Why Work with the DoD

If you’ve had any exposure to the Greater Washington DC area, you know that working with the federal government is a profitable possibility. However, like many other entrepreneurs, you hesitate to attempt going after a government contract – the process has a reputation for being convoluted and lengthy. Although there are learning curves to doing business with the government, to neglect this avenue leaves an immense revenue opportunity unexplored.

There are numerous benefits to working with the government that are worth pursuing. The Department of Defense (DoD) in particular invests heavily in small businesses. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are one such option available to small businesses, and it has perhaps some of the most unique benefits.

The SBIR and STTR programs, funded at over $1B annually, provide funding to small businesses to research and develop high-risk, innovative technology of interest to DoD. Innovators may submit proposals during any of the three solicitation periods.  DoD components that currently participate in the SBIR and STTR programs are Army, Air Force, Navy, DARPA, SOCOM, Defense Health Program, National Geospatial Agency,  Defense Threat Reduction Agency, Defense Logistics Agency, Missile Defense Agency, the Defense Microelectronics Activity, and the Joint Program Executive Office for Chemical and Biological Defense.

So why are the SBIR and STTR Programs so special? Here are the top three reasons:

DoD Funding Allows Small Businesses to Maintain Ownership

SBIR/STTR contracts provide non-dilutive funding to companies with fewer than 500 employees. Unlike other funding sources, SBIR/STTR will not require you to sell or relinquish any of your company’s sales, and you will not need to return the money received after your project hits the market.

DoD Funding is Intended for Early-Stage R&D

Each year, the DoD spends more than $1 billion annually on SBIR/STTR contracts to fund R&D efforts. These contracts are broken into three phases: Phase I companies develop a technically feasible solution. In Phase II, they develop a prototype of the solution. Phase III is commercialization of the technology, which is funded by entities other than SBIR / STTR.

Unlike VC firms, who prefer to fund established ventures with a proven track record, the DoD will fund promising ideas to help them get developed into products. Although you’ll still need outside funds to bring your finished product to market, the SBIR/STTR programs are designed to provide that funding boost when companies need it the most.

DoD Funds High-Risk Innovations

VC firms and angel investors are risk-averse, which can leave entrepreneurs undertaking the most challenging endeavors without enough outside capital to carry out their research. Conversely, the DoD seeks out innovators who are working on high-risk, high-potential projects. If you have a completely novel R&D project that hasn’t been done before, your chances of getting DoD dollars to develop your idea are better than with other funding sources.

These three reasons are just a few of many benefits to working with the government, and the SBIR/STTR programs are but one of several opportunities available to small businesses. Once you’re ready to explore the world of government contracts, the next step is to work your way through the jargon and regulations. This may seem daunting, but don’t worry – we’ve got your back!

Join our full-day workshop on September 28, 2017, where we will cover all of the above and more. Titled “DoD Funding: Where is the Money and How Can I Get It?”, we cover how the DoD spends money and funds research and how you can get in on it as well as the many non-traditional contracts you can keep an eye out for. Tickets are available here. We look forward to seeing you there!

Jangela Shumskas