In a follow-up to an ongoing saga in Washington, the House and Senate are considering several bills which are miles apart in their treatment of whether VC-backed companies should be eligible for SBIR funds. Although I’m not a legal expert, I thought that it might be interesting to break them down in order to better understand them.

Originally, VC-backed companies were permitted to apply for SBIR funds, but this changed in 2003. The law that made that change lapsed Sept. 30, 2008 and the waters have been a bit muddy since then. [Note; All of this data comes from the Thomas and GovTrack websites. I’ve listed the various bills chronologically, based on date of introduction:

1. House bill H.R. 3567: To amend the Small Business Investment Act of 1958 to expand opportunities for investments in small businesses, and for other purposes.
   Sponsor: Rep. Jason Altmire (D-Pa.)
   Introduced: 9/18/2007
   Committees: Committee on Small Business and Entrepreneurship
   Latest Major Action: Received and sent back to committee
   Status: This bill is no longer available to be voted on because it was introduced in a prior session of Congress.
   The bottom line: This bill died before any action was taken. Let’s hope Congress can do a better job with the current crop of bills.
2. House bill H.R.1491: To amend the Small Business Investment Act of 1958 to reauthorize and expand the New Markets Venture Capital Program, and for other purposes.
   Sponsor: Rep. Gwen Moore (D-Wis.)
   Introduced: 3/12/2009
   Committees: House Small Business
   Latest Major Action: 3/12/2009 Referred to House subcommittee.
   Status: Referred to the Subcommittee on Finance and Tax.
   The bottom line: This bill creates a new office called “New Markets Venture Capital” and provides for a director of this program. What isn’t clear is whether this would create a separate track for VC-backed companies and if so, whether this pot of money would be much more limited than the pot for companies that are not VC-backed.
3. Senate bill S.177: A bill to amend the Small Business Act to extend the Small Business Innovation Research and Small Business Technology Transfer programs, to increase the allocation of Federal agency grants for those programs, to add water, energy, transportation, and domestic security related research to the list of topics deserving special consideration, and for other purposes.
   Sponsor: Sen. Russell Feingold (D-Wis.)
   Introduced: 1/8/2009
   Committees: Senate Small Business and Entrepreneurship
   Latest Major Action: 1/8/2009 Referred to Senate committee.
   Status: Read twice and referred to the Committee on Small Business and Entrepreneurship.
   The bottom line: This bill extends the SBIR program through 2022 and the STTR program through 2023.
4. House bill H.R.1541: To provide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958, and for other purposes.
   Sponsor: Rep. Nydia Velazquez (D-N.Y.)
   Introduced: 3/17/2009
   Committees: House Small Business
   Latest Major Action: Became Public Law No: 111-10
   The bottom line: Gave Congress a little breathing room by extending the deadline for action from March 20, 2009 to July 31, 2009. No changes were made to any of the terms or conditions.
5. House bill H.R. 2772: To amend the Small Business Act to enhance the Small Business Innovation Research Program and the Small Business Technology Transfer Program, and for other purposes.
   Sponsor: Rep. Aaron Schock (R-Ill.)
   Introduced: 6/9/2009
   Committees: House Small Business; House Science and Technology
   Latest Major Action: 6/11/2009 House committee/subcommittee actions.
   Status: Forwarded by Subcommittee to Full Committee by Voice Vote.
   The bottom line: This bill adds a requirement for SBIR funding recipients to disclose more information about their corporate structure. This data will then be stored in database, presumably to monitor who owns the companies that the SBA is funding. It also increases the awards to $250,000 and $2 million for Phase 1 and 2 grants, respectively.
6. Senate bill S.1233: A bill to reauthorize and improve the SBIR and STTR programs and for other purposes.
   Sponsor: Sen. Mary Landrieu (D-La.)
   Introduced: 6/10/2009
   Committees: Senate Small Business and Entrepreneurship
   Latest Major Action: 6/18/2009 Senate committee/subcommittee actions.
   Status: Committee on Small Business and Entrepreneurship passed it to the full Senate. Ordered to be reported with amendments favorably. Currently awaiting floor vote.
   The bottom line: These companies get access to up to 8 percent of available funding (18 percent for the Dept. of Health and Human Services). Even the VCs would acknowledge that this is a better situation than 2003-2008 (zero availability of funds) and the current state of flux, but obviously not as friendly to VCs as other bills under consideration.
7. House bill H.R.2965: To amend the Small Business Act with respect to the Small Business Innovation Research Program and the Small Business Technology Transfer Program, and for other purposes.
   Sponsor: Rep. Jason Altmire (D-Pa.)
   Introduced: 6/19/2009
   Latest Major Action: 6/26/2009 House Committee on Science and Technology.
   Status: Granted an extension for further consideration ending not later than July 7, 2009.
   The bottom line: This bill brings things back to the pre-2003 state so there would not be a restriction on VC ownership of small businesses.

If you have a pony in this race, you may want to consider writing to your congressional representative rather than passively letting them decide. Certainly we know which version of the future the NVCA is lobbying for.