Introduction
If you’re putting together a team for an SBIR or STTR proposal, one of the first questions you’ll need to answer is: who can serve as Principal Investigator (PI)? And just as important—can the PI or other key team members come from a university or another company?
The short answer is: it depends on the program. While the SBIR and STTR programs both allow collaborations with external institutions, the rules for who can serve as PI—and where they must be employed—are different. Understanding those rules up front can help you avoid compliance issues and make strategic choices about how to structure your proposal team.
The PI Requirement in SBIR vs. STTR
SBIR Rules
In the SBIR program, the PI must be primarily employed by the small business at the time of award and for the duration of the project. This means the PI must spend at least 51% of their time—or at least 20 hours per week—working for the business. The PI cannot simultaneously work more than 19 hours per week for any other employer.
Importantly, a PI can be affiliated with a university or another institution at the time of proposal submission. However, they must transition to full employment with the small business before the award is finalized.
STTR Flexibility
In contrast, the STTR program offers more flexibility. Here, the PI may be employed by either the small business or the partnering research institution. If the PI is affiliated with the research institution, they must work at least 20 hours per week at that institution.
While this structure allows the PI to remain at a university or nonprofit research organization, the small business must still maintain technical control of the project and conduct at least 40% of the work, with the research institution performing at least 30%.
What “Primarily Employed” Really Means
The phrase “primarily employed” often causes confusion, especially for academic researchers or consultants with multiple commitments. In the context of SBIR, “primarily employed” means that the PI must spend more than half of their total professional time working for the small business. This typically translates to at least 20 hours per week with that business and no more than 19 hours per week with any other employer.
For example, a university professor planning to serve as an SBIR PI must reduce their academic appointment to less than 19 hours per week—and commit to at least 20 hours with the company—before the award is issued. For STTR, such adjustments are not necessary if the PI remains with the research institution.
Key Staff, Collaborators, and Co-Investigators
While the PI’s employment is tightly regulated, the rules for other team members are much more flexible. Both SBIR and STTR programs allow your key staff, co-investigators, and collaborators to come from outside institutions, including universities, research labs, or other companies.
These external contributors can be brought in as consultants or subcontractors, depending on the structure of your budget and the nature of their work. In fact, leveraging outside expertise is often a smart move—especially if it brings specialized technical skills or equipment your business lacks internally.
But remember: while collaborators can play an essential role, they do not fulfill the PI requirement, and the small business must retain clear technical direction and control over the project.
Key clarification:
Outside collaborators can support your SBIR or STTR proposal as subcontractors or consultants, but they do not need to meet the PI employment rules.
Choosing the Right Program Based on Your Team
Understanding the PI rules isn’t just about compliance—it can also help you choose the best path forward. If your proposed PI isn’t ready to commit to the small business full-time, then STTR may be the better fit, since it allows PIs to remain employed at a university or research institution.
On the other hand, if your team is centered within the company and the PI can meet the employment threshold, SBIR might offer more flexibility in terms of budget allocation and institutional independence.
In some cases, applicants shift from SBIR to STTR mid-process when they realize their PI can’t meet the SBIR employment rule in time. This is avoidable if you assess your team’s structure early and align it with the appropriate program.
Best practice:
Confirm that your PI’s employment meets SBIR or STTR requirements before the award—not just before submission.
Final Thoughts and Actionable Takeaways
Choosing the right PI—and understanding the employment requirements tied to their role—is one of the most important early decisions in any SBIR or STTR proposal. Missteps here can delay or derail your submission, so it’s essential to get this right from the beginning.
PI Eligibility Checklist
- Will the PI be employed at least 51% by the small business during the project? (SBIR only)
- If applying to STTR, does the PI meet the employment rule for either the business or the research institution?
- Will the PI meet the employment criteria by the time of award, not just at submission?
Team Structure Checklist
- Are key contributors classified properly (employee vs. consultant vs. subcontractor)?
- Are outside collaborators used strategically for expertise the business lacks internally?
- Is the small business maintaining technical direction of the project?
Before submitting your proposal, it’s always a good idea to double-check the agency-specific rules in the current solicitation. Requirements can vary slightly by agency, and ensuring compliance from the start will save you time—and potentially your eligibility—later on.