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The U.S. Small Business Administration’s Office of Technology implements two grant programs to increase the competitiveness of small, high technology companies and to encourage the commercialization of promising science and technology. These two programs, the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR), provide critical funding to translate new sciences to medical products.

CaliforniaCalifornia received the most SBIR and STTR NIH Funding as of mid-October 2012, more than $127 million, which is 60 percent more than the No. 2 state, Massachusetts, and 215 percent more than the No. 3 state, New York.

Christopher Haskell“Almost every small company in our incubator has or is in process of SBIR funding. This is a critical bridge to translate academic research into companies that can attract VC funding.”

Christopher Haskell, Ph.D., Head, U.S. Science Hub, Bayer CoLaborator

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Through the SBIR program, the 11 federal agencies with the largest outside research budgets are required to spend at least 3.2 percent of this money with small businesses. With last year’s reauthorization, SBIR grants are $150,000 for Phase 1, which tests the new technology or discovery for feasibility and commercial potential. The reauthorization in 2011 also allowed venture-backed companies to compete for the first time for 25 percent of SBIR funds. Phase II grants for $1 million help further support promising Phase 1 grants.

Janssen“The SBIR program is filling a big void, and we need that program in order to grow larger as an industry. We need to figure out additional ways to fund biotech, beyond relying on venture capital funding. SBIR is a great venue and great use of taxpayer dollars because it allows new companies to get started, create value for society in jobs, better health care, new medical products and opportunities.”

Diego Miralles, Head, Janssen Healthcare Innovation

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The STTR program reserves 0.30 percent of the funds of federal departments and agencies with annual extramural research budgets exceeding $1 billion for awards to small U.S. companies. These awards fund cooperative R&D projects involving small business and a nonprofit research institute.

2011 2012*
Location Awards Funding Awards Funding
California 7,177 $3,325,938,155 339 $127,017,354
Massachusetts 4,892 $2,425,940,037 195 $79,698,291
New York 4,574 $1,975,645,671 97 $40,265,191
North Carolina 1,983 $943,177,420 84 $38,735,243
Maryland 2,086 $1,031,653,716 84 $35,221,454
Pennsylvania 3,318 $1,399,495,362 68 $26,631,501
Texas 2,540 $1,034,319,636 70 $25,312,460
Oregon 691 $301,974,960 61 $25,222,665
Ohio 1,618 $652,532,270 52 $23,129,309
Wisconsin 896 $386,175,298 46 $20,055,508
Source: National Institutes of Health
* Updated through October 15, 2012
Note: Data exclude R&D Contracts and projects funded through the American Recover & Reinvestment Act.

California receives the largest share of SBIR/STTR grants, which were designed to encourage commercialization of promising new technologies. The SBIR/STTR dollars remain critical for the translation of scientific discoveries and the advancement of new medical products for patients.

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