Tutorial 12: NSF

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Every SBIR or STTR program takes on the unique characteristics of the agency in which it resides. The National Science Foundation’s SBIR/STTR programs are no exception. NSF supports fundamental research and education across all fields of science and engineering. With an annual budget of approximately $7.5 billion, NSF is the funding source for approximately 24% of all Federally supported basic research conducted by America’s colleges and universities.

The NSF SBIR / STTR program resides within the Division of Industrial Innovation and Partnerships or IIP. Its vision is to drive the expansion of the nation’s innovation capacity by stimulating partnerships. It looks to enhance economic competitiveness by catalyzing the transformation of discovery into societal benefits. This vision shapes the implementation of the NSF SBIR/ STTR program which funds game changing, disruptive technologies. NSF’s solicitations are extremely broad. You identify the problem or opportunity, you propose the technological solution and devise your business strategy. One of the hallmarks of the NSF program is its emphasis on commercialization. NSF was after all the first agency to have an SBIR program and an emphasis on commercialization has always been its cornerstone.

With an annual budget of approximately $190M, the NSF SBIR/STTR program funds roughly 400 projects a year. The agency’s sweet spot is early stage, high risk technology at the pre-seed level. The goal is to conduct research and development that overcomes significant technical hurdles in order to prove the feasibility of a new product, process, or service. Applicants are expected to think deeply about commercialization and develop solutions that could create significant commercial success and/or societal impact.

The NSF program is unique in many ways. The Program Directors have deep technical and business expertise and directly provide guidance and mentorship to small businesses. NSF believes strongly in the benefits of connecting with others and facilitates that connection. The program funds highly technical R&D in broad technology areas. These include:

  • Advanced Manufacturing and Nanotechnology (MN)
  • Advanced Materials and Instrumentation (MI)
  • Biological Technologies (BT)
  • Biomedical Technologies (BM)
  • Chemical and Environmental Technologies (CT)
  • Educational Technologies and Applications (EA)
  • Electronic Hardware, Robotics and Wireless Technologies (EW)
  • Information Technologies (IT)
  • Internet of Things (I)
  • Semiconductors (S) and Photonic (PH) Devices and Materials
  • Smart Health (SH)
  • Other Topics (OT)

In trying to determine if the NSF SBIR/STTR program is a good opportunity for you and your company– it is recommended that you consider two things: (1) Is this a genuine innovation – an approach that is highly disruptive and technically risky? That is what NSF is looking for – not evolutionary technologies, but those that are revolutionary in nature; (2) The second thing to consider is if you are organized to aggressively validate a market need and pursue commercialization. Again, that is expected at NSF. Potential proposers can solicit Pre-Submission feedback from the appropriate Program Director by preparing a 1-2 page executive summary and uploading it to the NSF website. Feedback from the Program Director will help the potential applicant gauge whether a project meets the program’s intellectual merit and commercial impact criteria. These criteria are clearly described in the solicitation.

NSF is start-up friendly and has recently updated its website with the theme “America’s Seed fund – powered by NSF”. Eighty-five percent of awardees have 10 or fewer employees. In fact, in 2016 of the 331 companies that were awarded a Phase I grant, the median number of employees was 3, with one year in business. Approximately eighty-seven percent of awardees have never had a prior SBIR/STTR Phase II award from any agency. Seventy-eight percent of awardee companies were incorporated within the past 5 years.

NSF provides grants, not contracts. The average funding rate is 16% for Phase I and 39% for Phase II. Phase I awards are up to $225,000 to test feasibility and conduct proof-of-concept research over a 6-12 month period. Phase II awards are up to $750,000 and last 24 months. During Phase II the company is expected to engage in prototype development, scale up and testing. Phase II applicants, by the way must have received a Phase I NSF SBIR/STTR award.

The National Science Foundation provides a wide variety of Supplements designed to encourage partnerships and commercialization. At the Phase II level, there is a Phase IIB Supplement. At this stage of development NSF will provide a 1:2 match up to $500K – meaning that if you secure a $1M investment, NSF will provide an additional $500K. Another Phase II supplement is referred to as the TECP which stands for Technology Enhancement for Commercial Partnerships. This program provides a $150,000 supplement to SBIR or STTR awardees in order to pave the way for partnerships between strategic corporate partner and investors. The intent of this supplement is to provide funding for additional research that goes beyond the Phase II project’s objectives to meet the technical specifications or additional proof-of-concept requirements of the potential commercialization partner.

Apart from these supplements designed to encourage commercialization, there are others aimed at supplementing your team. These include Educational Partnerships with high school students, teachers, undergraduate students, and US veterans, as well as Institutional Partnerships. Be sure to explore these.

Another program developed by the National Science Foundation is the I-Corps program, originally designed to capitalize on previously NSF-funded basic research and nurture a national innovation ecosystem by helping discoveries from fundamental research to become new technologies that can benefit society. NSF now offers an I-Corps Lite program for SBIR/STTR awardees.

To find out more about the NSF SBIR/STTR program be sure to visit the agency’s website and listen to the tutorial regarding the NSF solicitation process.

NSF Success Stories

Course 2 Tutorial 12:


(1) NSF’s annual SBIR/STTR budget is approximately ……?

(2) The NSF SBIR/STTR Program Directors

(3) True or False: Fifty percent of NSF SBIR/STTR awardees have less than 10 employees.

(4) The size of an NSF Phase I SBIR/STTR award is up to ...

(5) True or False: Most of the NSF supplements support SBIR/STTR Phase I awards.

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