Army SBIR Program: Complete Overview for Small Businesses
- josh84483
- 6 days ago
- 10 min read
Updated: 5 days ago
The U.S. Army Small Business Innovation Research program represents one of the most significant opportunities for dual-use and deep-tech startups. The Army invests nearly $400 million annually in small businesses through SBIR—non-dilutive funding that doesn't require you to give up equity or take on debt. Companies win awards ranging from $150,000 to $2 million in SBIR funding, with the potential to secure follow-on Phase III contracts worth tens of millions more as the Army becomes your customer.
The companies that leverage SBIR most effectively don't pivot to chase military funding. They strategically identify Army topics that align with their existing technology development plans. This turns SBIR into accelerated funding for work you were already planning to do, while opening two markets: commercial customers and government contracts.
This guide provides a comprehensive overview of Army SBIR to help you get started: how the program works, who can apply, the different types of topics and funding phases, the Army FUZE innovation portfolio, success stories from companies winning millions in awards, and how to begin pursuing funding. Whether you're new to federal funding or looking to expand your SBIR strategy, this overview will help you better understand how to approach Army innovation dollars.
How Army SBIR Cycles Work
The Army participates in the broader Department of Defense (DoD), recently rebranded as the Department of War or DoW, SBIR system. The SBIR program funds approximately $4 billion to small businesses annually across all federal agencies. The DoD manages roughly half of that total budget—about $2 billion. Within DoD, the Army awarded $387.7 million to small businesses in fiscal year 2024, representing about 19-20% of the Defense Department's SBIR funding.
DoD Solicitation Cycles
The Department of Defense runs three major SBIR solicitation cycles per year. All military branches—Army, Navy, Air Force, Space Force, SOCOM—plus DoD agencies like DARPA, Defense Logistics Agency, Defense Health Agency, and others post their technology topics as part of these broader DoD solicitations. Think of it as a coordinated release where each service and agency identifies what problems they need solved. Additionally, DoD releases new topics on the first Wednesday of every month, giving you more opportunities throughout the year to submit proposals.
The Army posts its topics during these three annual DoD cycles and the monthly releases. The Army also releases topics outside of these cycles through out-of-cycle solicitations.
This means there are almost always open solicitations, sometimes dozens, so you're likely to have multiple opportunities to apply throughout the year.
Who Can Apply and How to Start
You need to meet specific requirements to qualify for Army SBIR funding:
U.S.-based for-profit small business
500 employees or fewer
At least 51% owned and controlled by U.S. citizens or permanent residents
Research and development work must be performed in the United States
Once you confirm eligibility, find open topics on the Army SBIR website (https://armysbir.army.mil/topics/) or the Defense SBIR/STTR Innovation Portal (DSIP) (https://www.dodsbirsttr.mil/topics-app/). Read the topic descriptions carefully—they explain exactly what the Army needs. The solicitations include technical objectives, expected deliverables, funding amounts, and expected technological maturity level (TRL).
You submit proposals through DSIP. The Army evaluates based on scientific and technical merit, commercialization potential, and how well your approach meets their requirements.
Topic Types and Application Strategy
The Army releases two types of topics: specific topics and open topics. Let's take a look at each type.
Specific Topics
These are targeted problems with clear requirements. The Army describes exactly what capability gap they need filled, what the technology should do, and how they'll measure success. Examples include specific sensor technologies, battery specifications, or software solutions for defined use cases.
Open Topics
Open topics give you more flexibility. Instead of solving one specific problem, you propose innovative solutions within broader technology areas or mission domains. The Army has released several open topic examples in recent memory:
Artificial Intelligence/Machine Learning (AI/ML) Focused Open Topic
Hybrid Electric Powertrain, Power and Propulsion Systems (HEPPS) Open Topic
Battery Focused Open Topic
Canine Readiness and Performance Open Topic
These open topics can range from narrowly focused within a specific industry or technology domain to completely unrestricted—allowing you to propose solutions the Army hasn't specifically anticipated but that could address emerging challenges.
