Many of you may not be familiar with SBIR/STTR. The quickest explanation is that there are two ways that your federal government invests in advanced technology. One way they do so is by owning their own laboratories. The National Renewable Energy Laboratory is a facility in Colorado with federal employees and contracts with business to conduct all manner of energy research. Argonne, Sandia, Los Alamos are other well known national labs. There are dozens and dozens across the country researching lots of different types of technologies.
The other way that the federal government funds high tech research is by providing funds directly to companies. Huge companies like General Electric and two-person start-ups like some of those at the TechVentures incubator that I manage, can receive federal funding to conduct cutting edge research. It’s very competitive to receive this funding. And if we allowed the GE’s of the world to compete directly with my start-ups of the world. Well, no money would ever likely make it to my clients.
This is why the SBIR and STTR programs were created. The Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR…ok, they didn’t quite get that acronym right) programs require about 16 different government agencies that receive funds from the federal government for research, to provide small percentages directly to small business.
It’s like a quota system for small business. The details are more complicated than this, but basically, 2.5% of funds used by certain agencies (like DOD, for instance, and the National Institutes of Health) must go to “small business”. If 2.5% doesn’t sound like a lot, it isn’t. I would argue it should be 4-5x that much. And there should be some fundamental structural changes to the program to enable that to happen effectively. Senate Bill 493 is under discussion currently which reauthorizes the existence of the program and makes some minor changes to current legislation. Unfortunately, it is being weighed down in the Washington sausage making machine with dozens of amendments that will ensure it doesn’t pass. They refer to this style of lawmaking as “loving a bill to death”.
Anyway, I’ll post some ideas for how to save America by improving the SBIR/STTR program next week. For now, I found this remarkably eloquent defense of the program by New Hampshire Senator Jeanne Shaheen (D).