How to Leverage SBIR/STTR Funding for Follow-On Investment

Securing SBIR/STTR funding can be an excellent springboard for attracting additional investment to your startup. Here are some key strategies for leveraging your SBIR/STTR award to obtain follow-on funding:

Highlight Your SBIR/STTR Success

• Include your SBIR/STTR award prominently in your pitch materials and investor presentations. This provides external validation of your technology and business potential.
• Emphasize the rigorous peer review process and competitive nature of SBIR/STTR grants. Winning an award demonstrates that experts in your field see promise in your innovation.
• Quantify the non-dilutive funding received and how you've used it to advance your technology and business. This shows efficient use of capital.

Demonstrate Progress and De-Risking

• Clearly articulate the technical and commercial milestones you've achieved with SBIR/STTR funding. This proves your ability to execute.
• Highlight how you've reduced technology and market risks with the grant funding. Investors want to see de-risking before they invest.
• Share any IP, prototypes, pilot studies, or early customers gained during the SBIR/STTR project. These tangible outcomes are attractive to investors.

Leverage Relationships

• Network with other SBIR/STTR awardees to get introductions to investors interested in early-stage, deep tech startups.
• Build relationships with your program officers and ask if they can make investor introductions or recommendations.
• Attend SBIR/STTR conferences and showcases to connect with investors specifically interested in SBIR companies.

Position for Follow-On Funding

• Develop a clear plan for how additional investment will build on your SBIR/STTR project to drive further growth.
• Understand typical investment amounts and milestones for your industry to set realistic funding goals.
• Consider pursuing larger government grants/contracts as a bridge to significant private investment.

Enhance Your Team

• Use SBIR/STTR funding to bring on key hires or advisors that round out your team's expertise. A strong team is crucial for investors.
• Highlight any high-profile collaborations or partnerships enabled by your SBIR/STTR project.

Be Prepared for Due Diligence

• Maintain thorough documentation of your SBIR/STTR project, financials, and achievements to facilitate investor due diligence.
• Be ready to clearly explain any technical concepts to non-expert investors.

By strategically leveraging your SBIR/STTR award, you can position your startup to successfully raise follow-on funding and continue scaling your business. The key is to demonstrate how the grant funding has de-risked your venture and accelerated your path to market.