Best Practice: Apply to Both
Companies looking to win non-dilutive funding from the Army should consider applying to a mixture of both specific and open topics. This approach dramatically increases the number of relevant opportunities you can pursue. Between specific topics that match your technology and open topics where you can shape proposals around your roadmap, you maximize your shot at securing Army SBIR awards.
The Three Phases of Army SBIR
Phase I: Proof of Concept
Phase I establishes whether your idea works. You get approximately $150,000 to $250,000 for 6 to 12 months. Your goal is to demonstrate scientific and technical merit, feasibility, and commercial potential.
The Army typically receives around 2,000 Phase I proposals per year and funds between 10-13% of them. Phase I awards are competitive, but if you have solid technology and a clear approach, you have a real shot.
Phase II: Development and Demonstration
Typically, Phase II follows Phase I if you successfully reach your R&D milestones. Phase II provides $1 million to $2 million or more for up to two years. This is where you develop, demonstrate, and deliver your innovation from Phase I. You build prototypes, conduct testing, and work closely with your Army technical point of contact to refine the solution.
The success rate for Phase II is much higher—generally 50-60%. Once you've proven feasibility in Phase I, the Army wants to see you develop it further.
Direct to Phase II: Skip the Feasibility Study
Direct to Phase II is an alternative pathway where companies skip Phase I entirely and go straight to prototype development. Some Army SBIR solicitations are structured specifically as Direct to Phase II opportunities, meaning they only accept Phase II proposals and don't offer a Phase I option. You start working on a working solution immediately, with Phase II funding levels ($1M-$2M+) and timeline (up to 2 years).
Phase III: The Real Goal
Phase III is why the DoD SBIR program exists through a sole-sourced contract. This is where the Army becomes your customer.
The Army invested in your technology through Phase I and Phase II. Now in Phase III, they want to become your customer—and a massive one at that. This is nearly unheard of in the investment world: an investor with no equity stake, no board seats, no control. They're simply interested in helping you develop your technology, giving you the right to work with them as a customer. Or not—it's your choice.
Phase III has no dollar limit. It's not restricted by SBIR budget caps because it comes from separate procurement funding. The Army can issue Phase III contracts worth millions or tens of millions of dollars to purchase your solution at scale.
Phase III contracts can also include production, deployment, training, and support. Some companies build entire businesses around providing their SBIR-developed solutions to the Army and other DoW branches.
SBIR Success Story: Tip & Cue
One example of a successful Army SBIR winner is Tip & Cue, an innovative dual-use startup building software-driven spectrum intelligence solutions. Their technology addresses a critical military challenge: adversaries increasingly deploy signal jammers to disrupt GPS and communications.
Tip & Cue won a Phase I Army SBIR award valued at $236,822 to develop their RF spectrum intelligence capabilities. In 2025, the company successfully transitioned to Phase II with a $1.9 million contract from the U.S. Army to advance mission-critical spectrum intelligence technology.
This follow-on award demonstrates the SBIR pathway in action—prove feasibility in Phase I, then scale development in Phase II. Tip & Cue's technology provides "The Signal Source of Truth" for tracking RF interference events, helping both military and civilian sectors detect and respond to disruptions in navigation, aviation, and communication systems.
xTech Program: A Non-Traditional Path to SBIR Funding
xTech represents a different approach to Army innovation funding. Instead of traditional grant applications, xTech uses prize competitions to identify promising technologies and connect small businesses with Army customers.
How xTech Works
xTech runs dynamic prize competitions where companies pitch their technologies directly to Army leadership and technical experts. These competitions offer smaller cash prizes compared to traditional SBIR awards, but they provide something equally valuable: direct access to Army decision-makers and a highly likely pathway to Phase II SBIR funding for finalists.
