Won But Not Funded: Acquiring Funding When SBIR/STTR Funds Fall Through

Small businesses can win SBIR/STTR grants but not receive funding. In this guide, we explore “won but not funded” and what to do if it happens to you.

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Suppose you’ve attended a technology conference or spoken to industry hopefuls. In that case, you might have heard this before: “My company applied for an SBIR/STTR grant, and we won the grant, but we were never awarded funding.”

Unfortunately, “won but not funded” happens, sometimes for reasons outside a business’s control.

What’s the point of ‘winning’ a grant if no award is given? And what happens next? Before we dive in, let’s explore how this occurs.

Why Some SBIR/STTR Grants Are Never Awarded

There are various reasons why a company may never see award money from the federal government after they’ve ‘won’ a Small Business Innovation Research (SBIR)/Small Business Technology Transfer (STTR) grant. As mentioned, sometimes these reasons are within the company’s control, though sometimes they are not.

Here are several common reasons small businesses are not awarded funds:

Lack of Funding:

Any given agency is allotted an annual award pool to fund its SBIR/STTR efforts. Unfortunately, though frequently quite deep in the case of well-funded agencies like the DoD, this pool is still finite. Because of this, several agencies are limited by available funding for awarding small businesses. When this occurs, projects more closely aligning with an agency’s goals or those believed to have a higher potential impact get prioritized, meaning some business projects get cut. The sbir.gov website details that “agencies have the discretion to issue awards for less than the maximum dollar amount.”

Non-Compliance: 

We often stress that maneuvering the world of federal contracting is challenging. Occasionally, funding is stopped short by a small business failing to comply with the terms of a grant agreement. Funding is cut off either temporarily or entirely on matters such as required reports, deliverable deadlines, or milestone failures.

Technical Challenges: 

Simply put, this occurs when a small business’s project runs into complications that halt or seriously delay the project’s completion. This can occur within or outside the business’s control, but the result is the same: the government will pull its funding.

Market Fluctuations: 

The projects funded by SBIR/STTR grants are at the forefront of pioneering technology in all fields. Because this frontier is ever-changing, the market that invests in it can also be fickle, according to a National Institute of Standards and Technology report. If another technology or solution presents itself and makes a small business’s proposed solution obsolete, the federal government may withhold funding as priorities shift.

Internal Administrative Issues: 

The internal stability of a given company often dictates whether the government ends up awarding funding. If a small business changes critical personnel, or experiences financial woes/legal trouble, the government will quickly identify that entity as a risk and withhold funding.

What’s Next?

Though winning an award and not receiving funding can be frustrating – especially for reasons outside of your control – there are options for companies moving forward.

First, to address the elephant in the room, if your company suffers from internal issues jeopardizing your funding, reaching out to Vertx Partners and receiving free consulting from one of our industry veterans is your smartest move. Federal contracting is challenging, particularly for first-timers; if you don’t want to be caught unaware of the intricacies of compliance and deliverables, we can provide a strong foundation for you and your company.

Suppose an external factor affects your federal funding – what are your options now? Well, you can still secure financing through:

• Private Investors;
• Venture Capitalists;
• Or other Government Agencies/Programs, like the OTA program

Additionally, reapplying to future rounds of SBIR/STTR solicitations is always an option. Usually, you can put the hard work you’ve completed in writing your proposal and conducting preliminary research to good use in all these scenarios, given some finessing. Vertx keeps a list of current solicitations here for your perusal.

Have you won an SBIR/STTR grant but have yet to receive funding? Are you worried “won but not funded” could happen to you? Reach out to Vertx Partners today by filling out our quick survey. One of our industry experts will reach out to you ASAP and provide guidance at no cost to you.