By Kritika Agarwal
On Monday, the House passed H.R. 5100, a bill that would extend vital programs that help entrepreneurs, startups, and small businesses turn their ideas into products and bring them to market. AAU and other higher education organizations are now asking lawmakers in the Senate to support the bill and to protect the programs from lapsing at the end of the current fiscal year on September 30.
Known as “America’s Seed Fund,” the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are housed under the Small Business Administration. Eleven federal agencies currently participate in the programs and provide early-stage, equity-free funding to entrepreneurs from across the nation who have an idea and need help bringing it to market.
Since the programs were first established in 1982, they have provided seed funding to small businesses that have gone on to have major impacts on the United States’ economy and led to significant job creation. SBIR/STTR success stories include companies such as Qualcomm, Symantec, iRobot, IntraLase (which developed the LASIK eye surgery), and many more. In total, the programs invest $4 billion a year in about 4,000 companies in every state of the country, including in rural areas.
The programs are particularly helpful in the commercialization of federally funded university research, thus maximizing the returns on taxpayer investments. While universities do not directly receive SBIR/STTR funding, they frequently license patents to small businesses receiving the funding and work with them to translate discoveries from federally funded research into commercial products. They also provide small businesses with the expertise of faculty and graduate students and access to world-class labs and infrastructure.
STTR funding especially supports university-industry collaboration by requiring that businesses partner with a nonprofit research institution that performs at least 30% of the work. Additionally, university faculty can utilize a practice called “dual hatting” to work both for the university and the small business to develop research discoveries in their area of expertise while maintaining their faculty position. Many SBIR success stories began as earlier STTR projects that continued to receive funding through commercialization.
AAU strongly supports extending the SBIR/STTR programs for another year because of the significant role they play in fostering innovation, supporting small businesses and entrepreneurs, and ensuring that federally funded research discoveries do not remain “stuck in the lab” but are instead translated into real-world products, services, and solutions that benefit all Americans.
If the programs are allowed to expire at the end of the current fiscal year, universities, small businesses, and entire innovation ecosystems will lose a key pathway for bringing new technologies to market. As AAU and our partner organizations noted in a recent letter to the House Small Business Committee, extending the SBIR/STTR programs is necessary to avoid unnecessary disruptions and to safeguard U.S. innovation capacity.
Kritika Agarwal is assistant vice president for communications at AAU.