AFWERX is the Air Force's innovation arm and the single largest SBIR funder in the Department of Defense -- in FY2024, it accounted for roughly 53% of all DoD SBIR awards by contract count. Unlike traditional SBIR programs that define narrow technical problems, AFWERX Open Topic lets you pitch technology you're already building and frame the defense application yourself. Phase I is $75K over 3 months, Phase II reaches $1.25M, and the STRATFI bridge can scale to $15M+ before Phase III production contracts.
If you're building dual-use technology -- something with both a commercial market and a defense application -- AFWERX is the fastest, most commercial-friendly path into government funding.
2026 note: AFWERX solicitations are currently paused pending SBIR reauthorization (passed Congress March 2026, awaiting signature). Prepare now so you're ready when new windows open.
The AFWERX funding ladder
AFWERX has the clearest funding pathway of any SBIR agency. Each step builds on the last.
| Phase | SBIR | STTR | Duration | What You Do |
|---|---|---|---|---|
| Phase I | $75K | $110K | 3 months | Customer discovery -- find your AF end-user, get a Customer Memorandum signed |
| Phase II | $1.25M | $1.8M | Up to 21 months | Prototype development with an identified program office |
| D2P2 | $1.25M | $1.8M | Up to 21 months | Skip Phase I if you have mature tech + existing Customer Memorandum |
| TACFI | $375K-$2M | -- | Varies | Tactical bridge for operational-level capabilities |
| STRATFI | $3M-$15M | -- | Up to 48 months | Strategic bridge with defense/industry co-investment (totals can exceed $60M) |
| Phase III | No ceiling | -- | Varies | Sole-source production contracts -- no further competition required |
The critical thing to understand: AFWERX Phase I is NOT an R&D grant. There are no R&D milestones. The $75K is business development money to identify an Air Force customer and end-user willing to sign a Customer Memorandum confirming they want your technology. AFWERX provides a curriculum on outreach and SAGE fellows to help you make those connections.
This is fundamentally different from NSF Phase I ($305K for feasibility research) or NIH Phase I ($314K for preliminary studies). At AFWERX, the research comes in Phase II. Phase I is about proving there's a buyer.
Open Topic vs. Specific Topic
AFWERX runs two parallel tracks. Knowing which one fits your company matters.
Open Topic (most startups start here)
You bring the idea. Open Topic is technology-agnostic -- you pitch your existing product and explain the defense application. There's no predetermined technical requirement to match.
This is the "front door" for commercial tech companies. If you have a working product or prototype with commercial traction and can articulate a clear Air Force use case, Open Topic is your path.
Specific Topic
The Air Force publishes a defined technical problem. You propose a solution. These topics are more narrow and specific -- closer to traditional DoD SBIR.
Choose Specific Topic when your technology directly addresses a published requirement. The evaluation is more technical and the competition may be narrower (fewer applicants per topic).
When to choose which
Open Topic if: you have an existing product, commercial customers, and can frame a dual-use defense application. You're leading with commercial viability.
Specific Topic if: you're building specifically for a defense mission and can respond directly to a published Air Force requirement. You're leading with technical solution fit.
The Customer Memorandum: the most important document
The Customer Memorandum is a signed document from a Department of the Air Force Customer and End-User confirming they want your technology. It's the single most important artifact in the AFWERX process.
- Required for Phase II: proposals without a properly executed Customer Memorandum are not evaluated
- Required for D2P2: must be included at time of submission
- Securing it is the point of Phase I: your entire 3-month Phase I should be focused on identifying the right AF stakeholder and getting this signed
- Two signatures required: the "Customer" (controls the budget) and the "End-User" (operates the technology) are often two different people. Both must sign.
If you can't get a Customer Memorandum, you can't advance. It's that simple. This is AFWERX's way of ensuring the technology has a real pull from within the Air Force, not just a push from the startup.
