// SBIR
America’s largest seed fund
doesn’t take equity.
Every year, eleven federal agencies hand out roughly $4 billion to small companies developing new technology. They don’t do it out of generosity. Congress makes them. It’s called SBIR, and most founders have never heard of it.
~$4B/yr
Awarded to small business
11
Agencies required to run it
Zero
Equity taken
// Why the money exists
It’s not a grant program. It’s a law.
Any federal agency that spends more than $100 million a year on outside R&D is required by statute to set aside 3.2% of that budget for small businesses. Not encouraged. Required.
That’s the part most people miss. This money has to go somewhere every single year, and the agencies have to find companies to give it to. The problem was never the funding. It’s that the companies who should be applying have never heard of it.
96.8% — everything else
3.2%
Reserved for SBIR
That sliver is the whole program. Across eleven agencies it adds up to roughly $4 billion a year, and every dollar of it is reserved for companies with fewer than 500 people. You can check your size standard in about a minute.
// Who qualifies
The bar is lower than you think.
There’s no revenue requirement, no track record requirement, and no minimum team size. Plenty of awards go to companies of three people.
A US-based for-profit business
500 employees or fewer, including affiliates
More than 50% owned by US citizens or permanent residents, or by other qualifying US small businesses
Your principal investigator is primarily employed by you while the award runs
The work happens in the United States
You do NOT need past government contracts
You do NOT need a finished product
Companies majority-owned by venture capital firms, hedge funds, or private equity are excluded at most agencies. A few permit it under a specific statutory authority, and the rules differ per agency. Read the solicitation before you invest time.
// How it works
Three phases. Most people start at the first.
An agency publishes a problem it needs solved. You write a proposal explaining how you’d solve it. If they pick you, they pay for the work.
Phase I
6 to 12 months
Show it can work
A funded feasibility study. You’re proving the concept holds up, not shipping a product.
Phase II
~24 months
Build it
Development money to turn the proven concept into a working product. This is where most of the $2M sits, and where the proposal actually gets hard.
Read the Phase II playbook →Phase III
No time limit
Sell it
No SBIR money here. But work that came out of SBIR can be bought sole-source, skipping full competition.
Most companies enter at Phase I. Some agencies run Direct-to-Phase-II, which skips straight to the development money if you can already show the concept works.
// Where it comes from
Eleven agencies, eleven different appetites.
Each one runs its own solicitations on its own schedule, with its own priorities. The same technology can be a poor fit at one and a perfect fit at another. We’ve written guides for the biggest ones.
DoD
Defense
Read the guide →
HHS
Health (incl. NIH)
Read the guide →
DOE
Energy
Read the guide →
NASA
Space
Read the guide →
NSF
Science
USDA
Agriculture
DHS
Homeland Security
Read the guide →
DOT
Transportation
DOC
Commerce (NOAA, NIST)
EPA
Environment
ED
Education
// Status
The program is open and funded through 2031.
SBIR lapsed in September 2025 and sat frozen for months before Congress reauthorized it in April 2026. The 3.2% set-aside came through unchanged. If you held off applying during the lapse, that reason is gone.
// Common questions
The four we get asked most.
What is SBIR?
A federal program that awards roughly $4 billion a year to small businesses developing new technology. Eleven agencies are required by law to set aside 3.2% of their external R&D budgets for it.
Do I have to give up equity?
No. SBIR awards are non-dilutive: no equity, no board seat, no investor. You also keep the rights to what you invent.
Can I qualify without a product or past contracts?
Yes. You need a US-based for-profit company with 500 or fewer employees, majority-owned by US citizens or permanent residents (or by other qualifying US small businesses), doing the work in the United States. Your principal investigator must be primarily employed by the company while the award runs. No revenue, product, or contract history required. Companies majority-owned by venture capital firms, hedge funds, or private equity are excluded at most agencies. Always check the specific solicitation.
Where do I start?
Most first-time applicants start with Phase I. Some agencies run Direct-to-Phase-II if you can already show the concept works.
Find the ones that fit what you build.
Those eleven agencies post new topics every week. Tell Outrider what you build and we’ll email you the ones that match.