SBIR/STTR seed-funding programs running out of money – and Congress needs to act

Congress needs to ensure the smooth continuation of two federal programs that provide seed funding for small, innovative businesses, according to a host of supporters, including the Department of Defense (DoD), small businesses—and the Arizona Bioindustry Association (AZ BIO).

AZ BIO last month joined other Arizona business leaders in writing their congressional delegation about the importance of the Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) programs, which support innovative enterprises in a variety of fields. Federal funding for the programs expires on Sept. 30 unless Congress acts to extend the budget.

The National Institutes of Health (NIH) runs the second-biggest SBIR/STTR programs, according to Science, and many members of the Biotechnology Innovation Organization (BIO) have benefitted. The SBIR/STTR programs typically give up to $250,000 for the first 6-12 months of development of an idea and up to $750,000 more if the idea proves feasible.

The largest SBIR/STTR programs are run by the DoD, and Sen. Rand Paul (R-KY), ranking member of the Senate Small Business Committee, has expressed concerns about using defense funding for this kind of mechanism, delaying approval for the budget, Science said. The DoD has said the programs are essential, and it is urging passage, according to Breaking Defense. “Paul’s position has evolved over the past several weeks,” and he may ultimately approve support to the programs, Science said, but the approval must get through a packed congressional agenda in September.

SBIR/STTR programs benefit taxpayers

In announcing their backing for the programs, AZ BIO said: “Since its inception in 1982, the SBIR/STTR program has supported our small business community as we work to improve health, develop new agricultural techniques, innovate for our national defense, explore space, and more. Across the agencies that participate in this essential program, Arizona small businesses have received 3,488 awards and over $1 billion in funding for research programs intended to meet the needs of these agencies, our country, and our people.”

As AZ BIO noted, the programs support new ideas at their inception. “SBIR/SSTR funding for health innovation is rarely sufficient to sustain the full development process let alone commercialization, but it can move the discovery process forward and begin the development process,” the AZ BIO statement said. “Without SBIR/STTR funding, many potential health innovations won’t make it to commercialization.”

The result is a hefty payback for taxpayers: “A Defense Department assessment showed the SBIR/STTR Program has generated a 22:1 return for every federal dollar spent, and a study by the National Academy of Sciences found a commercialization rate of between 50-60% for SBIR/STTR investments—a win-win for the U.S. economy and taxpayer,” according to AZ BIO.

Seed-funding programs give equality a boost

BIO President and CEO Dr. Michelle McMurry-Heath praised the value of the SBIR/STTR as a tool to promote equality in an interview with the Mayo Clinic in December.

Dr. McMurry-Heath spoke of BIO’s efforts to promote diversity through the BIOEquality Agenda and added: “The Small Business Innovation Research and the Small Business Technology Transfer programs will also play an important role in addressing inequity. As one of the country’s largest sources of early-stage capital for technology commercialization, they help grow and support promising technologies in the private sector and therefore enable life-saving innovations to reach consumer markets.”