STTR requires a research partner in a way SBIR does not

The record

The Small Business Technology Transfer program and the Small Business Innovation Research program are administered together under one SBA SBIR/STTR Policy Directive, which states the specific line separating them. For STTR Phase I and Phase II, the directive states, “not less than 40 percent of the R/R&D work must be performed by the” small business concern, “and not less than 30 percent of the R/R&D work must be performed by a partnering Research Institution,” and adds that “deviations from these STTR requirements are not allowed,” citing the statutory basis at 15 U.S.C. 638(e). SBIR carries no equivalent partnership mandate: a small business may outsource up to a third of Phase I work and half of Phase II work to any subcontractor, with no research institution required. The National Institutes of Health's own comparison table restates the same figures side by side, alongside each program's separate set-aside share of agency R&D budgets, 3.2 percent for SBIR and 0.45 percent for STTR.

What the documents establish

The Policy Directive is SBA's own regulatory guidance to every participating federal agency, not one agency's paraphrase of the law; it names the underlying statute directly rather than describing it secondhand. NIH's SEED page is a second, independent primary source, an agency's own restatement of the same two numbers for its own applicants, and it adds a detail the Directive does not foreground: STTR's principal investigator may be employed by either the small business or the research institution, while SBIR requires the small business to employ its own. The two documents agree on the work-share floor and the money-always-to-the-small-business rule; neither describes SBIR and STTR as interchangeable structures with only a name difference.

The operating read

A founder assembling a research-institution agreement for an STTR proposal is negotiating against a floor, not a target: 40 percent and 30 percent are minimums the statute does not allow either party to waive, so the remaining share, up to 30 percent of the funded work, is the only portion open to negotiation. This is an editorial reading beyond the documents themselves: because the Directive states management direction and control of the STTR project must rest with the small business regardless of the funding split, a founder should treat the intellectual-property allocation agreement with the research institution, required before an award, as the document that actually settles commercial rights, not the work-share percentages alone.

What to check before you decide

Before assuming a research partnership meets STTR's structure, check the following:

• Does the written agreement with the research institution allocate IP and follow-on research rights explicitly, as the Policy Directive requires before an award is made?
• Is the principal investigator's primary employment correctly documented, consistent with STTR's rule rather than SBIR's stricter small-business-only rule?
• Does the proposed work split meet the 40/30 floor before counting any work assigned to a third-party subcontractor?

This is a description of SBA's and NIH's own published rules as retrieved on 16 September 2026, not legal advice on any specific proposal; a research institution agreement should be reviewed against the current directive and counsel before submission.