The commercialization phase of the Small Business Innovation Research program where companies scale successful R&D from Phase I and II into market-ready products or services for government and commercial use.
Phase III SBIR represents the make-or-break moment for innovative small businesses. After proving technical feasibility in Phase I (proof of concept) and demonstrating operational capability in Phase II (prototype development), Phase III is where your innovation actually becomes a product the government buys. There's no SBIR funding in Phase III—that's the point. You're using Phase I and II to derisk technology, and Phase III is when you commercialize it using your own capital or private investment.
What makes Phase III unique is that it exists in a specific window: you typically have two years after Phase II completion to secure Phase III awards. These awards aren't direct contracts; they're modifications to existing government contracts or new procurements where your Phase II work directly addresses a stated government need. The government uses Phase III to transition technologies from the lab into actual deployment, which means they're buying real solutions to real problems.
For your business strategy, Phase III success depends on building relationships with program managers who remember your Phase II work and understanding how your innovation solves their current pain points. Many companies that excel in Phase I and II stumble in Phase III because they focus on the technology instead of the customer problem. The agencies that funded your research want Phase III to work—they've already invested in you—so they're motivated to help you find the right contracting vehicle.