AUSTIN, Texas -- AFWERX and SpaceWERX the innovation arms of the Department of the Air Force and U.S. Space Force, respectively, have selected 23 small businesses with Phase II contracts awarded within the last two years to apply for funding through a Program Year 2025.1 Strategic Funding Increase (STRATFI) annual notice of opportunity.
Within the space and defense industry, small businesses frequently face funding gaps - often referred to as the “valley of death” - between developing a prototype and securing the resources for full-scale production and operational deployment. While early-stage research and development often receive initial support, many innovators struggle to obtain the follow-on funding and partnerships needed for an acquisition contract award.
STRATFI helps bridge this gap by providing between $3 million and $15 million per project to scale innovations for operational use. By connecting private-sector innovators, defense stakeholders, and investors, STRATFI strengthens the defense industrial base and accelerates the transition of advanced capabilities to the warfighter.
"One of the key steps we've taken is recognizing that if you're in the Small Business Innovation Research program and can demonstrate progress on your technology to prepare it for transition, AFWERX wants to invest more funding in that idea and help it cross the valley," said Col. Elliott Leigh, AFWERX director and chief commercialization officer for the Department of the Air Force. "If you're a STRATFI recipient and you're performing well, that signals a high likelihood of successful transition."
The 23 selected small businesses were announced March 8, 2025 at an innovation networking event held at the
Capital Factory House in Austin, Texas.
AFWERX STRATFI Selections (U.S. Air Force) include:
- Accrete AI
- Advanced Nav & Positioning Corp
- Agile RF Systems
- BILT
- Castelion
- DittoLive
- Firestorm Labs
- HTX Labs
- Map Large
- Nokomis
- Physical Sciences
- PlanetiQ
- Simplesense
- Urban Sky Theory
- Whisper Aero
SpaceWERX STRATFI Selections (U.S. Space Force) include:
- Gravitics
- Albedo Space
- Umbra Lab
- Cesium Astro
- LeoLabs, Inc.
- Xona Space
- Beast Code
- RISE 8
The next step for the selected companies is to enter a contract agreement where funding is allocated based on the project scope and matching requirements. They collaborate with the Department of the Air and Space Force stakeholders, end users, and industry partners to refine and transition their technology for operational use.
Throughout the process, the STRATFI selected companies must meet key milestones, demonstrate progress, and align their solutions with defense needs. The goal is to advance their innovations beyond prototyping into full-scale implementation, bridging the gap between Phase II and Phase III.
The Program Year 25.2 Tactical Funding Increase (TACFI) Notice of Opportunity is open for submissions from small businesses with Phase II contracts. TACFI provides between $375,000 and $2 million to help bridge the transition from Phase II to Phase III for emerging innovations. For details on eligibility and submission guidelines, visit AFWERX STRATFI/TACFI.
“These investments represent a strong commitment from program executive offices…alongside private capital, to accelerate the maturation and scaling of our most promising ideas," said Arthur Grijalva, SpaceWERX director. "By focusing on strategic, high-priority initiatives, we are driving innovation that directly supports the missions of the Air and Space Forces.”