Is Your Startup a Good Fit for SBIR/STTR Funding?

In 2024, life science startups continue to face challenges in accessing equity funding, particularly at the pre-seed/seed stage. Many turn to SBIR/STTR grants as a vital funding option. These grants provide crucial funding and additional benefits, such as honing communication skills and building essential business capabilities. SBA statistics say only 46% of first-time applicants will win. What are some ways you can significantly improve your odds of securing funding?

A Life Science Funding Desert

2023 was challenging for life science startups seeking equity funding. Furthermore, the timeline for medical products (5-7 years for devices and 13 or more for drugs/biologics) makes many VCs wait to back a company until it is closer to a submission phase. Funding statistics are also poor for companies with nontraditional founders or working on technologies that address underserved groups. 2024 is better, but not by much, and the landscape is particularly difficult for pre-seed/seed-stage companies.

Are SBIR/STTR Grants an Option?

These gaps mean nondilutive funding is often the mainstay of a company’s early cash flow. SBIR/STTR grants are one such funding source, and they have benefits beyond providing funds. Developing a proposal, communicating it clearly in the application, revising where needed to secure acceptance, and managing the contract all help you and your team build and demonstrate skills necessary for business success. But how do you know whether your idea meets an SBIR/STTR program’s objectives?

Finding an Answer: Step 1 – Research

There are three ways you can find out. The first and necessary step is researching the agencies that support your technology through their published information and solicitations. If you are unfamiliar with these grants, the generic America’s Seed Fund site is an excellent place to start. Each of the eleven agencies with SBIR/STTR programs has specific areas related to their mission. Health and Human Services (HHS) and the National Science Foundation (NSF) are the most likely sources of medical product development funds. However, we are increasingly seeing technologies in development on the boundaries between traditional sectors. Think about which agencies could be customers for your product to identify new opportunities. Searching previous awards can assist in refining your focus on specific funding opportunities. Here’s one place to start: https://beta.www.sbir.gov ?

Finding an Answer: Step 2 – Build Relationships

Second, start building relationships with the managers of likely programs as soon as you identify them. Curate questions from your research and use these to begin an engagement. Let them know you are developing a proposal and ask whom they recommend as additional contacts. The U.S. Small Business Administration provides services for grant applicants and is another source of information. You should understand the application process and timelines because they will impact your development and require significant time commitment. If you have a regional life science trade association, find out what resources they have to help you. Use your research on previous awardees to make connections and get their feedback, particularly on process pain points. The breadth and depth of your network will directly contribute to your company’s success beyond securing funding, so start building these connections as soon as possible.

Finding an Answer: Step 3 – Get Feedback from Reviewers

Third, many agencies offer a way to get clear feedback on your idea before you put in the extensive time to develop a proposal. A great example is the Project Pitch opportunity at the NSF. You submit a short summary of the technology innovation, technical objectives and challenges, market opportunity, and the team (no more than 1,000 words total). If your idea is a good fit, you’ll be invited to submit a full proposal. If it’s not a fit, the reviewers will tell you why. Here’s the NSF’s project pitch site: https://seedfund.nsf.gov/project-pitch/ ?

The Take Home Message about SBIR/STTR Grants

I can’t emphasize too strongly that you should spend most of your time on the research step. Applying for an SBIR/STTR grant will take a significant portion of your energy, and you should have enough confidence in the fit to predict a better-than-even chance of success. The SBA notes that 46% of first-time applicants are winners, but that means 64% don’t succeed on their first try. Your first application will be the hardest because you are developing all the content from scratch. Keep all your drafts and notes because they can be useful for future grant applications and other competitions.