DoD SBIR/STTR Fast Track

April 13, 2006

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The "Fast Track" is a special program for the Department of Defense SBIR and STTP programs that offers a significantly higher chance of SBIR/STTR award, and continuous funding, to small companies that can attract outside investors. Small companies retain the intellectual property rights to technologies that they develop under these programs. Funding is awarded competitively, but the process is more streamlined and easier.

Projects that obtain such outside investments and thereby qualify for the Fast Track will, subject to qualifications described in the solicitation, be evaluated for Phase II award under a separate, expedited process and be eligible to receive interim funding of $30,000 to $50,000 between Phases I and II. They will be selected for Phase II award provided they meet or exceed a threshold of "technically sufficient" and have substantially met their Phase I technical goals.

Warning

Caution

To qualify for Fast Track, small companies and outside investors must follow the procedures and rules detailed in section 4.5 of the SBIR/STTR solicitation. This discussion only summarizes the most important requirements.

Many small companies have found the Fast Track policy to be an effective tool for leveraging their SBIR (or STTR) funds to obtain additional funds from outside investors. This is because, under the Fast Track, a small company can offer an investor the opportunity to obtain a match of between $1 and $4 in DoD SBIR (or STTR) funds for every $1 the investor puts in.

Toward the end of a small company's Phase I SBIR or STTR project, the company and its investor must submit a Fast Track application stating, among other things, that the investor will match both interim and Phase II SBIR or STTR funding, in cash, contingent on the company's selection for Phase II award. The matching rates needed to qualify for the Fast Track are as follows:

For small companies that have never before received a Phase II SBIR or STTR award from DoD or any other federal agency, the matching rate is 25 cents for every SBIR or STTR dollar. (For example, if such a company receives interim and Phase II SBIR funding that totals $750,000, it must obtain matching funds from the investor of $187,500.)
For all other companies, the matching rate is $1 for every SBIR or STTR dollar. (For example, if such a company receives interim and Phase II SBIR funding that totals $750,000, it must obtain matching funds from the investor of $750,000.)

The matching funds may pay for additional R on the company's SBIR or STTR project or, alternatively, they may pay for other activities (e.g., marketing) that further the development and/or commercialization of the technology.

In the application, the company and its investor must certify that the outside funding qualifies as a "Fast Track investment," and that the investor qualifies as an "outside investor." Outside investors may include such entities as another company, a venture capital firm, an individual "angel" investor, or a non-SBIR or non-STTR government program. Outside investors may not include the owners of the small business, their family members, and/or affiliates of the small business.

DoD will notify each Fast Track company, no later than 10 weeks after the end of Phase I, whether it has been selected for Phase II award. Once notified, the company and investor must certify, within 45 days, that the entire amount of the matching funds from the outside investor has been transferred to the company.

If you need assistance regarding Fast Track, you can visit DoD's STIR/STTR web site for complete details on the program. The site also contains a list of private-sector sources of early-stage technology financing as well as a list of ongoing Phase I SBIR and STTR projects.

You can also contact the SBIR/STTR Help Desk by e-mail at SBIRHELP@us.teltech.com or by telephone at 1-800-382-4634.