If you’re a startup founder wondering whether your young company can apply for Small Business Innovation Research (SBIR) funding—even without revenue or a full staff—the answer is yes. The SBIR program was designed with innovators like you in mind.
The program aims to support early-stage research and development that has strong commercial potential. It doesn’t require you to be profitable—or even post-revenue. Whether you’re a one-person operation or backed by venture capital, eligibility depends more on your company’s structure and ownership than its age or financial history.
This post breaks down two common scenarios: startups with no revenue and companies with venture capital backing. We’ll also clarify the nuanced rules around ownership, control, and which types of funding relationships can affect your eligibility.
Can a Startup with No Revenue Apply for SBIR?
Yes. Revenue is not a requirement for SBIR eligibility. A business can be brand new, pre-revenue, or even founded solely to pursue an SBIR opportunity—as long as it meets the program’s basic qualifications.
- Be a for-profit small business located in the United States
- Have 500 or fewer employees (including affiliates)
- Be primarily owned and controlled by U.S. citizens or permanent residents (or qualifying small businesses)
- Operate under an eligible legal structure (e.g., LLC, C-corp, S-corp)
It’s also acceptable for the business to have just one employee—the principal investigator (PI)—as long as that individual will be primarily employed by the company during the award period.
SBIR awards are not loans
They’re non-dilutive grants or contracts. You don’t need to generate revenue or show profitability to apply.
What Are the SBIR Rules for Venture-Backed Companies?
The presence of venture capital (VC) funding doesn’t automatically disqualify a company from SBIR eligibility—but the details matter. The key issues are ownership and control.
- Allowed if no single VC owns over 50% or controls the company
- Company must remain under 500 employees including affiliates
- Allowed only if all investors are U.S.-based
- No single VC can own more than 50%
- Only valid if agency opts in to this rule
Only permitted if that VC is itself a small business majority-owned by U.S. citizens or permanent residents.
How Venture Capital Affects STTR Eligibility
While the SBIR program allows for some flexibility in venture capital ownership, the STTR (Small Business Technology Transfer) program is more restrictive. STTR rules generally prohibit majority ownership by venture capital firms, hedge funds, or private equity groups.
- Business must be at least 51% owned by U.S. individuals or qualifying small businesses
- Must operate in partnership with a U.S.-based nonprofit research institution
Agency Discretion and Timing of Eligibility Certification
Even if your company’s ownership structure fits within SBIR guidelines, eligibility can still hinge on the specific agency you’re applying to. Not all agencies opt into the provision that allows majority ownership by multiple U.S.-based venture firms.
Agencies such as the National Institutes of Health (NIH) and the Department of Energy (DOE) typically accept such ownership structures, while others may not. It’s essential to check the solicitation and agency-specific SBIR guidelines before assuming eligibility.
Also important: you don’t have to meet all eligibility requirements at the time of application. Instead, you must certify eligibility at the time of award.