How AFWERX differs from other SBIR agencies
| AFWERX | NSF | NIH | Navy/Army | |
|---|---|---|---|---|
| Phase I amount | $75K / 3 months | $305K / 6-12 months | $314K / 6 months-2 years | $140K-$250K / 6 months |
| Phase I purpose | Customer discovery | Feasibility research | Preliminary studies | Technical feasibility |
| Evaluation emphasis | Commercial viability + dual-use | Technical innovation + broader impacts | Approach + significance | Technical merit + topic relevance |
| Speed to award | ~90 days | 4-6 months | 6-9 months | 4-6 months |
| Phase III bridge | STRATFI/TACFI ($375K-$15M) | None | None | None |
| Topic model | Open (you define the problem) | Broad (you define within technology areas) | Omnibus (any health topic) | Specific (agency defines) |
AFWERX is fastest, most commercial-friendly, and has the only structured bridge-funding mechanism (STRATFI/TACFI) in the entire SBIR ecosystem. The trade-off: the smallest Phase I award and the requirement to prove commercial traction, not just technical merit.
How to apply
Step 1: Register
You need active registrations at:
- SAM.gov -- federal contractor registration (2-4 weeks for new applicants, start now)
- DSIP (dodsbirsttr.mil) -- the DoD SBIR/STTR submission portal
Step 2: Choose your track
Open Topic for most startups. Specific Topic if a published requirement matches your technology.
Step 3: Prepare your proposal
Use the mandatory proposal template specified in the current solicitation. Submissions not using the exact current template are disqualified -- this catches founders every cycle.
Your proposal should cover:
- Technical approach -- what you're building and why it matters for the Air Force
- Team qualifications -- who's doing the work
- Commercialization strategy -- your commercial market, traction, and dual-use framing
- Phase I work plan -- how you'll identify and engage your AF customer during the 3-month period
Format rules: no embedded videos, no moving graphics, no hyperlinks. Content must be on its designated template pages -- content placed on wrong pages will not be evaluated.
Step 4: Submit via DSIP
Submit through dodsbirsttr.mil. AFWERX runs multiple submission windows per year for Open Topic.
Step 5: Execute Phase I (if awarded)
Three months of customer discovery. AFWERX provides:
- SAGE fellows -- experienced professionals assigned to you automatically after Phase I award (no separate application) who help you navigate the Air Force bureaucracy and make introductions
- Outreach curriculum -- structured training on how to engage military end-users
Your goal: a signed Customer Memorandum from an AF Customer and End-User.
5 things that make AFWERX proposals win
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Lead with commercial traction. Revenue, paying customers, pilot deployments. AFWERX evaluates commercialization potential as heavily as (or more than) technical merit. If you have commercial proof points, they're your strongest card.
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Frame dual-use, not defense-only. Open Topic is designed for companies with commercial products that have defense applications. Show your commercial market first, then articulate the AF use case.
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Name specific end-users. Don't say "the Air Force could use this." Identify which command, which base, which mission set. If you already have AF contacts, reference them.
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Plan for the Customer Memorandum from day one. Your Phase I work plan should describe how you'll identify and engage your AF customer. This is the entire deliverable.
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Show the Phase III path. AFWERX evaluates transition strategy. Describe how you'd go from prototype to fielded capability -- funding source, contract vehicle, integration plan.
Common mistakes
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Treating Phase I like an R&D grant. AFWERX Phase I has no R&D milestones. The $75K is for customer discovery. If your proposal reads like an NSF research plan, you've misunderstood the ask.
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Using the wrong template. Template versions change with each solicitation release. Using an outdated template is an automatic disqualification. Always download the template from the current solicitation page.
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No plan to find an AF customer. If your proposal doesn't describe how you'll secure a Customer Memorandum, you're missing the fundamental deliverable of Phase I.
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Ignoring the "Selected but Not Funded" reality. AFWERX funds proposals in order until the fiscal year budget runs out. A "Selected but Not Funded" result isn't a rejection -- it means you cleared the bar but the money ran out. Apply early in each cycle when more budget is available.
