One of the most common misperceptions relating to non-dilutive funding for life science R&D is that the SBIR/STTR program is the main and even only funding resource available for the life science industry. Companies and investors alike must know that although it is an important and sometimes relevant program, the SBIR/STTR program is a small, limited and limiting program. Also, it must be emphasized that programs thought to be focused solely on academic research (such as RO1, R21 and UO1) are open to all applicants, industry and academia alike; in fact the number of awarded industry R01 is increasing steadily every year.

The Small Business Innovation Research (SBIR) program is a set-aside program for domestic small business concerns to engage in Research/Research and Development (R/R&D) with commercial potential. The STTR program was established by the Small Business Technology Transfer Act of 1992. Federal agencies with extramural R&D budgets over $1 billion are required to administer STTR programs using an annual set-aside of 0.30%. Under the newly approved regulation (2010), SBIR funding has increased from $100K to $150K for an SBIR Phase I award; and from $750K to $1M for an SBIR Phase II award. Companies that are willing to apply to those mechanisms should take into account alternative sources of funding that might be more significant.