A bill re-authorizing the Small Business Administration’s seed grant program for start-ups, which significantly boosts the amount of the awards but decreases their number (and allows venture capital backing of grantees) passed 386-41 in the U.S. House of Representatives yesterday.
The bill, HR 2965, would increase the amount of Phase 1 Small Business Innovation Research grants to $250,000 and push SBIR Phase 2 grants to $2 million (Phase 1 grants are now $100,000; Phase 2 grants are $750,000).
But the bill would reduce the total number of grants meted out to early-stage innovators, because although the grant amounts would increase, the total investment pool would not.
And with its most controversial provision the bill would remove a 2003 rule barring venture capital-backed firms from receiving the federal cash.
The House bill must now be reconciled with a Senate version that limits how much of the investment pool can go to VC-backed firms (18 percent of National Institutes of Health grants and 8 percent of grants from the 10 other federal agencies that dole them out).
The Senate version would also increase awards to $150,000 for Phase 1 grants and $1 million for Phase 2 grants and cap at 50 percent how far above the recommended amounts the grants can go.
David Bergstein, president and CEO of Zoiray Technologies, a Boston firm that’s developing a multiplex immunoassay platform, said the way the House bill ups the ante — and the competition — for companies out for the grants isn’t necessarily negative.
Zoiray landed a Phase 1 grant for $168,000 and is in line for a second of roughly $160,000, Bergstein told MassDevice.
“We were awarded $168,000 for our Phase I NIH award after justifying that it was simply impossible to accomplish [what we wanted to accomplish] on $100,000,” he explained. “Increased competition will certainly make it more difficult for first-time applicants and innovators, but a boost to dollar amounts is much needed. Achieving real progress in high technology and innovation is very difficult even on those amounts.”
And focusing on technology that has a chance of making it to market is an important goal, Bergstein added.
“Hopefully it’ll bring a greater focus to the innovations that can really take off beyond the SBIR program and stir the kind of economic development that everyone talks about.”