Research and development (R&D) activity is risky since there is no guarantee that your idea will become a viable product. Early stage innovations are unlikely to attract venture or angel funds. So, where can you look for funding? One possibility may be the federal government with the Small Business Innovation Research and Small Business Technology Transfer programs.
I have a product idea and need money to pay for research and development. Where can I find funding? Mandy, Riverton.
Great question, unfortunately, research and development (R&D) activity is risky since there is no guarantee that your idea will become a viable product. Due to this risk, a bank is unlikely to loan money to a fledgling or startup company. Additionally, if your innovation is early stage and there is no feasibility study or prototype to support it, your company will have difficulty attracting seed funding from other sources (venture or angel funds). So, where can you look for funding? One possibility may be the federal government.
The federal government tries to solve some of our nation’s most significant problems, and it looks to small businesses to help provide solutions. Since 1982, when President Ronald Reagan signed the first legislation creating the Small Business Innovation Research (SBIR) program, the federal government supports small business R&D. Ten years later, the Small Business Technology Transfer (STTR) program started. The STTR program promotes the transfer of intellectual property and technical knowledge from our nation’s non-profit research entities – usually, a university or a national lab.
The important key here is that there needs to be some unknown on whether or not your product will work since SBIR/STTR supports scientific discovery. What that means is if you know your product will work, it won’t qualify for funding since SBIR and STTR don’t pay for straight product development. The first phase of funding is typically a feasibility or proof of commercial concept.
Currently, eleven federal agencies participate in the SBIR program with the five largest, also offering STTR funding. We encourage small businesses to start their search for federal research money at the five agencies which aaccount for over 97% of the SBIR and STTR funds. These agencies include Department of Defense (DoD), Health and Human Services (HHS) which includes the National Institute of Health (NIH), Department of Energy (DOE), National Science Foundation (NSF), and National Aeronautics and Space Administration (NASA).
NASA and DoD are contract agencies with very specific research topics. DOE is a granting agency, but it tends to have specific areas of interests that are more narrowly defined. Other agencies are grant agencies (HHS, NSF, DOE) with broad areas of interest. It is easier for a small business to fit your product idea into a grant agency so check there first.
Once you have looked at the five largest, take a few moments to review the broad topics at Department of Agriculture (USDA); due to Wyoming’s rural nature and USDA’s mission, it is also a great place to look for funding. It is important for a small business to understand the mission of each agency and learn the similarities and differences among them.
You can learn more about these and other SBIR opportunities that might be a fit for your innovative product idea by visiting the Wyoming SBIR/STTR Initiative website, www.uwyo.edu/sbir.