Unlocking Innovation: The Ultimate Guide to STRATFI/TACFI Funding for SBIR/STTR Innovators

The STRATFI/TACFI program is a game-changing initiative designed to bridge the “valley of death” between SBIR/STTR Phase II efforts and the scaling opportunities of Phase III. Created to catalyze partnerships between Air Force and Space Force end-users, acquisition professionals, private-sector innovators, and investors, this program provides supplemental funding that propels small businesses toward strategic, high-impact defense solutions.

What Is STRATFI/TACFI and Why Was It Created?

STRATFI (Strategic Funding Increase) and TACFI (Tactical Funding Increase) are two interrelated components of the Department of the Air Force’s funding strategy:

• STRATFI focuses on large-scale, strategic investments ranging from $3M to $15M, designed to bring breakthrough capabilities to market.

• TACFI provides tactical funding increases between $375K and $2M to eligible SBIR/STTR Phase II efforts, enabling rapid innovation and seamless transition to Phase III.

These initiatives were established in response to evolving national defense strategies that emphasize leveraging America’s entrepreneurial spirit and technological innovation. They aim to address capability gaps, enhance the competitive edge of the U.S. defense enterprise, and accelerate the commercialization of advanced technologies. The program’s creation is rooted in the desire to foster strong, collaborative relationships between government stakeholders and the private sector, ensuring that promising technologies receive the investment and validation they need to succeed.

Who Qualifies for STRATFI/TACFI?

Eligibility for the STRATFI/TACFI program is strictly defined to ensure that only the most promising small business concerns (SBCs) are considered:

• Small Business Status: The applicant must be recognized as an SBC and be eligible for an SBIR/STTR award.

• Active or Recent Phase II Experience: Companies must be either actively engaged in an SBIR/STTR Phase II effort or have completed one within the past two years, calculated from the final deliverable date.

• Sequential Award Limitations: The subject Phase II effort must not have already received a sequential (second) Phase II award.

• Timing Requirements: At least 90 days must have elapsed since the beginning of the associated Phase II execution.

• No Overlapping STRATFI Efforts: The company should not be concurrently executing a prior STRATFI effort.

• Domestic Performance: All anticipated work must be performed in the United States.

These criteria are designed to ensure that the funding goes to innovators who are well-positioned to translate early-stage technologies into fully scaled capabilities.

The Importance of STRATFI/TACFI in Today’s Defense Landscape

In today’s fast-paced defense environment, the STRATFI/TACFI program plays a crucial role in:

• Bridging Funding Gaps: By providing supplemental funding, the program helps companies overcome the “valley of death” that often hinders the transition from research to operational deployment.

• Fostering Collaborative Innovation: It encourages strategic partnerships between government entities and private industry, ensuring that cutting-edge technology development aligns with the operational needs of the Air Force and Space Force.

• Enhancing National Security: By accelerating the maturation of promising technologies, the program strengthens the U.S. defense industrial base and ensures a competitive edge against adversaries.

• Validating Commercial Potential: The inclusion of third-party matching funds—whether from government sources or eligible private investors—serves as a strong external validation of a company’s technological promise and commercial viability.

How to Submit a Capability Package: Step-by-Step Process

Submitting a successful capability package for the TACFI program involves a well-organized and meticulous process. Here are the essential steps:

1. Prepare Your Documentation

All submissions must adhere to the mandatory templates provided by the program. Key documents include:

• SBC Registration: A memo confirming your small business registration (dated within 30 days prior to submission).

• Private Funding Capitalization Table: A detailed breakdown of your company’s ownership, uploaded using the provided Excel template.

• Capability Package: This core document should encompass:

  • Company profile, key personnel, and ownership details.

  • A comprehensive overview of your current Phase II work.

  • Detailed description of your proposed TACFI effort, including technical solutions, transition strategy, and benefits to the warfighter.

• Matching Funds Documentation: Upload separate files for:

  • TACFI Government Funding Letter(s) or TACFI Private Funding Letter(s)

  • Any applicable Phase III or subcontract awards that logically extend your Phase II work.

