Stacy Chin explains why the SBIR/STTR programs, which have funded companies like Qualcomm and Biogen, face uncertainty after 2025. A new law gives founders one year to submit proposals before the 2026 reauthorization. She advises tightening compliance, diversifying funding sources, and watching for congressional changes.
What the fuck is happening with the SBIR and STTR program? Are they shutting it down? Is my proposal getting reviewed? Is it safe to even continue? Over the past few weeks, my messages have been flooded with dozens of founders reaching out in full panic mode. They're freaking out, wondering what's happening with the situation and if SBIR and STTR opportunities are going to vanish overnight. Some are scrambling to rewrite budgets, others are calling investors, and a few are just trying to figure out what is next. If this lifeline disappears? It's pure chaos, and I totally understand. When something critical feels uncertain, it shakes founders to their core. But take a deep breath, because here's the truth: you're okay for another year. Let me break it down for you in this video, so stick around to the end because these insights could make or break your non-diluted fundraising strategy for the rest of this year. Hey guys, welcome back to the channel. If you're joining us for the first time, I'm Stacy Chin, a professional federal grants and contracting consultant who's helped to raise over $50 million of non-diluted funding for startups developing innovations for healthcare, climate, and defense. So if you've been following this channel for a while, you'll know that the SBIR and STTR program aren't just another line item in the federal budgets, but rather they are a huge engine for American innovation. For over 40 years, these programs have funded new ideas that start small in the lab, garage, or someone's living room and then turn technologies overnight to change complete industries. We're talking about the backbone of startup and R&D across the US. That's why more than $4 billion every year are dedicated to these small business programs, because these grants have helped create technologies in the past like Qualcomm, 23andMe, Biogen, iRobot, and thousands more. So the SBIR and STTR program give founders something that venture capitalists can't really give them: time and freedom to build without dilution. No equity given up, no loss of controls, just pure funding for innovation that truly matters. Because let's face it, the SBIR and STTR program allows that PhD researcher spin out their first company from a research lab. These critical funds also help small biotech companies take discovery from the lab towards the clinic. And this is really what gives climate tech, AI, and advanced manufacturing startups the runway to scale before investors come on board to get interested in what they're building. So bottom line, for the past 4 decades, these programs have launched technologies and new innovations that have defined entire industries. Not only have they created hundreds or thousands of jobs, but rather a few billions in private funding investments, all started from one small federal grant. But this year, these programs are leading to huge question marks in founders' heads. So let's take a step back. In 2022, Congress extended the SBINSTR program only through 2025. But since then, debate at Washington has been fierce. Lawmakers couldn't agree. Some wanted modernization of the program with deeper reforms. Others question whether the SBIR and STTR programs have run their course entirely. And critics argue that too many awards were going to the same company over and over and over again, what they call SBIR mills, instead of spreading the opportunities to new startups. And others have raised flags about foreign influence and national security risks, pointing to cases where research has funded potential ties to China or other adversarial countries. Also, there are calls for tighter oversight. Stronger performance metrics, and more transparency on commercialization outcomes. Essentially asking, are taxpayers really getting a return on their investment? Meanwhile, supporters are pushing back, saying the real problem isn't the program itself, rather it's the bureaucracy and how it slows the whole process down. There's inconsistent review standards across agencies and the lack of long-term funding stability. So now what's going on with startup founders across the nation? They're left in limbo, staring at the deadlines, not knowing when the next funding round is going to come even next. I've talked to teams who have proposals ready to go, budgets filled, partners lined up, but then they froze. Why pour months into an application if the entire program is going to vanish? So startups have been pausing submissions. Investors held off on term sheets, waiting to see if federal funding would dry up. Even agencies like the NIH, the NSF, the DOD were caught in the middle, unsure whether to release new solicitations or put everything on hold. So for small companies relying on the SBIR and STTR programs as their lifeline, that uncertainty wasn't just inconvenient, but rather existential. But here's the thing. While policymakers argue about performance metrics and oversight, founders weren't thinking about the policy. They're thinking about survival, how to keep the labs open, how to keep the engineers and scientists paid, how to keep the ideas alive in a system that can feel like it vanishes overnight. And that's where HR 5100 comes in. So in mid-September 2025, Congress finally stepped in and pass a short technical bill quietly but critically called H.R. 1500. And this is why it matters. This bill gives founders one year on clarity to submit agency confidence, solicit any awards, and investors enough certainty to continue pushing deals forward. Let's be clear, this is a bridge, not the destination. The bigger debates around foreign influence safeguards, repeated award caps, and new performance standards are still on the table for the next reauthorization. So I know you're asking, what should founders do now? And here's what we've been saying: double down on submission. Treat this year as your window of opportunity. So if you have been holding off applying, this is the time to get your proposal in the system. Tighten your compliance documentation. Expect stronger due diligence next cycle. Clean up your ownership structure and review if you have any foreign ties. And why are we telling you to double down? Because during times of uncertainty, we find that everyone's holding back. But that means that's your petition and window of opportunity to get ahead. We've seen these governmental situations and reforms happen in the past, and those that stick the course are the ones who get awarded. Also, this might be a great time to also diversify your funding. If you're focused on submitting SBIR applications in one agency, this is a great time to look across different agencies and see if you are a fit. You can also look into state grants, other FOAs, BAAs, or other non-dilutive funding opportunities as well as dilutive. Either way, make sure to follow agency updates and congressional hearings. Keep an eye on the policy shifts coming up in 2026, which could change how the entire ecosystem operates. But either way, this is temporary and things will open up. It's just a matter of when. So if you have runway, take these months to build up the momentum to prepare for your wins and also prepare for what is next to come. And with that, thank you so much for joining me today. And you're looking for help to figure out what is your non-dilutive funding strategy during these difficult times, where my team and myself at Scout are ready to jump on a call with you. And if you're looking for help to understand how to navigate this troubling landscape and what your non-dilutive funding strategy should be in preparation for 2026, check the link below. We can reach out to myself or one of my team members at Scout. We're here ready to help you to figure those next steps out together. If you found any of these tips helpful, I would greatly appreciate if you like and subscribe to this channel. And don't forget to check out the links below in the description for more resources and tips to support you in your non-dilutive fundraising journey. Thank you so much for joining me today, and I'll see you in a video very soon.
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