Almost all of the big commercial successes from the National Science Foundation SBIR/STTR program have been companies that received Phase IIB awards, according to Ben Schrag, Senior Program Director of SBIR/STTR at NSF.
So, what’s a Phase IIB award? This is a supplement that is intended to bridge the gap in funding between a SBIR/STTR Phase II project and commercialization. The main objective is to accelerate a Phase II project to the commercialization stage or enhance the overall strength of its commercial potential or both.
There’s a hitch. A defining characteristic of IIB awards is they are matching grants that require funding from third-party investors. If you envision this to be venture capital firms or angel investors, you are correct. But the SBIR definition of investor goes beyond that. It could also be another company, a foundation, a research institution, a university, or even a state or local government. The key is the third party has to make a monetary commitment.
The amount of money the SBIR matches depends on the agency. NSF will put up 50 cents on every dollar of qualifying funds received with a minimum match of $50,000 and a maximum of $500,000. In other words, companies must get at least $100,000 in qualifying third party funds to play. Remember that number.
For its portion of the match, the funding agency does have restrictions on how its money can be used, and these typically relate to the scope of the Phase II project that is underway – expansion of technical work, for example. The good news is there are no such restrictions for the third-party portion. This money can be used for market research, intellectual property development, R&D, capital investment and business development, among other things.
What about other agencies? Not all agencies offer Phase IIB funding. For those that do, there is variation in funding amounts and criteria. Unlike NSF, the Department of Energy is looking to support new R&D and activities that extend beyond the scope of the Phase II grant. And NIH Phase IIB awards are intended to provide follow-on funding for projects that require extraordinary time and effort in the R&D phase – think FDA approval for the development of a new vaccine, for example.
If you currently have an SBIR/STTR Phase II award, I have two assignments for you.
- Talk with a program officer at your funding agency to learn if a Phase IIB award is an option for you.
- Consider participating in CTC’s upcoming SBIR Advance program. This program provides money, training and other resources to Wisconsin businesses to advance the commercialization of their SBIR/STTR-funded projects.
For Phase II awardees, SBIR Advance provides up to $100,000 per year for up to two years. Remember that number? Although SBIR Phase IIB awards are competitive and there are no guarantees, our SBIR Advance program funds have previously qualified for the third-party match discussed above.
