Funding Your Life Science Startup With SBIR Phase I Funds From the NIH

My friend during psychiatry residency said, “You should consider pursuing SBIR funding?” I asked him, “What is SBIR?” With this article, I hope to succinctly answer that question and more importantly to explain why Small Business Innovation Research (SBIR) is an excellent way for someone interested in the life sciences to fund an entrepreneurial interest. Once a life scientist establishes a small for-profit business, SBIR funds can support the creation of a technological solution to meet an unmet need in the life sciences.

What is SBIR?

SBIR is a component of all the primary funding initiatives of the US federal government. The SBIR funding solution is not the same as a loan from the Small Business Administration. You do not owe the government anything for its granting of money to you. There is no obligation to pay it back. Still, keep in mind that this is a government-run grant program. You must spend the funds wisely and carefully, follow government standards, and in some cases complete an audit following government standards.

NIH and other branches of government are obligated to dedicate a percentage of their R&D funds to SBIR efforts. SBIR funds are only General hashtag linkage to COVID-19 Pandemic available to a commercial enterprise, in other words, a for-profit company. This funding mechanism is not designed to complete basic science research or produce a product with no apparent applicability. Funds must yield a viable commercial product sold in the marketplace.


This article focuses exclusively on the NIH’s SBIR program and specifically Phase I of SBIR funding which is the most rudimentary and simplest way to achieve funding. There are similar mechanisms such as STTR as well as more complicated means of obtaining additional SBIR/STTR funds however those are less likely to be the optimal choice and are not the focus of this article.

The NIH SBIR program is particularly well suited to the life scientist-entrepreneur. NIH provides investigator-driven research through its more academic grants as well as SBIR. That means that the NIH program is unique in that it will consider your idea versus telling investigators what ideas they will fund. SBIR programs in other branches of the government will often specify a need and goal of the research. Your project must fit within that specified need. To sum, the NIH SBIR program can be an excellent solution for an entrepreneur interested in creating a product that will add value in the life sciences. But you must assess if the limitations and conditions are acceptable to your goals.

SBIR Limitations and Focus

Phase I focuses only on demonstrating feasibility. You are not expected to complete the entire product, nor fully assess it in all logical ways. Your goal is to use Phase I to demonstrate that the idea is sound, the team is capable and with further funding, it is likely that you will produce something of value. Some ideas cannot be easily demonstrated in a short time frame and with a limited budget. To fit within SBIR Phase I, you must then roll back your plan and goal to a project that is feasible. Reviewers will reject a project that over promises as quickly as one that under delivers.

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