What is the difference between SBIR and STTR?

SBIR (Small Business Innovation Research) requires that the principal investigator be primarily employed by the small business. STTR (Small Business Technology Transfer) requires a formal research partnership between the small business and a nonprofit research institution, with defined portions of the work performed by each. STTR is well suited for companies with academic collaborators; SBIR is better suited for companies that can conduct all research in-house.

Can a medical device startup apply for both SBIR and STTR?

Yes, a company can apply for both programs, and can apply to multiple agencies for projects with different scientific focus areas. However, the same project cannot receive concurrent funding from both SBIR and STTR, and there are restrictions on receiving duplicate funding for the same work from multiple agencies. The SBIR.gov portal outlines the duplication policies.

What is the acceptance rate for NIH SBIR grants?

NIH SBIR acceptance rates vary by institute and funding cycle. Historically, NIH SBIR Phase I acceptance rates have ranged from approximately 15 to 25 percent, but rates differ significantly by institute and scientific area. The NIH SEED office can provide current acceptance rate data for specific institutes. Do not treat general acceptance rate figures as predictive for any specific application or institute.

Does receiving an SBIR grant affect my company's ownership or equity?

No. SBIR and STTR grants do not give the federal government an equity interest in your company. They do, however, include a federal rights clause: the government retains a non-exclusive, royalty-free license to use any invention developed with SBIR funds. This is different from giving up equity and does not prevent you from commercializing the technology, but founders should understand the government license provision before applying. For more information, see SBA regulations at https://www.ecfr.gov/current/title-13/chapter-I/part-121.

Can SBIR funds be used for clinical trials?

NIH SBIR Phase II awards can fund feasibility clinical studies, including first-in-human studies, if the research plan is approved and the study meets NIH human subjects research requirements. Phase II awards typically require an Investigational Device Exemption (IDE) from the FDA before clinical research on a medical device can begin. The IDE application process is described at https://www.fda.gov/medical-devices/how-study-and-market-your-device/investigational-device-exemption-ide. Significant clinical trials (pivotal trials) are typically too large to be fully funded by SBIR and require equity investment in addition.

How long does it take from SBIR application to award?

The NIH review and award cycle typically takes nine to twelve months from submission of a Phase I application to receipt of the award. Preparation of a competitive application typically takes two to four months. Founders who are planning to use SBIR as a bridge to equity funding should build this timeline into their runway planning.

Non-Dilutive Funding for Medtech: SBIR, STTR, NIH Grants, and Other Grant Sources

Direct answer: Non-dilutive funding means capital that does not require giving up equity. For medical device startups, the most significant sources are the Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program, both federally mandated and administered through agencies including NIH and NSF. Other sources include NIH R01 research grants (for research-stage technologies with academic partners), the Department of Defense CDMRP program, and some state-level innovation grant programs. These programs fund pre-clinical and early clinical research, reducing the capital founders must raise through equity dilution at the highest-risk stage. (As of July 2026.)

Non-dilutive capital is the most underutilized funding source in early-stage medtech. Founders who fund prototype development and feasibility studies with SBIR and STTR grants arrive at their first equity round with meaningfully derisked technology, a stronger negotiating position, and less diluted cap tables.

This article explains the SBIR and STTR programs in practical terms for device founders, identifies other relevant grant programs, and clarifies what these programs can and cannot fund.

What Is the SBIR Program?

The Small Business Innovation Research program is a federally mandated competitive grant program. Eleven federal agencies are required to allocate a portion of their extramural research budgets to SBIR. For medical device companies, the two most relevant agencies are:

The SBIR and STTR programs were reauthorized in April 2026 (the Small Business Innovation and Economic Security Act of 2026) and are authorized through September 30, 2031; check current solicitation status before applying, because program authority has lapsed and been renewed before.

