If you’re running a startup or small business in deep tech, you already know how critical NSF’s SBIR/STTR programs are. They offer that rarest of opportunities: serious funding to push bold ideas forward without giving up a slice of your company. But in April 2025, the ground shifted. NSF hit pause on grant awards, triggering a wave of uncertainty across the innovation community. Thankfully, just days later, awards started flowing again, but not without some lasting questions.
NSF Hits Pause on Grant Awards
On April 17, 2025, NSF unexpectedly halted all pending grant awards, including SBIR and STTR. The reason? Every award needed a second review, prompted by broader scrutiny tied to new federal executive orders. Over 400 grants across NSF programs, especially those connected to diversity, equity, inclusion (DEI), and misinformation research, were pulled back for another look.
For startups on the brink of a Phase II award, the timing couldn’t have been worse. Many companies were already deep into planning (i.e., hiring teams, kicking off projects) only to find their funding frozen. In some cases, the delay threatened survival.
It was a harsh pivot, especially considering that just weeks before, NSF had been issuing SBIR/STTR awards at a faster clip than last year. Momentum was strong. Then suddenly, it wasn’t.
NSF Gets Back on Track
Fast forward to April 23, 2025. Good news: NSF resumed issuing awards after moving through the second review process. While the backlog is real, NSF leadership has signaled that catching up is now a top priority.
If you’re in the award pipeline, expect a bit of turbulence, but also some tailwinds. The key right now is staying closely connected with your program officer and being ready to move fast when your notice comes through.
Reading the Tea Leaves
This sudden “second look” wasn’t just about administrative caution; it reflected a larger shift. New executive orders are reshaping federal funding priorities, putting a sharper focus on certain research areas while sidelining others. Programs linked to DEI initiatives and combating misinformation have seen more scrutiny, and that climate inevitably touches SBIR/STTR applicants too.
The takeaway? Entrepreneurs must stay agile. Proposals that align with national priorities like advanced manufacturing, climate tech, defense, and AI may find a smoother path. But companies working in sensitive or emerging social research spaces should be prepared for extra hurdles and plan their narratives strategically.
Startups Feel the Squeeze
Across LinkedIn, X, and industry forums, the reaction from entrepreneurs and support organizations was swift and clear: worry, frustration, and a demand for transparency.
Some founders publicly shared the risks they faced from delays, cash flow issues, lost hires, missed market windows. Others emphasized how critical Phase II awards are not just for survival, but for growth.
At the same time, there’s resilience. The SBIR/STTR community has always been resourceful, and this moment is no different. Companies are leaning harder into building strong relationships with program officers, polishing contingency plans, and looking at alternative non-dilutive funding streams.
Staying Ahead in Uncertain Times
Here’s what you can do right now to position your venture for success:
- Stay informed. Subscribe to SBIR/STTR updates from agencies like NSF, NIH, DoE, and USDA. Policy landscapes are shifting quickly.
- Talk to your program officer. Don’t guess: ask for direct updates on your proposal’s status.
- Diversify your funding base. Look into other federal programs, state innovation grants, and strategic partnerships.
- Tighten your storytelling. Make sure your project narrative connects clearly to national science and technology priorities.
Conclusion
The April 2025 NSF SBIR/STTR turbulence is a reminder that even in the world of federal funding, change can happen fast, and it’s not always predictable. But if there’s one thing entrepreneurs excel at, it’s adapting.
At GrantCraft Consulting, we’re here to help you make sense of these shifts, craft winning proposals, and keep your momentum going. If you have questions, need a strategy session, or just want to talk through your next steps, we’re ready to help.
Got a question about your SBIR/STTR strategy? Drop us a line—we’d love to hear from you!