A recent report from the Study Group documented the return on investment (ROI) generated by the Department of Education’s and the Institute of Education Sciences’ Small Business Innovation Research program (ED/IES SBIR). The findings highlight an important path forward that would increase the effectiveness of IES’s education research and development (R&D).
By way of background, SBIR was established in 1982 via the Small Business Innovation and Development Act, which directed every federal agency with an extramural R&D budget of more than $100 million to allocate at least 3.2 percent of that budget to SBIR. The Small Business Administration, which oversees the program, describes it as “America’s Seed Fund,” supporting small business technology development and commercialization.
Currently, 11 federal agencies meet this criterion, with annual SBIR budgets ranging from $5 million at the Environmental Protection Agency to $2.3 billion at the Department of Defense. In the last few years, ED, through IES, has invested around $10 million annually in its SBIR. ED/IES SBIR supports two phases of investment: Phase I, which awards $250,000 over eight months for rapid prototyping and initial evaluation, and Phase II, which awards $1 million for full-scale development and evaluation.
Drawing on survey responses from SBIR-funded small businesses that were awarded funding from 2012 to 2022, the Study Group report documents the many successes of the program and reports on the following:
- Product development: Seventy-three of 104 responding firms (70 percent) developed and launched at least one research-based education technology product.
- Reach: Collectively, these products have been used by approximately 130 million students, educators, and administrators.
- Scale through acquisition: Nearly 20 percent of awardees were acquired by larger education companies, expanding product reach beyond what most traditional research grants achieve.
- ROI: SBIR-supported products during this span generated more than $260 million in revenues since their products launched. According to Ed Metz, an author of the Study Group report, this is far higher than the ROI of most other IES R&D projects. (This estimate is based on as-yet-unpublished data).
- Out of the labs and into the market: Twenty-five of the SBIR projects originated from research conducted by university faculty or graduate students. To bring their innovations into real-world classrooms, these researchers either founded companies themselves or collaborated with entrepreneurs to translate their evidence- and research-based ideas into practical, scalable education technologies. (See some examples here.)
These achievements illustrate the key strength of SBIR: It successfully focused on the translation of research into widely used products.
Some SBIR features have already informed IES’s newly launched “Transformative Research” program and should be central to the design of any IES-supported research program relaunch.
Here are key features of SBIR that matter the most for IES’s future:
- Connecting academics to entrepreneurs. Too often, promising IES-funded evidence-based innovations stall before reaching students and educators. SBIR shows the power of linking academic researchers who have created models from basic research with entrepreneurs who can develop scalable products. These links can bridge the gap between research labs and the market.
- Multi-stage grants with milestones. SBIR’s staged structure ensures resources continue for projects showing the most promise while discontinuing projects that haven’t proven successful. Incorporating milestone-driven progress into other IES research programs would increase efficiency and reduce the costs associated with continuing to fund failing projects.
- Planning for commercialization. SBIR requires grantees to think about sustainability and dissemination from the outset. Embedding commercialization and scaling strategies into research programs—while also exploring viable models for free and open products—would increase the adoption of IES-funded innovations.
Ultimately, IES’s mission is to fund research that will improve learner outcomes. It has partly succeeded in doing so by investing in academic researchers to develop theoretically informed, evidence-based innovations. But IES lost the plot by not focusing enough on outcomes and impact. Instead, its grant programs were mostly “field-initiated,” driven by research and projects proposed by academics or contractors. As a result, IES spread its resources on projects that were perhaps academically rigorous but not practically relevant. Following SBIR’s lead, IES should prioritize projects that can realistically improve student outcomes.
The SBIR model provides a template: Combine rigorous research with entrepreneurial approaches and planning for scaling through commercialization. By adopting these features, IES can ensure its investments lead not only to knowledge generation but also to widespread impact.
When redefining IES’s role, the goal for the Trump administration should be clear: Create models that translate evidence into practice that will be widely adopted. SBIR’s success shows that this goal is achievable.