Monday, July 6, 2009

Hope for SBIR in the House

Rep. Ed Markey of Massachusetts has submitted an amendment to H.R. 2965 which:
  1. Allows NIH to direct up to 15% of its SBIR budget to majority venture owned businesses and allows every other agency to direct up to 5% of its SBIR budget to majority venture owned businesses instead of allowing majority venture owned businesses unfettered access to all SBIR funding.
  2. Increases Phase I and Phase II award sizes from $100,000 to $150,000 and Phase II award sizes from $750,000 to $1,000,000 instead of $100,000 to $250,000 and $750,000 to $2,000,000 as proposed by H.R. 2965.
This is a good amendment to an otherwise destructive bill. SBIR must be reauthorized for the sake of innovation, for the sake of small businesses, for the sake of job creation, for the sake of our national economic well-being. H.R. 2965 as submitted without amendment would transform the more than quarter-century proven success of SBIR into a neo-SBIR, far less inclined to support seed funding for truly innovative businesses, and far more likely to subsidize the risk mitigation interests of large venture capital firms, and the tiny portfolio of companies they own. Markey's proposal allows for a reasonable accommodation of VC-majority ownership without gutting the strengths of SBIR.

Most importantly:
  • SBIR must be retained in Phase I for early-stage seed funding, to support pre-prototype feasibility studies--Phase I should be sacrosanct; This issue is not directly addressed in Markey's amendment. H.R. 2965 allows for dangerous precedents in weakening the status of Phase I.
  • Increases to allocations should reflect inflation and the higher cost of doing business today, but not raised so high as to severely reduce the number of awards under the program.
  • The SBIR allocation as a percentage of agencies' budgets should reflect the value of SBIR for the greater economy, principally it's ability to create and sustain high-quality employment. In this light, a significant increase (at least a doubling or tripling of the current 2.5%) could be easily justified.

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