NIH SBIR Beginner: Are SBIR Grants Right for You?

by Tom Hollon

If you’re new to NIH SBIR grants, take a moment to consider whether they’re right for you.

If they’re not, you’ll save yourself a lot of disappointment and wasted time by looking for money elsewhere.

NIH SBIR grants and their STTR grant cousins are FREE MONEY. They aren’t loans to be paid back. They do not dilute equity. VCs like investing in companies with SBIR grants because they see NIH approval as validation of their technologies. No wonder everybody wants a grant.

But… so many more companies want this free money than there is free money to go around that NIH can afford to be very choosy about who gets it. So put out of your mind that winning SBIR grants is going to be a cinch. For most companies, it won’t be.

Here then are some questions to ask before committing time and money in preparing a SBIR grant application.

1. Are you eligible to apply?

NIH eligibility criteria are IRONCLAD. On the date of the SBIR Phase I and Phase II award, your company must meet all of the following, which I quote from NIH:

  • “is organized for profit, with a place of business located in the United States, which operates primarily within the United States or which makes a significant contribution to the United States economy through payment of taxes or use of American products, materials or labor;
  • “is in the legal form of an individual proprietorship, partnership, limited liability company, corporation, joint venture, association, trust or cooperative, except that where the form is a joint venture there can be no more than 49 percent participation by foreign business entities in the joint venture;
  • “is at least 51 percent owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States; and,
  • “has, including its affiliates, not more than 500 employees.”

2.  Are you starting at least 5 weeks before the SBIR grant deadline?

If you’re a first-time SBIR grant applicant, you must register as an applicant with NIH eRA Commons and Grants.gov, which unfortunately can’t be done at the last moment. NIH eRA Commons and Grants.gov each require your company to register at least 4 weeks ahead of NIH’s SBIR grant submission deadline. To be on the safe side, make it 5 weeks. If you have less than 5 weeks, I advise you to skip the upcoming deadline and apply next time around. NIH SBIR grants have three submission deadlines a year, every 4 months.

3. Is NIH interested in your SBIR research project?

Each NIH institute and center has a mission from Congress to improve some aspect of the nation’s health. Unless your SBIR project aligns with one of these missions, NIH will never give you a grant, period. So before you start working on your grant application,  first contact a SBIR NIH Program Officer familiar with research funding in your field and ask if your project is of interest.

Every institute and center has a program officer for SBIR grants. They’re generally very nice. It’s a mistake not to seek their advice. NIH’s annual SBIR Omnibus contains a list of SBIR program officers throughout NIH and their contact information. You can find it through Google. Search for “NIH SBIR Omnibus.”

Contact a program officer first by email, sending a proposed abstract of your project. Then call a day or two later and ask if it’s a fit for the program officer’s institute, or if not, some other institute. You’ll probably find them more available to advise you if you contact them well ahead of your grant deadline.

4. Do you have someone with sufficient research experience to guide the project?

NIH does not award SBIR grants to train people to do research.

5. Do you have the facilities and equipment to do the research?

For a Phase II SBIR grant you may be able to include some needed research equipment in your budget, but I do not believe this is possible for a Phase I grant. For Phase I, you should already have access to the equipment you’ll need.

6. Do you have capable colleagues to talk to?

NIH will assess your research environment as part of its review of your application. It’s a red flag if you have no one to advise you if your research gets in trouble.

7. Do you know what a successful SBIR grant application looks like?

A careful examination of someone else’s successful SBIR grant will help you understand the effort it takes to have a serious chance of winning. For many years NIAID’s website has made available successful SBIR grant applications for downloading and study as models. Even if your project has nothing to do with allergies and infectious diseases (NIAID’s research realm), I recommend studying a model NIAID SBIR grant because it will give you an idea of what’s expected in a top quality application.

Most of your work in putting together a successful SBIR application will involve writing a detailed, thorough research plan that anticipates reviewers’ questions and answers them convincingly. Unless you are repairing a rejected research plan from a previous application, this will not be done quickly. Even if you hire a consultant like me to help, you will still have to supply most of the information and make all the important decisions about what will go in it. There’s no getting around that winning takes time, toil and sweating the details. NIH SBIR grant winners win because they invested the time, money, or both, to create applications decisively superior to their competitors’.

8. Have you carefully considered how to divide your research project into Phase I and II components?

Not figuring out what to do in Phase II until after you win Phase I is the wrong approach. NIH allows you to set your own criteria for Phase I success to justify requesting more money in Phase II. Consider not just how to do choose those Phase I criteria, but how to choose the ones that will give you the best shot to win a Phase II grant.

For example, suppose you’d like to do three experiments in Phase I, two of which will probably succeed and the third is risky. Consider whether you would have a better chance to win a Phase I grant if you delay the risky experiment until Phase II.

Phase I success criteria should neither be too easy (which NIH won’t approve) nor too difficult to obtain (which could prevent you from even applying for Phase II).

9. Do you have preliminary data for SBIR Phase I?

It’s one thing to compete for a Phase I grant. It’s another to win. Technically, preliminary data for a Phase I application is not required to win. However, the more risky the experiments you propose, the more preliminary data can assure reviewers that you can make the experiments work. So strongly consider whether you can include preliminary data to give yourself an edge.

Summary

Whether NIH SBIR grants are right for you isn’t just about having a great SBIR project idea. NIH will evaluate your SBIR application as a package — the idea, the researchers, the research environment, and all the rest. A serious deficiency in any one part will doom the whole and you won’t win. So consider the questions I’ve posed here in total in deciding if you have a strong chance to compete and win. Good luck.

 

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