Early stage start-ups are often looking for resources to advance their company and products. Start-ups from institutions like Emory are no different. The Small Business Administration’s Small Business Technology Transfer Research (STTR) program might provide a solution for these entrepreneurs.
The STTR program was created in 1992. All federal agencies with extramural research budgets over certain thresholds must participate in STTR and set-aside a required portion of their funds for these programs. Currently there are five agencies with STTR programs. The intent is for domestic small businesses to participate in research and development with commercialization potential.
The STTR is described as a program, “that expands funding opportunities in the federal innovation research and development arena.” The initiative is sponsored by various Federal agencies, like the National Science Foundation and the Department of Health and Human Services, with the goal of forming partnerships with the private sector through the support of commercialization of research.
The STTR support fund is formed by the participating agencies which have to set aside portions of their budget for small business technology transfer research awards. After an agency accepts a small business’ proposal for funding, it enters into the three-phased program. In the first phase, the entrepreneur works with the federal agency to establish “technical merit” of the proposed research. If the research moves into the next phase, more funds are usually awarded and commercialization usually begins. Finally, small businesses in the last phase enter the market with opportunities for some of these businesses to receive contracts from the Federal agencies that provided the STTR support.
Not every small business qualifies for STTR support, so knowing the eligibility criteria is essential before applying. Researchers at Emory will not be able to apply under the Emory name. Universities are considered to be “subcontractors” in the SBA’s dealings with a small business. For that reason, faculty entrepreneurs need to ensure their own operations fulfill the SBA’s guidelines when seeking financial support.
The small business should be organized as a for profit business that is located within the United States. This requirement is out in place so that the SBA ensures that taxes and jobs generated by the business are returned back to the United States.
Legally, the business must be in the form of “an individual proprietorship, partnership, limited liability company, corporation, joint venture, association, trust or cooperative.” This is another criterion that ensures that the business’ management is set up properly. Foreign business entities in a joint venture must have less than 50 percent participation.
STTR requires that if one or more individuals or venture capital entity is involved, no entity should own more than 50 percent of the venture. The primary controller should be the entrepreneur in charge.
Finally, the company must have less than 500 employees.
These are the most important criteria for individuals seeking support under the STTR. More can be reviewed here at the SBA’s eligibility guide.
To learn more about the differences between STTR and SBIR funding refer to our blog “Helping our Faculty Navigate the World of SBIRs & STTRs” and also our blogs “SBIR Funding for Your Start-up” and “Funding Your Start-up.”