National Institutes of Health (NIH): The largest SBIR grantor in the federal system, with a focus on health-related research and development. NIH SBIR information is at https://seed.nih.gov.
National Science Foundation (NSF): Funds fundamental technology research, including hardware and sensor development relevant to medical devices. NSF SBIR information is at https://www.nsf.gov/funding/programs/sbir/.

The program is structured in two phases:

Phase I is a feasibility study. The goal is to demonstrate that the core technical concept is sound and that the research plan for Phase II is credible. Phase I award amounts are set by SBA statutory guidelines that are adjusted annually for inflation. As of the April 2026 SBIR/STTR reauthorization, NIH may award up to approximately $323,090 for a Phase I project (total costs, generally over a period of six months to two years) without a separate SBA waiver, though individual NIH Institutes and Centers may set lower caps.

Phase II is the principal research and development effort. Phase II builds on Phase I results and moves toward commercialization. As of the April 2026 reauthorization, NIH may award up to approximately $2,153,927 for a Phase II project (total costs, generally over one to three years) without a separate SBA waiver. NIH holds an SBA-approved waiver to exceed the guideline on specific designated topics, and some Institutes and Centers set lower internal caps.

There is also a Phase IIB or SBIR Phase II Enhancement mechanism at some agencies that allows additional follow-on funding when a Phase II awardee secures matching private investment.

What Is the STTR Program?

The Small Business Technology Transfer (STTR) program is a companion to SBIR with one key structural difference: STTR grants require a formal collaboration between the small business and a non-profit research institution (typically a university or academic medical center). The non-profit must conduct a defined portion of the research under a formal partnership agreement.

For medical device startups that originated from university research or that have an academic clinical collaborator, STTR can be an excellent fit. The collaboration requirement also means the academic partner brings facilities, equipment, and often clinical access that strengthens the research plan.

NIH STTR program information is at https://seed.nih.gov/small-business-funding/small-business-program-basics/understanding-sbir-sttr. Award amounts and phase structure parallel the SBIR program.

Eligibility Requirements

To apply for SBIR or STTR through any federal agency, a company must meet the Small Business Administration eligibility criteria (https://www.sba.gov/federal-contracting/contracting-assistance-programs/small-business-innovation-research-sbir-program):

Organized for profit and located in the United States
More than 50 percent owned and controlled by U.S. citizens or permanent resident aliens, or by another small business that is itself more than 50 percent owned by U.S. citizens or permanent residents
Fewer than 500 employees
Principal investigator must be primarily employed by the small business during the period of the award (for SBIR; STTR has different PI requirements)

Faculty spinouts, university-originated devices, and companies with substantial foreign ownership may face eligibility complications. Confirming eligibility before investing significant time in a grant application is advisable.

What SBIR and STTR Funds Can Be Used For

SBIR and STTR grants fund research and development activities directly related to the scope of the funded project. Permitted uses typically include:

Salaries for the principal investigator and key personnel working on the project
Laboratory supplies and materials
Equipment purchases required for the research
Subcontractor costs (within defined limits)
Overhead and indirect costs (at the negotiated rate for the institution or a provisional rate for early-stage companies)

SBIR funds cannot be used for activities unrelated to the funded project, general business development, or commercialization activities outside the scope of the research plan. Marketing, sales, and investor outreach are not fundable uses.

The Role of Regulatory Milestones in SBIR Planning

For medical device companies, SBIR Phase I and Phase II awards often map to the pre-clinical development stage, feasibility demonstration, and prototype validation that precedes FDA engagement. The research objectives in the grant application should align with milestones that reduce FDA submission risk.

This matters for two reasons. First, NIH program officers evaluating device grants understand the FDA pathway. A Phase II application that articulates a clear link between the funded research and an upcoming 510(k) or IDE submission is viewed favorably. Second, the Phase II to commercialization transition (sometimes called Phase IIB or the "SBIR to Venture" bridge) is easier to negotiate with equity investors when you can show that the Phase II results position the company for a credible regulatory submission.

