The controversy over whether small firms with VC funding (resulting in more than 50 percent ownership) should be able to apply for government funding through the Small Business Administration has received much press lately. Non-dilutive financing can be an important part of fundraising for start-ups, but should the Small Business Innovation Research door be shut once a company gets institutional financing?
SBIR grants provide non-dilutive funding at levels ranging from about $100,000 to $1 million. VCs would like their portfolio companies to be able to seek this sort of funding if it can delay or eliminate future rounds of financing, but some feel that SBIR money should go only to those who are truly in boot-strap mode.