Small business grant programs in limbo
Congress to decide fate of research funding program
The Senate version of the bill to reauthorize the Small Business Innovation Research program and the Small Business Technology Transfer program was unanimously passed by the Senate's Committee on Small Business and Entrepreneurship.
The Senate bill would increase Phase I grants from $100,000 to $150,000 and Phase II grants from a maximum $750,000 to $1 million. The House version would increase Phase I grants to $300,000 and Phase II to $2.2 million.
One sticking point between the two bills is the amount of venture capital ownership in a business before it becomes ineligible to receive the grants.
Richard A. Zakour, executive director of biotechnology trade group Maryland BIO, said the reauthorization of the two programs is important to the state.
"It's a source of funding that many small companies rely on," he said.
The SBIR and tech-transfer programs began in 1982 and were last reauthorized in 2000.
"We hope the House and Senate are able to work this out in conference," said Alan Eisenberg, executive vice president of emerging companies and business development with trade group BIO.
Biotech research company MaxCyte of Gaithersburg received $300,000 for a SBIR Phase 2 research grant this year, but would possibly be ineligible under the Senate version of the bill that has more limits on venture capital ownership than the House version, said MaxCyte CEO Douglas A. Doerfler, who testified before Congress on the importance of reauthorization this year.
Allowing companies backed by multiple sources of venture capital assures that the companies have the institutional capabilities to do the research the government wants, he said.
The programs were intended to assist small businesses, which is one of the reasons for the limits on venture capital, he said.
"Their argument is if a company like mine receives venture capital money I should be able to tap into funds," Doerfler said. "But most companies are venture backed and we're all pretty small companies."
MaxCyte has about 15 employees.
Venture capitalists want to assure the research is done that will result in commercial products while the SBIR and tech-transfer grants from the federal agencies are for more early research that might pay off in the long-term improvements in public health and other mandates.
But restricting venture capital-backed companies also will hurt small businesses such as his and also keep companies capable of conducting the research from qualifying, Doerfler said.
"I'm just hoping we can solve this so we can compete for the funds," he said. His company is close to being more than 51 percent venture capital-funded, which would make it ineligible.
This report originally appeared in The Business Gazette.