by Eric Frahm
CEO - Gallium Solutions

The Small Business Innovation Research (SBIR) program provides an entry point for small businesses to secure government funding for innovative solutions. However, the true measure of SBIR success isn’t just winning Phase I or Phase II contracts. It’s transitioning from an SBIR-funded prototype to a full-scale program of record or sustained government sales. 

Many companies fail to navigate this path successfully, so understanding how to move beyond early-stage funding is essential.

The SBIR Lifecycle

  1. Phase I: Concept Development
    • Awarded to explore technical feasibility.
    • Typically $50K-$250K in funding for 6-12 months.
    • It requires a strong research and innovation focus but offers no guaranteed follow-on funding.
  2. Phase II: Prototype Development
    • Builds on Phase I results with additional funding (typically $750K-$1.5M).
    • Focuses on developing a functional prototype and demonstrating viability.
    • Success depends on securing an end-user or sponsor within the government.
  3. Phase III: Commercialization & Transition
    • No direct SBIR funding; relies on federal procurement pathways or private investment.
    • The goal is integrating the solution into a program of record or securing non-SBIR government contracts.
    • Companies that fail to plan for Phase III early often struggle to transition beyond SBIR funding.‍

‍Strategies for Successful Transition to a Program of Record

  1. Engage End Users Early – Winning Phase I is just the beginning. Identify government end-users who would benefit from your technology and cultivate relationships with them early in the process.
  2. Secure a Government Sponsor – A champion within the agency can help advocate for additional funding and ensure your technology aligns with operational needs.
  3. Understand Procurement Pathways – Learn agencies' acquisition strategies to transition SBIR-funded solutions. Vehicles like Other Transaction Authority (OTA) agreements or direct Phase III sole-source contracts can help move from prototype to deployment.
  4. Align with Mission Priorities – Your technology must solve a real problem within the government. Positioning your solution within an agency’s broader mission increases the likelihood of transition.
  5. Develop a Funding Bridge – SBIR Phase III does not come along with guaranteed funding. Companies should explore follow-on funding opportunities, including private investment, dual-use commercialization, or non-SBIR federal contracts.

Common Pitfalls That Derail SBIR Success

  1. Failure to Plan Beyond Phase II – Many companies focus solely on Phase I and II funding without a clear roadmap to transition.
  2. Lack of Customer Engagement – Without agency buy-in, even the most technically sound solution won’t gain traction.
  3. Over-Reliance on SBIR Funding – A sustainable business model requires diversifying revenue streams beyond SBIR contracts.
  4. Ignoring Regulatory & Acquisition Hurdles – Government procurement processes can be complex; failing to navigate them properly can prevent transition.

Final Thoughts

Winning an SBIR contract is the first step in securing long-term government business. Companies that focus on the transition from the beginning—by engaging customers, aligning with mission needs, and understanding acquisition pathways—stand the best chance of turning an SBIR award into a sustainable government contract.

If you'd like to learn more about how we help companies like yours learn to 'speak government' and take full advantage of the government funding opportunities available to you, click here to book a call!