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The Senate’s INNOVATE Act (S.853) proposes major reforms to the SBIR/STTR programs that power so much of New York’s innovation economy. If passed, these changes will affect how our BIANYS community of startups, incubators, and universities engage with federal funding opportunities. Here are the three current biggest takeaways for our community:
1. New “Phase 1A” $40K Pilot Awards
To bring in more first-time applicants, the bill creates a new Phase 1A funding track for up to $40,000 awards. This would be a simplified 2-page application and reserved for only small
businesses NEW to SBIR/STTR funding. The agencies would use open-topic solicitations to support early stage feasibility studies.
2. STTR Program Restrictions and Changes
The bill significantly tightens participation rules for the Small Business Technology Transfer (STTR) program. It removes Phase II funding from the STTR program, requiring all Phase I STTR projects to transition into Phase II SBIRs. While it proposes boosting the SBIR set-aside from 3.25% to 3.45% of each agency’s extramural R&D budget starting FY 2026, it would reduce the STTR set-aside from 0.45% to 0.20%.
3. New SBIR/STTR Caps and Benchmarks on Companies Submitting Proposals
The INNOVATE Act introduces a $75 million lifetime cap on combined SBIR and STTR Phase I and II funding per company, limits submissions to a maximum of three proposals per solicitation and no more than 25 proposals per year and establishes stricter commercialization benchmarks
requiring companies with multiple past awards to demonstrate stronger market traction in order to remain eligible for future funding.
Why This Matters for BIANYS Members
For BIANYS members, including our incubators and accelerators, the INNOVATE Act matters because it will reshape our founder pipelines and resource strategies across New York’s innovation ecosystem. With reduced STTR funding, research-driven startups emerging from universities may face fewer pathways to secure early federal dollars, increasing competition for SBIR awards and putting pressure on incubators to deliver stronger proposal coaching, investor connections, and commercialization support. Accelerators may also need to diversify funding strategies, leveraging state programs, corporate partnerships, and venture networks to offset gaps
created by federal shifts while preparing founders to meet stricter performance and market traction benchmarks.
BIANYS will continue to monitor the bill closely and advocate for policies that support our startups, incubators, and research institutions. We’ll share updates and resources as the bill progresses. Please stay tuned for opportunities to engage with policymakers on behalf of New York’s innovation ecosystem.
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