Venture Capital Critical in SBIR Implementation

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants are critical for supporting emerging biotechnology companies working on promising innovation that could lead to medical advancements and breakthroughs for patients living with debilitating diseases including cancer, HIV/AIDS and Parkinson’s.

Late last year, the SBIR/STTR grant program was reauthorized as part of the National Defense Authorization Act (HR 1540). Most importantly, this reauthorization will allow small, majority venture capital-backed companies to once again compete for SBIR/STTR funds, which will open up opportunities for emerging biotechnology companies to bring innovative medical treatments and cures to the patients who so desperately need them.

The SBIR program has been instrumental in bringing breakthrough therapies to the American people. Allowing small companies that are primarily funded through venture capital to compete once again for SBIR/STTR grants will increase the number of new medical discoveries and innovations available to patients. Restrictions on VC participation in the SBIR program have stifled innovation and investment—particularly in the case of biotechnology and other life sciences, where up front expenditures make the biggest difference.

On May 15, the SBA published proposed rules. These proposed rules provide clear and bright line tests that will both protect the small business program as well as honor the historic VC compromise and reflect the clear and unambiguous wishes of Congress. Reasonable and clear ownership, affiliation and reporting requirements will maintain robust participation in the program and provide an invaluable funding opportunity for small, U.S. biotechnology companies. BIO will continue to work with SBA to ensure that that these rules enable emerging American biotechnology companies that are majority-owned by venture capital to once again compete in the SBIR program.

The importance of advancing science has never been more important than it is right now as companies are struggling to recover from the economic crisis, and accelerate growth, hiring and research.

SBIR should be an aggressively competitive program that fulfills federal research and development goals of bringing breakthrough public health discoveries to the public.