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Phase IIB

Supplemental funding opportunity applicable for SBIR and STTR Phase II awardees.

The objective of Phase IIB funding is to provide additional R&D funds to further accelerate commercialization of the Phase II project, when a qualifying third party financial investment/commitment has been received as a direct consequence of the NSF funded Phase I/Phase II research outcomes. The third party funding should serve to accelerate commercialization activity of the NSF funded Phase II Program. For more information, read the SBIR and STTR Phase IIB Supplemental funding opportunity.

Overall Submission and Review Process

Request timing

Phase II awardees are encouraged to start discussing any Phase IIB requests as early as possible with the Program Director on the Grant. The awardee may be invited to submit a formal Financial Package after initial review by the Program Director. The Financial Package must be submitted to the Program Director for review at least a month in advance of the expiry date of the grant to initiate formal NSF review. The Program Director may recommend that the awardee request approval for a no-cost extension (to extend the grant expiry date by up to 6 months) to allow NSF time to review the Phase IIB supplement request.

Process overview

For companies requesting $250,000 or less of NSF Phase IIB matching funds:

  • The PI is invited by the Program Director to submit a formal Phase IIB Financial Package along with an outline of what R&D will be done with a potential NSF Phase IIB match.
  • The Financial Package is internally reviewed by NSF, and the PI receives feedback from the Program Director on what third party funds would qualify for the Phase IIB match.
  • The PI receives permission from the Program Director to submit the Phase IIB proposal after NSF review of the Financial Package.
  • The Phase IIB proposal is reviewed by NSF.
  • The award may typically extend the expiry date of the grant by 12 months.

For companies requesting over $250,000 (not to exceed $500,000) of NSF Phase IIB matching funds:

  • The PI is invited by the Program Director to submit a formal Phase IIB Financial Package along with an outline of what R&D will be done with a potential NSF Phase IIB match.
  • The Financial Package is internally reviewed by NSF and the PI receives feedback from the Program Director on what third party funds would qualify for the Phase IIB match.
  • The Program Director invites the company to make an on-site presentation at NSF for review of the proposed Phase IIB R&D program and the company’s commercialization plans. The company is provided details on what should be covered in the on-site presentation.
  • The awardee company (including a minimum of the PI and CEO) presents in person at NSF to an audience of NSF staff. A representative of the third party must be available at the meeting (in person or on the phone).
  • The Program Director may have further discussions with the awardee after the on-site meeting.
  • The PI receives permission from the Program Director to submit the Phase IIB proposal after NSF review of the Financial Package.
  • The Phase IIB proposal is reviewed by NSF.
  • The award may typically extend the expiry date of the grant by 24 months.

Review criteria

All Phase IIB proposals will be reviewed in-house by a minimum of two NSF SBIR/STTR Program Officers. Each proposal will be reviewed based on the review criteria below.

Criterion: What is the intellectual merit of the proposed activity? Potential considerations: Will the completion of the proposed activity lead to a solid foundation of the scientific and engineering knowledge and understanding base? Has the firm progressed satisfactorily in the Phase II activity to justify a Phase IIB activity? Is the proposed plan a sound approach for establishing technical feasibility that could lead to commercialization?

Criterion: What are the broader impacts of the proposed activity? Potential considerations: Does the commercialization plan summary in the proposed activity show a clear path to commercial and societal benefits? Does the proposed activity reflect changes to the Phase II commercialization plan that further improves the chances of conversion of research in order to provide societal benefits? What are the expectations of the third party, and how effective will the third party funded activity lead to commercial and societal benefit? Evaluate the competitive advantages of this technology vs. alternate technologies that can meet similar market needs.

Third Party Funding Qualifications and Use

Qualifying third party funds

Qualifying third party funds should meet these requirements:

  • The company and the documentation provided (henceforth referred to as the “Financial Package”) will need to clearly establish that the third party is making investments/financial commitments as a direct consequence of the outcomes of NSF funded Phase I and/or Phase II Grant activity and it is not contingent on the company receiving the Phase IIB grant.
  • The Financial Package will need to include executed legal agreements signed by both the awardee company and the third party. The Financial Package must clearly specify the amount of the investments/financial commitments being made. The third party funding must be cash, but not in-kind or other “intangible assets”. Loans and any forms of debt obligations, will not qualify.
  • The Financial Package should involve money legally obligated to the awardee company with no attached contingencies or conditions that will result in the return of any funds back to the third party.
  • The transfer of funds to the awardee could occur up-front or over a clearly defined contracted date-certain payment schedule to occur during the proposed Phase IIB project period (not to exceed 2 years), and proof of receipt of the third party money will need to be provided to NSF to receive matching Phase IIB funds.
  • The legal agreements in the Financial Package need to have been executed prior to formal NSF review of eligibility for Phase IIB supplemental funding.
  • Funds from multiple unrelated third parties may be presented in a combined Financial Package. This may be particularly the case where the third party money is the result of sales, licensing, etc.
  • Any third-party investment funds in excess of $500,000 must come from private-sector (non-governmental) sources. Definition of a Third party investor: https://seedfund.nsf.gov//how-to-submit/definitions/#third-party-investor

Amount of third party funds

The Financial Package must include a minimum of $100,000 of qualifying funds. NSF will match up to 50% of qualifying funds received. Phase IIB supplemental awards will be made for a minimum of $50,000 and a maximum of $500,000.