• Collaboration Agreement: Must include end-user, customer, and technical points of contact.

• Contracting Responsibility Acceptance: A memo or email that confirms contracting and award responsibilities.

• Submission Quad Chart and White Paper: A concise, yet comprehensive summary designed for senior leadership review.

2. Use the Official Submission Portal

• Online Ingest Form: Complete the ingest form on the AppSheet platform. This must be filled out by a designated Government Point of Contact (POC) such as an end-user, customer, or Technical POC.

• File Uploads: All required documents must be uploaded as separate files unless specified otherwise. Pay close attention to labeling requirements to ensure that each file is correctly identified.

• Submission Window: For Program Year 25.2, the TACFI-only cycle is open for submissions until March 31, 2025. There are two selection cycles planned (Winter 2025 & Spring 2025), so timing your submission is critical.

For more detailed instructions and to access the required templates, visit the official STRATFI/TACFI page on AFWERX and join the designated Teams channel for up-to-date guidance.

Understanding the Matching Funds Options

One of the most critical aspects of the TACFI program is its matching funds requirement. Here’s what you need to know:

Matching Ratios and Options

• Dual-Use Matching Option:

  • Ratio: 1:1 SBIR funds to eligible third-party funds.

  • Example: $375K SBIR funds paired with $375K from an eligible outside investor.

• Defense-Only Matching Option:

  • Ratio: 1:1 SBIR funds to non-SBIR/STTR government funding.

  • Example: $375K SBIR funds paired with $375K in government funding.

The program allows for additional matching funds from non-SBIR sources, such as eligible third-party investments, which include venture capital, angel investments, or other validated funding sources. However, internal company funds and contributions from affiliated entities do not qualify.

Key Matching Funds Guidelines

• Eligibility of Third-Party Funds: The funds must come from outside investors who provide cash investments—not internal financing.

• Documentation: Ensure all matching funds are supported by signed funding letters and, if applicable, are received prior to the award.

• Subcontracts: May count toward government matching if they align with the Phase III transition strategy and comply with SBIR work-share requirements.

These guidelines are designed to ensure that additional funds genuinely reflect market validation and contribute to reducing technical and commercialization risk.

Common Pitfalls and How to Avoid Them

Many applicants encounter similar issues when preparing their submissions. Common mistakes include:

• Incomplete Packages: Missing mandatory documents such as the Capability Package or Collaboration Agreement.

• Inaccurate Information: Discrepancies in key details (e.g., POC contacts, contract numbers, or funding amounts) across documents.

• Misalignment of Funding: Incorrect matching funds calculations, including ineligible third-party investments or internal funds.

• Using Outdated Templates: Always ensure that you are using the current PY25.2 version of the submission templates.

Careful review and adherence to the provided guidelines can make the difference between a successful submission and an incomplete package.

Next Steps: Key Dates and Final Tips

• Submission Deadline: The open window for submissions runs until March 31, 2025.

• Selection Cycles: Expect two selection cycles (Winter 2025 and Spring 2025), so plan your submission timeline accordingly.

• Support Channels: If you encounter any issues or have questions, contact the program team at [email protected] and join the AFWERX Ventures MS Teams channel for the latest updates and guidance.

Stay Updated on Submission Deadlines
For the most current submission window and selection cycle dates, please visit the AFWERX STRATFI/TACFI Key Dates Page. You can also join the AFWERX Ventures MS Teams channel and reach out via [email protected] for further guidance and support. By following these steps and guidelines, you can position your small business to successfully leverage TACFI funding and drive your technology from Phase II research into a transformative Phase III solution.

Conclusion

The STRATFI/TACFI program represents a pivotal opportunity for SBIR/STTR innovators. By understanding the program’s purpose, eligibility requirements, matching funds options, and submission process, your company can secure the additional funding necessary to bring breakthrough defense technologies to market. Stay informed, adhere to the guidelines, and seize this opportunity to become a part of the next wave of strategic innovation in national defense.

For additional details and to access the necessary templates and resources, visit AFWERX STRATFI/TACFI and keep up with the latest program updates.