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Writing a traditional SBIR proposal. AFWERX evaluates differently from NSF, NIH, or even other DoD branches. Technical depth matters less than commercial viability and dual-use framing.
STRATFI and TACFI: the bridge nobody else offers
The "Valley of Death" between SBIR Phase II and production contracts kills most defense startups. AFWERX built STRATFI and TACFI specifically to bridge it.
TACFI (Tactical Financing): $375K-$2M for operational-level capabilities. Smaller, faster, focused on near-term tactical needs.
STRATFI (Strategic Financing): $3M-$15M direct award, structured with matching from a Defense program office and private capital (typically at a 1:3 ratio). With active defense customer co-investment and follow-on VC participation, total project value can exceed $60M over up to 48 months.
In FY2024, AFWERX transitioned 470 companies to Phase III, representing $1.44B in contracts. That pipeline -- from $75K Phase I through STRATFI to sole-source Phase III -- is the most developed SBIR commercialization pathway in the entire federal system.
2026 status
SBIR authorization lapsed September 30, 2025. AFWERX paused all new solicitations. Reauthorization legislation passed Congress in March 2026 (awaiting presidential signature), extending the program through September 2031.
Existing awards continue -- if you have an active Phase I, II, or III contract, you're unaffected.
What to do now: prepare so you're ready when solicitations reopen. Register at SAM.gov and DSIP, draft your proposal, build Air Force relationships, and identify potential customers. The companies that submit in the first window after reauthorization will have the least competition.
Should you apply to AFWERX?
Yes if: you have a working product or prototype with commercial traction and can articulate a clear Air Force (or Space Force) use case. You're comfortable with a 3-month customer discovery sprint. You want the fastest path into DoD procurement.
No if: you're pre-product with only an R&D concept (start with NSF instead). You can't identify any defense application for your technology. You need more than $75K to prove feasibility (consider NIH or NSF Phase I).
The long game: $75K Phase I is small. But the AFWERX pathway -- $75K to $1.25M to $15M STRATFI to uncapped Phase III -- is the most aggressive funding ladder in government. If your technology genuinely fits a defense mission, that pathway is worth the small initial investment.
For context on how AFWERX fits into the broader SBIR landscape, see our SBIR guide for startups and funding amounts by agency.
Budget strategy: what AFWERX allows and what trips people up
AFWERX Phase I budgets are small ($75K) but Phase II budgets ($1.25M) require real planning. Here's where companies get tripped up:
Indirect rate caps. AFWERX doesn't impose a hard cap on indirect rates, but reviewers notice. If your overhead rate is 150%+ and your competitor's is 40%, you're funding less actual work per dollar. Companies with no negotiated rate should propose a reasonable estimate (30-60% is typical for startups) and be prepared to justify it.
Allowable costs. SBIR budgets follow FAR cost principles. Broadly allowable: personnel (salaries + fringe), equipment under $5K, materials and supplies, travel to meet Air Force stakeholders, subcontracts (up to 33% of Phase I, 50% of Phase II). Not allowable: entertainment, lobbying, contingent fees for grant consultants (FAR 31.205-33(f)), and general marketing.
The Phase I trap. $75K over 3 months is not a lot. Don't try to fund serious R&D with Phase I money -- that's not what it's for. Phase I is customer discovery. Budget for travel to Air Force bases, industry days, and stakeholder meetings. Save the R&D budget for Phase II.
Phase II budget optimization. With $1.25M over 21 months, you can fund 2-3 engineers full-time plus equipment, materials, and subcontractor support. The most competitive budgets show a clear correlation between spend and technical milestones. Reviewers want to see that every dollar maps to a deliverable.
Team composition: what evaluators want to see
AFWERX evaluators care about execution credibility, not academic pedigree:
Principal Investigator. Must be primarily employed by the small business (more than 50% time). Unlike NIH, AFWERX doesn't require a PhD PI. Technical leadership experience and domain expertise matter more than degrees. A former Air Force officer or defense industry veteran as PI signals cultural fit.
