10 Year Trends in SBIR/STTR Funding to North Carolina Small Businesses

Small innovation-based businesses in North Carolina continued to successfully leverage the federal SBIR and STTR funding programs in 2023, totaling $173M awarded. 129 North Carolina companies secured SBIR/STTR funding via over 200 Phase I and Phase II awards in 2023 – 115 Phase I and 90 Phase II. 

Figure 1. Awards vs. Number of Firms Awarded 2014-2023.

Interestingly, while the total number of awards has declined slightly from the state’s all-time high in 2021, the $173M awarded in 2023 was a new funding record, up 7% from $161M in 2022. This suggests that awardees in NC have found continued success by progressing on to the more valuable Phase II awards.  Average amounts for Phase I awards in the state are $240,373, and Phase II awards average $1,182,378. 

In 2023, North Carolina ranked 11^th in number of Phase I awards, 9^th in number of Phase II awards, and 9^th in total dollars awarded. This ranking has increased consistently and significantly over the past two decades. 2023 was the strongest year over the last decade for Phase II awards, with 90 such awards making up a remarkable 44% of the total awards. Overall, 3.8% of the national funding dollars were distributed to NC.  

Table 1. State Ranks in 2023. 

Rank	State	# of Phase I Awards	# of Phase II Awards	Total Awards	Total Funding ($M)	Funding as % of National Total
1	CA	760	470	1230	892.2	19.7%
2	MA	361	246	607	484.0	10.7%
3	VA	211	175	386	300.7	6.6%
4	TX	206	140	346	243.7	5.4%
5	NY	204	117	321	233.3	5.1%
6	CO	168	130	298	215.1	4.7%
7	PA	134	94	228	207.7	4.6%
8	OH	168	110	278	175.2	3.9%
9	NC	115	90	205	173.0	3.8%
10	MD	122	87	209	167.5	3.7%

The largest SBIR/STTR programs are consistently those of the Department of Defense (DoD) and the Department of Health and Human Services (HHS), which includes the NIH. This is reflected in North Carolina, where small businesses received 68 DoD awards and 92 HHS awards in 2023. Notably, the percentage of DoD awards that are Phase II compared to Phase I has trended higher over the last 10 years, from 38% in 2014 (and having fallen as low as 26%) to 50% in 2023 as shown in Figure 2 below.   

Figure 2. Department of Defense SBIRs: Proportion of Phase IIs 2019-2023. 

The DoD distributes the most SBIRs/STTRs of any federal agency, representing 49.8% of total awards in 2023, while HHS provides 22% of total awards (note that number of SBIRs is not entirely proportional to amount of funding disbursed). Yet in a reflection of the state’s strength in the life sciences, North Carolina received 44.9% of its SBIR/STTRs from HHS, compared to 33% from DoD. A full breakdown of 2023 awards by agency is shown in Figure 3. 

Figure 3. Number of Awards by Agency in 2023. 

Department of Energy SBIR/STTR funding has trended up noticeably to 16 awards (12 Phase I and 4 Phase II) in North Carolina, an all-time high. While the increase is small compared to the number of awards from DoD and HHS, it may reflect that energy is a burgeoning R&D interest area for NC small businesses. 

Figure 4. DOE SBIR/STTR Total Award Count 2019-2023. 

Across the state, SBTDC has had a significant impact on the success of companies seeking SBIR/STTR funding with all federal agencies. Of the 129 companies awarded in 2023, 78 have worked with SBTDC. These companies received a total of 139 awards in 2023, totaling $90.8M in capital distributed. The SBTDC team is proud to have contributed to the success of these innovative North Carolina businesses. 

Figure 5. Proportion of North Carolina SBIR/STTR Awardees that have worked with SBTDC.

Last, but certainly not least, the One North Carolina Small Business Program was funded once again for the 2023-2024 fiscal year. This program consists of two components, the Incentive and the Match. The Incentive has a budget of $400,000 and serves to partially reimburse companies for the costs of preparing an SBIR/STTR proposal. The Match has a budget of $2.4 million and provides a 50% boost (up to $60,000) to a company’s SBIR/STTR award. Applications for this year’s cycle will be accepted until June 30^th, 2024, or until all available funds have been disbursed. Last fiscal year, 65 small businesses were awarded via a total of 48 Incentives and 25 Matches. North Carolina’s continued funding of this program shows both the state’s commitment to advancing innovation-based small businesses and the substantial impact that this funding has.