The competition format is straightforward. Companies submit proposals showcasing their dual-use technologies. Winners advance through multiple rounds, presenting at showcase events and receiving direct feedback from Army technical staff and program managers. Unlike traditional SBIR applications, xTech competitions emphasize rapid evaluation and real-time engagement with potential Army customers.
xTechSearch is the flagship open-topic competition, accepting proposals across all technology areas that could enhance Soldier readiness and mission success. Other xTech competitions focus on specific challenge areas like artificial intelligence (xTechScalable AI), advanced manufacturing (xTechPrime), and emerging technology domains.
The Path from xTech to SBIR
Finalists of xTech often receive invitations to submit Direct-to-Phase II SBIR proposals, where their likelihood of winning is highly increased. This means you benefit from direct exposure to Army decision-makers through the competition, receive prize funding, and gain a likely pathway to more significant funding through Direct-to-Phase II awards of $1-2M+. In other words, xTech serves as both a competition and a fast-track entrance to substantial SBIR funding.
xTech By The Numbers
7 years of competitions
$29 million in prizes awarded
$285 million in follow-on contracts
9,000 submissions from companies across the country
In FY 2024 alone, the Army ran six xTech competitions and awarded 86 follow-on SBIR contracts totaling $73 million to xTech winners.
xTech Success Story: Compound Eye
Compound Eye, based in Redwood City, California, demonstrates how xTech opens doors to major SBIR funding. The company initially hesitated to work with the Department of War but discovered a viable pathway through xTech.
In early 2020, Compound Eye submitted their Visual Inertial Distributed Aperture System (VIDAS) technology to xTechSearch 5. VIDAS provides GPS-independent navigation for autonomous platforms using passive 3D-mapping instead of active sensors like LiDAR.
Their xTech participation led directly to a Direct-to-Phase II SBIR contract worth $1.56 million in 2021. They followed this with another $1.7 million Direct-to-Phase II award in 2022 to enhance perception sensing for autonomous ground systems.
By September 2024, Compound Eye received nearly $2.2 million in combined funding from Army SBIR, their transition partner PEO Ground Combat Systems, and integrators L3Harris and RTX. In July 2025, they secured full SBIR CATALYST funding (see below to learn more about Catalyst) —an additional $13.3 million to accelerate VIDAS-SLAM development.
Compound Eye's journey shows how xTech competitions and prize money can unlock SBIR opportunities and lead to millions in follow-on funding for companies solving critical Army challenges.
Army FUZE: The Army Innovation Umbrella
Both the traditional Army SBIR program—with its specific and open topics—and the xTech prize competitions operate under a larger umbrella organization called Army FUZE.
FUZE exists to accelerate Army modernization through dual-use innovation, strategic partnerships, and mission-driven outcomes. The program addresses a critical challenge: the pace of threats is accelerating, and the Army needs to close the gap between innovation and impact faster than ever. By integrating multiple innovation programs under one portfolio, FUZE ensures that promising technologies don't just emerge—they evolve, scale, and transition into the hands of warfighters.
FUZE Portfolio: Four Innovation Programs
Army FUZE integrates four distinct programs that work together to accelerate technology development and transition:
SBIR/STTR Program - Empowers small businesses to develop innovative technologies that meet Army needs and demonstrate strong commercial potential. This includes both traditional Phase I/II/III funding and Direct-to-Phase II opportunities.
xTech Program - Connects small and non-traditional businesses with the Army through prize competitions to accelerate the development of transformational technology solutions.
ManTech Program - Drives cutting-edge manufacturing innovation to enhance performance, affordability, and readiness of next-generation Army systems.
TMI (Technology Maturation Initiatives)Â - Accelerates advanced technology into operational capability through prototype funding and manufacturing refinement.
FUZE By The Numbers (FY25)
$750M+ in annual funding
1,000+ firms engaged per year
100:1 private capital return received by participating firms
FUZE represents the Army's commitment to moving at the speed of relevance. These programs work together to ensure emerging technologies reach Soldiers faster, closing the gap between innovation and operational impact.