Use of third party funds

NSF does not place restrictions on how the awardee spends the third party funds. R&D, market research, advertising, intellectual property development, capital investment, business development, human resource development are some examples of typical uses for the third-party funds, with the overall goal of accelerating commercialization of the NSF funded technology being developed in the Phase II grant.

Use of NSF Phase IIB funds

NSF match funds shall only be used for research & development activities that further build on the Phase II program and catalyze acceleration towards commercialization.

Phase IIB Proposal Preparation

Phase IIB proposals MUST be submitted using Research.gov. The Phase IIB proposal shall not exceed 15 pages. The additional work proposed should be an expansion of the technical work being performed in the Phase II project and must fall within the scope of the present Phase II project. The proposal will contain the following:

The following sections count toward the 15 pages

  • An Executive Summary of the Commercialization Plan
  • A discussion of the “New” R&D Activities (including how the third-party funding will be used to accelerate and/or expand commercialization
  • A summary of the third party investment

Add/delete non Co-PI senior personnel

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Summary of proposed work

  • Executive Summary of the Commercialization
  • “New” R&D Activities Proposed

Supplementary docs

Upload the following documents (combine the two word documents and upload as one file).

Revised expiration date:

You may add 12 months (or 24 months for a Phase IIB request over $250,000) to the duration of your existing Phase II project. Please contact your cognizant PD to discuss if needed.

Budgets, budget justifications, and certifications

Prepare new budget for the Phase IIB activities (only the NSF funding). Provide complete line item justification for ALL budget items.

Include the following statements/certifications (as part of the budget justification):

  • NSF SBIR/STTR Funding Agreement Certification Form OR a statement that “The certifications made under the Phase II award remain true and current, and the signed Funding Agreement Certification for the Phase II award was submitted with award XXXXXXX”, OR an updated NSF SBIR/STTR Funding Agreement Certification Form.
  • A statement that “The budget rates in the Phase IIB budget are identical or lower than those in the Phase II budget approved by NSF.” Rates include salaries, indirect costs, fringe benefits, overhead, G&A, unit cost rates, etc.
  • Only individuals that the company has designated as the “Authorized Organizational Representative” can submit the Phase IIB proposal.

Award and Payment Procedures

A Phase IIB applicant will be notified of the funding recommendation within 60 days of submission.

All third-party investment funds upon which the Phase IIB supplement is made must be transferred to the company by the end of the Phase IIB supplement. Additionally, the final payment for the original Phase II award will be held back and made only when the Phase II and Phase IIB projects are completed.

The Phase IIB match will typically be released under the following schedule:

For Phase IIB supplements up to $250,000 (12-month projects): 50% will be released as the advance payment and 50% with an approved 6-month interim report.

For Phase IIB supplements greater than $250,000 (24-month projects): 25% will be released upon Phase IIB award; 25% with an approved 6-month interim report; 25% with an approved 12-month interim report and 25% with an approved 18-month interim report.

  • If the Phase IIB financial package included transactions for which some of the funds had not yet been received by the company. Payments will be released upon receipt of proof that the funds have been transferred from the third party to the NSF awardee, typically in the form of a bank statement. Therefore, the payment schedules above may be modified according to the details of the release schedule of the third party money if these funds are not provided up-front. That is, NSF funds (50% match) will only be disbursed at any given time according to the amount of third party funds for which NSF has been provided proof of receipt.

Budgets, budget justifications, and certifications

Prepare new budget for the Phase IIB activities (only the NSF funding). Make sure to budget one or two trips to the SBIR/STTR Phase II Awardees Conference depending on the length of the grant extension. Provide complete line item justification for ALL budget items.

  • NSF SBIR/STTR Funding Agreement Certification Form OR a statement that “The certifications made under the Phase II award remain true and current, and the signed Funding Agreement Certification for the Phase II award was submitted with award XXXXXXX”, OR an updated NSF SBIR/STTR Funding Agreement Certification Form.
  • A statement that “The budget rates in the Phase IIB budget are identical or lower than those in the Phase II budget approved by NSF.” Rates include salaries, indirect costs, fringe benefits, overhead, G&A, unit cost rates, etc.