ners undertake a limited amount of research aimed at establishing an idea’s scientific and commercial promise. Today, the legislation anticipates Phase I grants as high as $100,000.4

  • Phase II grants are larger—the legislated amount is $750,000—and fund more extensive R&D to further develop the scientific and commercial promise of research ideas.

  • Phase III. During this phase, companies do not receive additional funding from the SBIR program. Instead, grant recipients should be obtaining additional funds from a procurement program (if available) at the agency that made the award, from private investors, or other sources of capital. The objective of this phase is to move the technology from the prototype stage to the marketplace.

The Phase III Challenge

Obtaining Phase III support is often the most difficult challenge for new firms to overcome. In practice, agencies have developed different approaches to facilitate SBIR grantees’ transition to commercial viability; not least among them are additional SBIR grants.5 The multiple approaches taken to address the Phase III challenge are described in Chapter 5. The Department of Defense has shown considerable initiative in its efforts to enhance commercialization and capture returns for the program. Unlike some major agency participants in the program (e.g., NIH & NSF), DoD seeks to acquire and use many of the technologies and products developed through the SBIR program.

Previous NRC research has shown that firms have different objectives in applying to the program. Some want to demonstrate the potential of promising research but may not seek to commercialize it themselves. Others seek to fulfill agency research requirements more cost-effectively through the SBIR program than through the traditional procurement process. Still others seek a certification of quality (and the investments that can come from such recognition) as they push science-based products towards commercialization.6


With the agreement of the Small Business Administration, which plays an oversight role for the program, this amount can be substantially higher in certain circumstances and is also often lower, especially with smaller SBIR programs, e.g., EPA or the Department of Agriculture.


The Phase III challenge was explored at a conference convened at the National Academies on June 14, 2005. The proceedings of this conference are reported in National Research Council, SBIR and the Phase III Challenge of Commercialization, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2007.


See Reid Cramer, “Patterns of Firm Participation in the Small Business Innovation Research Program in Southwestern and Mountain States,” in National Research Council, The Small Business Innovation Research Program: An Assessment of the Department of Defense Fast Track Initiative, Charles W. Wessner, ed., Washington, DC: National Academy Press, 2000.

The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement