Expert Advice

What are Government-led Innovation Programs?

Government-led Innovation Programs (GIPs) are highly competitive programs that aim to support technological innovation in domestic small businesses, creating opportunities for small firms to engage in Federal Research/Research and Development (R/R&D) with the potential for commercialization. The most widely known programs are the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR). These two initiatives are the largest source of early-stage/high-risk funding for start-ups and small businesses.

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SBIR/STTR Mission and Goals

The SBIR/STTR program aims to encourage technological innovation within small businesses through the investment of Federal research funds, in addition to the potential commercialization and direct sale to government agencies. Overall, these GIPs aim to:

  • Stimulate domestic technological innovation.
  • Meet Federal research and development needs.
  • Foster and encourage participation in innovation and entrepreneurship by women and socially or economically disadvantaged persons.
  • Increase private-sector commercialization of innovations derived from Federal research and development funding.
  • Furthermore, the STTR program aims to foster technology transfer through cooperative R&D between small businesses and research institutions.

Federal Agency Participants

Eleven Federal Agencies participate annually in the SBIR program, and five participate in the STTR program. Through a competitive awards-based program, SBIR and STTR enable small businesses to explore their technological potential and provide the incentive to profit from its commercialization.


Program Eligibility

Only small businesses within the United States are can participate in the SBIR/STTR programs. A small business must meet the eligibility requirements listed below during the first two phases. You must be:

  • Anrganized for profit, with a place of business located in the United States
  • More than 50% owned and controlled by one or more individuals who are citizens or permanent resident aliens of the United States or by other small business concerns that are each more than 50% owned and controlled by one or more individuals who are citizens or permanent resident aliens of the United States; and
  • No more than 500 employees, including affiliates.

Three Phases of SBIR/STTR

The SBIR Program is structured in three phases:

Phase I. 

The objective of Phase I is to establish the technical merit, feasibility, and commercial potential of the proposed R/R&D efforts and to determine the quality of performance of the small business awardee organization before providing further Federal support in Phase II. These awards are generally $50,000 – $250,000 for six months (SBIR) or one year (STTR).

Phase II. 

The objective of Phase II is to continue efforts initiated in Phase I. Funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the project proposed in Phase II. Typically, only Phase I awardees are eligible for a Phase II award and awards are generally $750,000 for two more years of development.

Phase III. 

The objective of Phase III is for the small business to pursue commercialization. The SBIR/STTR programs do not fund Phase III. At some federal agencies, Phase III may involve follow-up on non-SBIR/STTR-funded R&D or production contracts for products, processes, or services intended for use by the U.S. government.

What Innovations do SBIR/STTR Fund?

SBIR funds high-risk, high-payback innovations:

  • Revolutionary
  • Never been done
  • Pushes forward the state-of-the-art /standard of care
  • With the potential for commercialization

SBIR does NOT fund:

  • Evolutionary
  • Basic research
  • Optimization of existing products and processes or modifications to
  • broaden the scope of an existing product, process, or application
  • Analytical or “market” studies of technologies

Small businesses participating in the SBIR or STTR program receive many benefits: you receive funding with no strings attached – you do not give up equity in your company, you do not give up rights to the intellectual property, you do not return the funding – as this is not a loan. Promising research is expected to lead to a commercial product and be

If you are ready to dive into GIPs or seek help with government contracting or want no-cost help to find contracting opportunities, please contact your Norcal APEX Accelerator counselor for assistance or apply for services today!

If you have more questions, please contact us at or 707.267.7561

Authored by: Nanci R. Pigeon, Norcal APEX Accelerator Procurement Specialist