Monday, June 15, 2009

SBIR Reauthorization bills HR 2767 & HR 2772

Bills have already been introduced in the House, with some provisions that would effectively kill the ability of SBIR to seed early-stage high-impact ventures, replacing it with a crudely wrought corporate welfare scheme to support Venture Capital firms, at the expense of small businesses, job growth, and the nation's economy.

In particular:
  • Sam Graves' H. R. 2767 would effectively redefine "natural person" to somehow include "venture capital operating companies." I kid you not! Read the language in the bill (link above). As written, there is absolutely nothing that would prevent this loophole from being utterly abused with abandon. How difficult would it be for members of one venture capital firm to split off and create a second shell VC firm and invest beyond the 50% stipulated? And who owns those VC firms? It could be China or Libya.
  • Aaron Schock's H. R. 2772 includes some worthwhile provisions, but the caps introduced in Sec. 12 are perhaps twice what they ought to be. Further, without more oversight or clarification, the open-ended "fast-track" authority proposed in Sec. 11 would effectively permit by-pass of Phase I (despite the explicit though weak requirement for Phase I stipulated in Sec. 14), meaning once again that funding would be shifted to later stages of technological and business development, killing many innovative ideas before they've had a chance to develop, and benefiting only VC investors, not innovation and not the small businesses who create it.
  • The provision introduced in Sec. 13 authorizing perpetual Phase II funding without regard to commercial potential or private investment is an invitation for unending corporate welfare (which most assuredly would be taken up by those VC-owned firms which H.R. 2767 would welcome in).
  • The proposal to raise award caps, without any proposal to increase allocations for SBIR as a percentage of the money already being spent (not as any additional expenditure) would dramatically reduce the number of ideas being funded, stifling innovation rather than encouraging it.
I implore you to act now, and to get the strength of your elected officials behind this issue before it's too late. We need the public behind this issue, for the sake of innovation, for the sake of job growth, for the sake of the economy! Let's get the word out to the media as well:
  • Keep SBIR for Small Businesses!
  • Keep award sizes reasonable to support small-scale early-stage R&D that have great potential for societal benefit and commercialization beyond government funding.
  • Ensure that there be no reduction in the total number of Phase I awards, in order to seed the greatest number of promising ideas.
  • We should put a check on the handful of SBIR mills with obscene numbers of multiple awards, and no commercialization or private funding, but not at the expense of the thousands of truly small businesses which have been started or sustained through SBIR's ability and willingness to seed early-stage, high-risk, high-impact research.
  • VCs simply will not fund such research. SBIR will (unless "modernization" takes the form of removing SBIR's greatest strength).
Without this support, only the wealthy will have the wherewithal to innovate. The rest of us will be forced to leave our ideas and potential fallow, as we build up personal resources in hopes one day to return to our research, return to innovation, return to create jobs and wealth for our nation. What a waste of talent!

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