Army SBIR CATALYST Program: Bridge Funding
CATALYST is a specialized program within Army SBIR designed to bridge the gap between R&D and operational deployment, getting SBIR-funded technology into the hands of the Army faster. It uses a unique funding model with shared risk between the Army customer and technology integrators, with additional backing from the SBIR program.
CATALYST Funding Structure
CATALYST Base Award: Up to $1 million for 6-12 months initial period.
CATALYST Enhancement: Up to $7 million in additional Army SBIR funding, with matching contributions of up to $3.5 million each from both the Army transition partner and technology integrator. This creates a 2:1:1 funding ratio.
Total Potential Investment: $15 million or more per small business.
Getting Started with the U.S. Army SBIR Program
If you're a small business developing dual-use or deep-tech solutions, the Army SBIR offers a clear path to federal funding and government customers.
Start by reviewing open topics on the Army SBIR website. Look for both specific topics that match your current technology and open topics where you can propose innovative solutions. Register in the Defense SBIR/STTR Innovation Portal (DSIP) and familiarize yourself with proposal requirements.
Consider competing in xTech competitions as an entry point. These competitions provide visibility, feedback, and potential pathways to SBIR contracts. Many successful SBIR awardees got their start through xTech.
When preparing your proposal, focus on technical merit, feasibility, and commercialization potential. The Army wants solutions that work, can be deployed, and have potential for broader application beyond just military use. Dual-use technologies—those with both military and commercial applications—are particularly attractive.
Remember.
Army SBIR provides non-dilutive capital to develop your technology while you retain full ownership. You're not giving up equity. You're not taking on debt. You're receiving federal funding to solve real problems for a massive potential customer—the U.S. Army.
Beyond the immediate funding, SBIR opens doors to the broader defense industrial base. Prime contractors watch SBIR awardees. Phase III contracts can lead to subcontracting opportunities with major defense companies. Your SBIR-funded technology becomes a proven asset that's been validated by the government.
The numbers speak for themselves. The Army SBIR program awarded $387.7 million in FY24. xTech has generated $285 million in follow-on contracts. Companies participating in FUZE programs have achieved a 100:1 return on private capital. These aren't just grants—they're investments in technologies the Army needs and will buy.
About Akela ConsultingÂ
Akela Consulting specializes in SBIR grant writing for dual-use and deep-tech startups. We help companies navigate the complex proposal process, craft winning applications, and secure federal funding. In short, we make the unclear clear and lead the process. Contact us to learn how we can help you win Army and other SBIR awards.
Sources
Army SBIR Program statistics (Phase I proposal volumes and success rates): SBIR.gov, "Tutorial 1: DoD – Services," https://www.sbir.gov/tutorials/individual-agency-requirements/DOD-services
Army SBIR FY24 funding and program highlights: U.S. Army SBIR|STTR Program, "FY24 highlights and future outlook," https://armysbir.army.mil/announcement/u-s-army-sbirsttr-program-fy24-highlights-and-future-outlook/
xTech Program statistics and success stories: U.S. Army, "Army leverages Army SBIR and xTech prize competitions to secure AI pipeline," https://www.army.mil/article/277083/
Compound Eye success story: Army SBIR|STTR Program, "Compound Eye's growing Army partnership leads to $13M in Army SBIR CATALYST funding," https://armysbir.army.mil/news/compound-eyes-growing-army-partnership-leads-to-13m-in-army-sbir-catalyst-funding/
Tip & Cue SBIR award information: SBIR.gov Award Database, https://www.sbir.gov/awards/209403
Army FUZE Program information: Army FUZE official website, https://fuze.army.mil/
Army SBIR open topic examples: Army SBIR|STTR Topics page, https://armysbir.army.mil/topics/
SBIR program federal funding statistics: DAU (Defense Acquisition University), "DoD's Small-Business Innovation Research—How It Contributes to the Defense Mission," https://www.dau.edu/library/damag/september-october2021/dods-small-business