In late March, Tennessee Governor Haslam proposed an amended budget for the fiscal year beginning July 1, 2018, which included $3 million toward LaunchTennessee Grants—demonstrating that Tennessee’s implementation of a matching program for Small Business Innovation Research (SBIR) and Small Business Technology Transfer Programs (STTR) survived as more than just a 12-month initiative.

Previous State Funding

Within the last year, Tennessee became the seventeenth state to implement a matching program for SBIR and STTR federal funding. However, there was no guarantee that the program would be funded for a second year. While Tennessee is among national leaders in terms of research funding, Tennessee-based businesses have not been as successful as other states in winning SBIR and STTR awards. This matching program sought to help increase the success rate.    

With state funding, LaunchTennessee developed the SBIR/STTR Matching Fund Grants Program to advance commercialization efforts by matching funds awarded to Tennessee-based companies through successful SBIR and STTR applications. In its first year of funding, the state provided the fund with $1.5 million. In the current version of the budget—currently seeking legislative approval—the state allocated $3 million to LaunchTennessee Grants.

Overview of the SBIR/STTR Matching Fund Grants Program

The program offers funding on a first-come, first-serve basis to Tennessee companies that must remain headquartered in Tennessee for 24 months after receiving the award. The program requires the grant requests to contribute to the overall economic development of Tennessee and aid in LaunchTennessee’s mission to support entrepreneurship and innovation across the state. Currently, for this round of funding, SBIR/STTR awards received prior to January 1, 2018, are ineligible for the program. In addition, no one company can receive more than 10% of the total SBIR/STTR Matching Fund Grants Program budget ($150,000 in 2017 due to $1.5M FY2018 budget). In addition, companies are limited to one Phase I match and one Phase II match every two years based on a calendar cycle. Lastly, companies receiving a match must commit to semi-annual reporting with LaunchTennessee.

The program offers grant funding via the methodology outlined below to entrepreneurs, startups and small businesses commercializing technology throughout the state:

• Phase I Match calculations: $0.50 per $1 of SBIR/STTR funding for companies with principal businesses in Tier 1 and 2 counties; $0.60 per $1 SBIR/STTR funding for companies with principal businesses in Tier 3 and 4 counties, female-owned companies, minority-owned companies, veteran-owned companies and companies owned by those with disabilities.
• Phase II Match calculations: $0.25 per $1 SBIR/STTR funding for all companies.

Microgrant Program

Possibly another sign of the state’s new push for SBIR/STTR awards, LaunchTennessee also offers a Microgrant program backed by additional state funding. These grants are available to Tennessee-based early-stage companies that will be applying for an SBIR/STTR Phase I, Phase II or Fast-Track award. By providing financial support for SBIR/STTR grant-writing assistance, companies receive valuable assistance navigating the complex federal grant application process and increase their chances of an SBIR/STTR award. Microgrants will be awarded for up to $4,000 for Phase I assistance and up to $6,000 for Phase II and Fast-Track assistance.