I’ve commented before on the SBIR program, which was originally envisaged as a way to support small, high-tech businesses, while generating truly innovative solutions to difficulties faced by US Government programs. SBIR was for small businesses only (<500 employees), majority owned by US citizens and/or US companies (with the restriction that the entire family of companies hard to qualify as a small business). SBIR contracts are not large; the standard is ~100k-$150k for a proof of principal (research), followed by ~$1M for development to a stage at which it could attract Angel financing.

For the past three and a half years, SBIR has been a political football, since the previous authorization ended 9/30/08. It appears that an agreement has been reached.  This agreement would:

• Reauthorize the SBIR program, more or less as it is, for six years
• Increase the SBIR allocation, which is currently 2.5% of government research, to 3.2% in FY2017 (slightly more than 0.1% increase each year).  STTR, the equivalent program aimed at universities and nonprofit research groups, will get an increase from 0.5% to 0.45% over the same period, about 0.05% per year.
• Permitting, for the first time, funding to small businesses that are majority owned by US corporations–at least, by investment companies (venture, angel, private equity, etc.)–even if the owning corporation does not qualify as a small business.  Only up to 15% of the funding can go to these types of organizations for the contract agencies, such as DoD, but up to 25% of the funding can go to these organizations for grant agencies NIH, DOE, and NSF.
• Permitting, for the first time, DoD, NIH, and ED to give Phase II awards ($1M) without prior proof-of-concept in Phase I, if the agency determines that there is a compelling reason to do so.

This is a much better solution than we might have thought.  This is going to be offered as an amendment to the Defense Authorization Act.  One potential problem with this is that there is a provision already added to that Act that many people are against, one that permits the government to arrest US citizens and hold them incognito, without informing anyone, at any location in the world, and doesn’t even require the government to state a reason.  This is likely to cause a lot of debate, at the very least, on this Act, and we will still need to advocate to keep the SBIR portions of the Act, even if the other parts are amended.

For more information, go to Rick Shindell’s SBIR Insider.