criteria, and partnerships overseas. So you want to make sure you are eligible and qualified, that your structure looks good before you go and prepare an application. New changes that are happening in this new landscape. So I'm going to break this down into 7 different ways of what is coming in the SBIR sector that is new for everyone, including me. Number 1, Security Forward risk screen is going to be much more strict. They're going to look at your cap table. They'll look at your partnerships. And if there is something with foreign ties, especially with China, Iran, or Russia this time, they're just going to ding you right off the bat. So if you have foreign investors or partners, collaborators tied to your startup company, take care of that now. 2, proposal caps. You don't get unlimited submissions anymore. Because I saw on ChatGPT one PI has submitted 40 applications, which is not what you want to do. I'm a huge fan of submitting more than one application because these are very competitive applications. There's an average of 10 to 12% of getting an SBIR Phase I award, and so it is important to go after multiple of them, but you don't want to just kind of throw your dart in the air. Each application is strategic, and also to make sure that you don't hit that cap. I believe for NIH, Each PI is allowed, I believe, 9 applications in one fiscal year. Phase 3 push. Even though these are R&D grants, they're going to make more of an emphasis this year to you understand who your end customer is and how you can make money. So the best way to do this, in my opinion, is to get loads of support from people that you spoke to that might buy you at the end of the day. And this is something I strongly recommend, especially in a Phase 2 or Fast-Track application. And in Phase 1, this might be more important than ever before. Have you talked to your end customer yet, right? And that would just push you ahead of the pack. Or this would be my favorite one. So usually Phase 2s would be capped from $1 to $2 million for 1 to 2 years. Depending on new priorities and the US government wants to fund, there might be awards up to $30 million available for Phase 2, which is really exciting. However, you have to be much further along, and this may not be for an early-stage founder if you haven't gotten traction just yet. And so if you're further along with the team in place, you maybe have a couple Phase Is and you're in potentially a hot topic area, like for example, maybe quantum or critical minerals, for example, there might be a strategic breakthrough that you can get, secure more funding. So this is new and this is coming out and something I'm really excited about as well. Five, execution first evaluation. Again, you don't want a strong idea. We need an actionable plan of how you propose to carry your proposal. They want to see quantity of milestones and they want to make sure your plan is balanced to get you from not just a research answer, but to a commercialization answer. 6, more transparent denials. In the past, if you go after some SRAB agencies and you get denied, like this is quite common for the DOW, you might get like maybe a couple bullet points as to why you got denied, and they're going to try to remove this requirement so that the agency gives you more feedback as to why your proposal got denied. Your job is to make sure, you know, you make it as easy as possible to get this awarded by making sure your cap table is clean, your partnership is clean, you have, uh, quantitative milestones, and that you're going after facilitations that is the right fit for you and your startup. 7, the SBIR program typically expires and has to get renewed every 3 years. The SBIR program expired last year, September 31st, but then, sorry, October 1st, it kind of went into hiatus for a couple months. SBIR program is here to stay up until 2031. And so this is gonna be a long game. There's gonna be more SBIR funding more than ever before. And it's gonna be here for at least 5 years, which is fantastic, and that's one of the best things that happened, in my opinion, through this new act. Now, if you're thinking of going after SBIR funding in 2026, one, validate your eligibility, check your cap tables, your partnerships and collaborators, and get your registrations done early on. You know, that means your EIN, get your for-profit business started, start applying to SAM.gov. That one is gonna take the longest. 2, identify 1 or 2 topics. Start, um, I'm starting to see each of the agencies start putting out solicitations and calls out there, which is really exciting. DOW and the DSIP has many topics out right now. NIH or HHS has the next omnibus solicitation cycle coming out in September, and the other agencies we're keeping an eye on to see when the, uh, next deadlines are coming through. Again, start building a technical plan and start putting that narrative together, and then be honest with it. Like, do you have time to proceed? Is this the right moment for you? Because if you do go out the applications, it does take time, effort, and resources on your end in order to prepare a competitive application. And I can guarantee you, especially with these shorter timelines, the hiatus in 6 months, this is going to be a very competitive cycle. And so with that, I just want to thank you guys again for joining me today. Just a little bit about myself. I've been doing federal grants and contracting for about 10 years, did over $3 million of funding. I personally was a PI myself where I, um, a couple SBIRs, uh, in my first venture. I also was a reviewer for NIH and NSF for about 5 years. I have a YouTube channel. We're almost at 10K subscribers, so if you guys don't mind going on there, if you want to learn more about anything on the SBIR sector or just how to get federal grants and funding, that's a great resource for you guys to check out.