The Small Business Technology Transfer (STTR) Program is an initiative, coordinated and overseen by the Small Business Administration (SBA), to provide small businesses with greater access to funding in the federal innovation research and development arena.
Central to the program, notes the SBA, “is expansion of the public-private sector partnership to include the joint venture opportunities for small business and the nation’s premier nonprofit research institutions. STTR’s most important role is to foster the innovation necessary to meet the nation’s scientific and technological challenges in the 21st century.”
STTR is a parallel program to the Small Business Innovation Research (SBIR) Program, and was created by Congress when it reauthorized SBIR in 1992. The STTR program is a cooperative research partnership between small business concerns and research institutions. It differs from SBIR in two ways. First, it places a greater emphasis on the potential for commercial success. This has spurred participating agencies to be more stringent in their evaluations of applicants. Secondly, it requires that universities, federal laboratories, or nonprofit research centers team with businesses to get product into the marketplace. These research partnerships between small businesses and nonprofit institutions enable participants to combine entrepreneurial initiative and creativity with the expertise, equipment, and other assets of nonprofit research laboratories.
The SBA summarizes the program’s development and rapid growth this way. “The STTR Pilot program began making awards in FY 1994. In that year, 198 awards were issued for approximately $19 million to small high technology businesses that collaborated with nonprofit research institutions to undertake R & D projects. In FY 2004, Federal participating agencies awarded 614 Phase I awards and 195 Phase II awards totaling just over $198 million dollars.”
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In order to be considered for the STTR program, interested small businesses must meet several criteria. For instance, they must be American-owned and independently operated for-profit enterprises. In addition, the size of the company may not exceed 500 employees. There is no workforce size limit for participating nonprofit research institutions, but they must also meet certain parameters of the program. They must be principally located in the United States, and they must meet one of the following three definitions: nonprofit college or university, domestic nonprofit research organization, or federally funded research and development center.
Five federal departments and agencies—the departments of Defense, Energy, and Health and Human Services, along with the National Science Foundation and the National Aeronautics and Space Administration—are required by STTR rules to reserve a portion of their research and development funds for the program. As the distributors of STTR funding, they also designate those subjects suitable for additional R&D and determine whether to accept or reject STTR proposals.
These agencies make STTR awards based on the following factors: qualifications of the nonprofit research institution and its small business partner; degree of innovation; and future market potential. Small businesses that secure STTR funding are then routed through a threephase program.
Phase One: Startup. In this initial stage, awards of up to $100,000 are given to pay for approximately one year’s worth of study and research into the scientific, technical, and commercial feasibility of an idea or technology.
Phase Two: Development. These awards, available to Phase One participants, reach up to $500,000 for two years. During this period, business/research partnerships engage in research and development work with an eye toward commercial potential.
Phase Three: Introduction to Market. During this phase, the completed project is introduced into the commercial marketplace to succeed or fail. No STTR funds support this phase. Instead, participants must secure funding from private parties or other federal agencies that do not allocate STTR monies.
For more information on the STTR program, contact the Small Business Administration’s Office of Technology in Washington, DC, or visit the SBA’s Web site at www.sba.gov.