More Recommendations Supporting VC-Backed Firm Access to SBIR-STTR

Posted by: Mark Marich on June 21, 2009 Source: Policy Dialogue on Entrepreneurship

PDE staff were on hand last week for a hearing of the House Committee on Small Business taking yet another look at the reauthorization of the SBIR and STTR programs. Our report of the hearing--Legislative Initiatives to Strengthen and Modernize the SBIR and STTR Programs--follows:

This week the House Committee on Small Business held another hearing in preparation for the reauthorization of the Small Business Innovation (SBIR) and Small Business Technology Transfer (STTR) programs. The Committee heard testimony from representatives of several industries who voiced the positive impact of SBIR grants in their respective fields and gave recommendations for making the SBIR grants even more effective in funding groundbreaking innovations and start-up companies.

The witnesses included representatives from the Biotechnology Industry Organization (BIO), Cystic Fibrosis Foundation, Lynntech, Inc., U.S. Women’s Chamber of Commerce and Divergence, Inc. These witnesses all started their testimony by outlining the importance of SBIR grants to innovation in their respective fields and concluded with recommendations for improving the SBIR program. The witnesses unanimously recommended clarifying the SBIR eligibility rules and allowing small companies backed by venture capitalists to be eligible for SBIR grants. They also agreed on increasing the award-size of SBIR grants and removing the requirement for companies to apply for Phase I grants before they can apply for Phase II grants.

There did seem to be a point of contention amongst the witnesses on whether the government agencies overseeing the SBIR program should be allowed more flexibility in assessing the projects or if it is more beneficial for the agencies to follow strict guidelines. Those in favor of allowing more flexibility argued that the agencies were the most knowledgeable on the projects and their potential benefits. Those opposed were of the opinion that this would create confusion within the agencies and slow the SBIR program down.

Despite the recommendations supporting VC-backed firms, several members of the Committee voiced concern over the possible negative affects of allowing them to apply for SBIR grants. Representatives were worried that small businesses that are not VC-backed would be crowded out of the competition for SBIR grants.

More discussion and debate is certain to follow.

[Reported by Sahar Momand]

Category:  Capitol Hill  Technology Transfer  Tags:  sbir, sttr, house small business committee