Quiz — Chapter 20: SBIR/STTR
Answer from memory, then check. These test the programs' purpose, eligibility, the three phases, SBIR vs. STTR, the two tests, the agencies, and the commercialization plan.
1. Which best captures the threshold concept of this chapter? a) SBIR/STTR funds the best science, regardless of commercial prospects. b) SBIR/STTR funds the commercialization of innovation — you must pass both a technical-merit test and a commercial-potential test. c) SBIR/STTR is venture capital that takes equity. d) SBIR/STTR funds universities to do basic research.
Answer
(b). The agency acts like an early investor buying a future product; you must prove the technology will work and will sell.
2. Who is eligible for SBIR/STTR, and why is the money called non-dilutive?
Answer
Eligible: small for-profit businesses (American-owned, independently operated, under a size limit, meeting ownership rules) — not universities, nonprofits, or individuals. Non-dilutive because it's a grant/contract, not an investment: you give up no equity and repay nothing.
3. Describe what Phase I and Phase II fund, and the key fact about Phase III.
Answer
Phase I = feasibility (small/short award to prove the core concept can work). Phase II = development (larger/longer award to build and test the prototype; generally requires Phase I). Phase III = commercialization — not funded by SBIR/STTR; pursued with private investment, revenue, or non-SBIR contracts.
4. State the principal difference between SBIR and STTR.
Answer
STTR requires a partnership with a research institution (with a minimum share, commonly ~30%, to the partner) and allows the PI not to be primarily employed by the small business. SBIR is company-led, requires the PI to be primarily employed by the business, and keeps most work in-house.
5. A professor wants to commercialize a lab invention while keeping her faculty position and the lab's deep involvement. Which program fits, and why?
Answer
STTR — it requires (and funds) the small-business–research-institution partnership she needs and lets her be PI without leaving her faculty position. SBIR would require her to be primarily employed by the company and most work done in-house.
6. Name five elements a strong commercialization plan must address.
Answer
Any five: market/opportunity (bottom-up), problem/value proposition, competition and durable advantage, intellectual property, path to market (make/sell/distribute/regulate), team (business as well as technical), and Phase III financing.
7. Contrast the two agency styles, with an example of each.
Answer
Topic/mission-driven (e.g., DOD, NASA): the agency publishes specific topics it wants solved; you answer a named topic tightly (often via contract). Investigator-initiated (e.g., NIH, NSF): the agency publishes broad areas; you bring your own innovation within them (grants).
8. Why does the government weight commercial potential so heavily when it takes no equity and shares no profit?
Answer
Because commercialization is the mission — the program exists (by law) to stimulate innovation that reaches the market and benefits the nation (products, companies, jobs, mission capabilities). A technology that never commercializes fails that purpose, so the commercialization plan is the evidence the public investment will achieve its goal.
9. What's wrong with a commercialization section that asserts a "\$40 billion market" and stops there?
Answer
It's a top-down number with no real customers named, no honest competition analysis, and no plan for how this company reaches the market — the afterthought reviewers are trained to penalize. A credible case builds the market bottom-up from real customers and what they'll pay, analyzes competitors honestly, and maps a concrete path to market.
10. Why should founders treat the three phases as a ladder planned from the start?
Answer
Because the companies that succeed design Phase I to produce exactly the feasibility evidence Phase II needs, begin building the commercialization case during Phase I, and line up Phase III financing during Phase II. Winning a single Phase I without a plan to climb leads nowhere; agencies increasingly reward commercialization track record.
11. Name three registrations/gates an SBIR applicant must clear, and why they matter.
Answer
SAM.gov + UEI, the SBIR.gov company registry (SBIR company ID), and the agency's submission system. They're binary gates (Chapter 19): incomplete or late means the application isn't accepted, regardless of quality — so start weeks early.
12. (Synthesis) Two SBIR Phase I proposals have equally sound, innovative science; one is funded, one declined. Give one chapter-based reason — not "the science was better."
Answer
Either: the funded one had a real, evidenced commercialization case (named customers, honest competition, path to market, Phase III financing) while the other's was an afterthought; or agency/topic fit — the funded one matched the agency's style and answered a named topic, while the other was off-topic or aimed at the wrong agency. Both tests, and fit, decide it — not technical merit alone.
13. (Synthesis) In one sentence, why is SBIR/STTR described as a financing strategy rather than just "grants for science"?
Answer
Because non-dilutive SBIR/STTR funding can de-risk a technology company's earliest, riskiest R&D without giving up equity — building a working prototype and federal validation that make a later equity raise smaller and the company more valuable — so used deliberately across the phase ladder it functions as a deliberate way to finance a startup's path to market.