Technical team. Show you can actually build what you're proposing. If your technology requires hardware prototyping, the reviewer wants to see a hardware engineer. If it's AI, they want to see ML expertise. Don't over-staff -- 2-4 key personnel for Phase I, 4-8 for Phase II.
Subcontractors and partners. Academic partners add credibility for fundamental technology claims but aren't required. Test and evaluation partners (labs, ranges) signal you've thought about how to demonstrate the technology in a military context. Keep subcontracts under the allowable limits (33% Phase I, 50% Phase II).
Advisory board. Not required, but a military advisor (retired AF officer, former program manager) who can validate the operational relevance of your technology is a strong signal. List them even if they're informal advisors.
Why proposals get rejected: a failure postmortem
Based on patterns across hundreds of AFWERX submissions, the most common rejection reasons:
1. No clear Air Force use case. "This technology could be used for defense" isn't enough. You need to articulate which Air Force mission, which unit type, and which operational problem your technology solves. "Our sensor reduces maintenance inspection time for F-35 avionics bays from 4 hours to 20 minutes" beats "our sensor has defense applications."
2. Proposal reads like a research paper. AFWERX isn't funding research -- they're funding technology they can buy. Write like you're selling a product, not publishing a paper. Lead with the operational impact, not the scientific methodology.
3. No awareness of competing solutions. Evaluators know what's already deployed and what's in development. If you don't mention the incumbent solution and explain why yours is better, they'll assume you haven't done your homework.
4. Phase I plan is just R&D. Phase I is customer discovery. If your Phase I plan is "build a prototype and test it," you've misunderstood the program. Your Phase I plan should focus on identifying AF end-users, understanding their requirements, and getting a Customer Memorandum commitment.
5. Budget doesn't match scope. Proposing a $75K Phase I that includes building a hardware prototype, running field tests, and filing two patents is not credible. Scope your work to what $75K over 3 months can actually accomplish.
6. Weak or missing dual-use narrative. AFWERX wants technology that serves both military and commercial markets. If you can't articulate the commercial opportunity alongside the defense application, you're missing half the value proposition.
Competitive positioning: how to stand out in Open Topic
Open Topic is AFWERX's most accessible pathway but also its most competitive. Hundreds of companies submit each cycle. Here's what separates funded proposals from the pile:
Lead with operational impact, not technology. The first paragraph should describe the Air Force problem and quantify the impact of solving it. Technology description comes second. "USAF maintenance crews spend 12,000 hours annually on X, costing $Y and reducing readiness by Z%" is a stronger opener than "We developed a novel ML algorithm."
Reference real stakeholders. If you've already talked to an Air Force unit, mention it. "After discussions with the 412th Test Wing maintenance squadron, we identified..." signals you've done the customer discovery work. If you haven't talked to anyone yet, at least reference the specific Air Force functional area (maintenance, logistics, ISR, training) you're targeting.
Show commercial traction. AFWERX explicitly values dual-use companies. Revenue, customers, or partnerships in the commercial market prove the technology works and the team can execute. Even early traction (pilot customers, LOIs) differentiates you from companies that only have a concept.
Use the AFWERX vocabulary. Reference specific Air Force terminology and frameworks: Agility Prime, ABMS, JADC2, ACE (Agile Combat Employment), Ready Aircrew Program. This signals you understand the customer's world, not just your technology.
Compare yourself to DIU. If your technology is mature enough for a DIU Commercial Solutions Opening, mention it -- but explain why AFWERX Phase I is the right starting point (earlier TRL, need AF-specific validation, building the relationship first). This shows strategic thinking about the defense funding landscape.
Want help positioning your technology for AFWERX?
The difference between a funded AFWERX proposal and a rejected one is usually framing, not technology. We've written proposals across every DoD branch and can help you articulate the dual-use case, identify the right AF stakeholders, and position for the Customer Memorandum that makes Phase II possible. Start with a Strategy Review.