Other Federal Grant Sources for Medical Device Startups

Department of Defense (DoD) Congressionally Directed Medical Research Programs (CDMRP)

The DoD's CDMRP (https://cdmrp.health.mil/) funds medical device and technology research in therapeutic areas connected to military health priorities: traumatic brain injury, limb loss and prosthetics, orthopedics, wound care, and others. CDMRP programs accept both small business and academic applications, and several programs have specific small business funding mechanisms.

For device companies in relevant therapeutic areas, CDMRP can be a significant non-dilutive source. Award sizes vary by program and fiscal year.

NIH R01 and R21 Research Grants (Primarily for Academic Collaborators)

NIH R01 grants are the standard research grants that support the majority of academic medical research in the United States. Device companies typically cannot apply directly for R01 grants, but they can be collaborative partners on R01-funded projects. For founders who have academic medical center relationships, a sponsored research agreement with an R01-funded lab can provide access to research infrastructure and data that supports a future SBIR application.

R21 exploratory research grants (https://grants.nih.gov/grants/funding/r21.htm) are smaller, lower-barrier mechanisms that can fund proof-of-concept research. They are available to academic investigators, not companies, but may support research directly relevant to a startup's technology.

State-Level Innovation and Economic Development Programs

Many states operate small business grant or loan programs with a medical device or biotech focus. Programs vary widely by state and are not cataloged here, but they are worth researching through:

The Biomedical Advanced Research and Development Authority (BARDA) at https://biomedicaladvancedresearchanddevelopmentauthority.gov/ (primarily biopharmaceutical but has some device relevance)
State economic development offices
State Small Business Credit Initiative (SSBCI) programs administered through Treasury (https://home.treasury.gov/policy-issues/small-business-programs/state-small-business-credit-initiative-ssbci)

How to Apply for SBIR: A Practical Starting Point

The SBIR application process is structured differently from a venture capital pitch. The core document is the research plan (sometimes called the research strategy), which must articulate: the significance of the problem, the innovation of the proposed approach, and the approach (specific aims, methods, expected outcomes, and mitigation for potential pitfalls).

Practical starting points:

SBIR.gov (https://www.sbir.gov): The federal government's official SBIR/STTR portal. Contains funding opportunity announcements from all participating agencies, eligibility information, and application guides.
NIH SEED office (https://seed.nih.gov): NIH-specific SBIR/STTR resources including webinars, application support, and program officer contacts. The SEED office staff can answer questions about eligibility and match applicants to the right NIH institute.
NSF SBIR program (https://www.nsf.gov/funding/programs/sbir/): NSF SBIR applications go through America's Seed Fund. NSF focuses on fundamental technology innovation and is receptive to device companies with novel underlying technology.

The most common mistake in first SBIR applications is a research plan that reads like a business plan or a product roadmap. SBIR reviewers evaluate research rigor first. The commercialization potential is evaluated, but it does not substitute for a well-constructed research design.

Non-Dilutive Funding and Your Equity Story

Founders who have received one or more SBIR awards arrive at Series A discussions with a materially different story than those who have not. The grant itself is third-party validation that an expert scientific review panel found the research credible and the technology significant. The research it funded has reduced the technical risk that an equity investor would otherwise be pricing. And the founder has not diluted the cap table to get there.

The combination of SBIR Phase I, Phase II, and a well-documented regulatory strategy can, in well-structured cases, take a company through to an IDE application or a 510(k) submission before the first significant equity dilution. This is the most capital-efficient path through early-stage medtech development.

Building your marketing story around what the non-dilutive capital funded, and what regulatory milestone it positions you to hit next, is part of the commercialization narrative that connects to investor materials. Buzzbox Media works exclusively with medical device companies. If you are transitioning from a grant-funded pre-clinical stage to your first equity raise and want help building the external story, a 30-minute call is a good place to start. Book at https://www.buzzboxmedia.com/book.