Review of the SBIR and STTR Programs at the National Science Foundation (2023) / Chapter Skim
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The programs also help support small, new firms across a wider technological spectrum than is supported by venture capital while also helping to diversify the geographic reach of seed funding, providing initial funding for companies in states, such as Michigan, Wisconsin, and Indiana, that receive little venture funding.
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At the same time, NSF's rigidity regarding relatively small award amounts, as well as the limited opportunities for additional funding, may make the programs less attractive to firms working with capital-intensive technologies that are at an early stage of development. After receiving an NSF SBIR/STTR award, such firms move on to other federal agencies that offer SBIR and STTR programs so they can receive the early-stage funding they need to commercialize their innovations.
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2012) , wherein Congress directed each agency that had an SBIR program budget of more than $50 million in fiscal year 1999 to engage with the National Academies to conduct a quadrennial assessment of its SBIR and STTR programs.1 The congressional mandate calls for assessments that address how the SBIR and STTR programs have stimulated technological innovation, used small businesses to meet federal research and development (R&D)
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The committee also relied on qualitative data, including presentations by NSF SBIR/STTR personnel and consultations with current and former NSF personnel and researchers specializing in innovation. The committee consulted as well with a number of NSF SBIR and STTR awardees, I-Corps experts, and representatives of private-sector financing (including those from the venture capital, angel investment, and university accelerator communities)
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innovation ecosystem. Notably, NSF SBIR/STTR awardees contribute scientific publications and patents and realize financial and commercial outcomes that are consistent with the programs' goal of encouraging small businesses to engage in federal research and development with the aim of commercialization.
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Finding 5-4: While software is still the most common industry sector represented by NSF's SBIR/STTR awardees, the sectoral distribution of awardees is more diverse than that of firms supported by venture capital. NSF SBIR/STTR awardees that receive private-sector follow on funding are more likely to be in pharmaceuticals, medical devices, semiconductors, chemicals, and other capital-intensive technologies than are firms funded by venture capital, which focuses on software and commercial services.
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STTR recipients tend to use prior professional and educational networks when choosing a research partner. Historically Black colleges and universities are infrequent research partners for NSF's STTR awardees.
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Recommendation 3-4: NSF's assistant director for technology, innovation and partnerships should give SBIR/STTR program directors greater flexibility in award amounts, including allowing for larger Phase II awards up to the statutory limit. Recommendation 4-2: The new Directorate for Technology, Innovation and Partnerships should proactively encourage program directors across all NSF directorates to provide information on NSF's SBIR/STTR programs to grantees conducting NSF-funded research and development.
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Congress designed the SBIR and STTR programs so as to allow federal agencies to tailor the programs to their specific mission needs. In service of fulfilling the programs' legislative goals in the context of its own mission, each agency needs the latitude to pursue new initiatives and make programmatic decisions, such as adjusting award sizes and prescribing the appropriate maximum number of awards to any given small business.
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Many NSF SBIR/STTR awardees receive subsequent awards from other agencies, such as the Department of Defense and the National Institutes of Health. Finding 4-5: SBIR/STTR awards can provide a route to commercializing research supported by NSF, but only a small share of NSF SBIR/STTR awards go to principal investigators with previous NSF (non-SBIR/STTR)
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Finding 5-4: While software is still the most common industry sector represented by NSF's SBIR/STTR awardees, the sectoral distribution of awardees is more diverse than that of firms supported by venture capital. NSF SBIR/STTR awardees that receive private-sector follow-on funding are more likely to be in pharmaceuticals, medical devices, semiconductors, chemicals, and other capital-intensive technologies than are firms funded by venture capital, which focuses on software and commercial services.
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Recommendation 3-3: NSF should provide additional tools and training to ensure that the NSF SBIR/STTR programs continue to work toward greater diversity of reviewers, applicants, and awardees. Recommendation 3-4: NSF's assistant director for technology, innovation and partnerships should give SBIR/STTR program directors greater flexibility in award amounts, including allowing for larger Phase II awards up to the statutory limit.
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SUMMARY 13 Recommendation 5-1: Congress should continue to support NSF's SBIR/STTR programs, including by providing additional resources to enable innovation and new initiatives within the programs. Recommendation 5-2: NSF should establish systematic approaches for data collection, data access, and preregistered evaluation that would allow a comprehensive assessment of its SBIR/STTR processes and procedures.
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