Where are the women? An examination of women's participation in the SBIR/STTR program

A recent report by the National Women’s Business Council (NWBC) and the Small Business Administration (SBA) found that participation rates in the Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) programs by women-owned small businesses (WOSB) has essentially remained flat since 2011. Although participation rates vary by awarding agency, the report highlights several barriers faced by women entrepreneurs. Despite the gloomy findings, the report features promising practices from entrepreneurial support organizations (ESOs) that may “right the ship” in supporting women entrepreneurs through the SBIR/STTR program.

Between 2011 and 2018, both SBIR/STTR applications from and awards to WOSB hovered between 12 and 15 percent of all applications received and awards made. While agencies generally appear to be awarding WOSB firms in the same proportions as non-WOSB firms relative to the number of applications submitted, indicating fairness across agency proposal review and award criteria, there are wide differences among each agency’s WOSB participation rates. For example, the Department of Education awarded 29.5 percent of their total SBIR/STTR Phase I contracts for the period from 2011 to 2018 to WOSB while at the Department of Energy (DOE) only 7.5 percent of its awards went to WOSB over the same period.

These large differences are driven by the inequities and underrepresentation of women in STEM-intensive industries, the report’s authors conclude. An analysis of the four and six digit NAICS codes represented across the entire SBIR/STTR program shows that approximately 15 percent of all the firms in these “SBIR industries” (identified as the full set of unique NAICS codes used by all SBIR/STTR awardee firms for the years 2011 through 2018) are classified as WOSB. The share of awards made to WOSB across the entire SBIR/STTR program is similar — sitting at approximately 13 percent of all awards. This relative parity indicates that underrepresentation in industry is a primary barrier to WOSB SBIR/STTR participation and entrepreneurship.

Despite the systemic barriers to WOSB participation in SBIR/STTR, two agencies were able to achieve outsized increases in WOSB participation. The National Science Foundation (NSF) and the DOE each initiated plans aimed specifically at increasing SBIR/STTR outreach efforts to women, minorities, and socially and economically disadvantaged individuals. DOE, while showing a WOSB participation rate of 7.5 percent for the full period of the study, grew its WOSB participation rate from 3.5 percent in 2011 to 10.5 percent by 2018. For comparison, NASA experienced decreased WOSB participation with a drop of 2.3 percentage points, as did DoD (-1.4 percentage points) over the same period. The Department of Health and Human Services experienced a 0.9 percentage point increase in WOSB participation for the same period. The DOE SBIR/STTR Phase 0 program provides free technical assistance to potential first-time applicants and specifically seeks to increase the diversity of DOE SBIR/STTR applicants. Similarly, NSF initiated a series of changes to remove administrative and technical barriers to first time and underrepresented applicants, and experienced a 6.9 percentage point increase in WOSB participation from 2011 to 2018.

While SBIR/STTR outreach efforts vary widely by agency in form and intensity, SBA programs such as the Federal and State Technology (FAST) partnership program and Growth Accelerator Fund Competition (GAFC) not only increase awareness of the SBIR/STTR program, but also provide mentorship and technical assistance that can tip the scales in favor of participation by potential entrepreneurs. There is mounting evidence that organizations and programs dedicated to supporting the broad development of entrepreneurs are particularly well suited to effectively conduct SBIR/STTR outreach, and also to train prospective applicants in how to submit successful applications.

ESOs that provide similar technical assistance, mentorship, and networking opportunities as those in the federal FAST and GAFC programs may help ameliorate the significant disparities in accessing capital, leveraging professional networks and social capital, finding affordable business solutions, and other challenges that are faced by women, minorities, and other socially and economically disadvantaged entrepreneurs. As the tech sector and others seek to increase workforce diversity; the racial and ethnic demographics of entrepreneurship continue to diversify; and the movements for social and racial justice continue to increase, ESOs that make intentional efforts toward inclusion may provide the right model for increasing diversity throughout the high-tech, entrepreneurial innovation community — not just in the SBIR/STTR program.