United States Senate passed a bill reauthorizing the SBIR/STTR programs, clearing the biggest hurdle for reauthorization of this program that provides nondilutive funding to startups and small businesses to go from lab to market.
While this is a great news for the startup community, there is an article that confirm that companies with over 50 Phase 1s over the past 5 years will need to show a 50% transition rate to Phase 2. Firms with 50 Phase 2s over the past 10 years will need to show $250,000 in sales or investment for every Phase 2, and Firms with over 100 Phase 2s over the past 10 years will need to show $450,000 in sales or investment for every Phase 2. The consequence for missing these benchmarks will be a limit of 20 Phase 1s and Direct to Phase 2 awards per year at each agency.
This was a surprising point for me that even Government can consider giving a federal grant to a company that already has received more than 10 SBIR. The whole idea of SBIR grants is to stimulate commercialization of early-stage companies and help them to go from lab to market. If we calculate with an average ~1Million for Phase 2, 50 awards for a company can reach up to ~50M.
I think this is a wrong pathway to go for federal grants and it has the potential to create inequality in awards, as some companies will be able to receive millions of dollars in nondilutive funding, while some great technology solutions could not reach to market due to shortage in capital.
Instead of giving 50 awards to one company, SBIR funding should go to other small businesses with high potential.
As a small business/startup what is your opinion on this?
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