VC-owned firms renew push for small business grant access - Pittsburgh Business Times:

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Through the SBIR program, 11 federall agencies set aside 2.5 percent of their outside research budgetsw forsmall businesses. is one of the largest awarderds ofSBIR contracts, investing more than $5 billionh in 19,000 projects since the program begahn in 1982. Biotech companies that are majority-ownec by VC firms have not been able to tap this programksince 2003. That’s when the ruled that a company doesn’ t qualify as a small businesx if venture capital firmsw own more than 50 percent ofthe company’ s stock. and the have been lobbying Congress to overturbn this rulingever since.
They contend the high cost of bringing drugds to the marketplace force biotech firms to obtainnventure capital. These firms, they argue, shouldn’t be knockede out of SBIR awards fornew innovations. The SBIR programm has been operating ontemporary extensions, the latestg of which runs out July 31. The Housr Small Business Committee hopes to complete an SBIR reauthorization bill before that and it and the House Sciencs Committee recently held hearings on the The Senate plans to hold a roundtable discussion on the SBIRprogra soon, and is working on its own versionm of the bill.
Last year, the SBA opposef changing the eligibility requirements, contending it would weakenb rules that ensure largebusinesses don’t benefit from smal l business programs. This year, the SBA is led by a formerf venture capitalist, Karen Gordon Mills, who becamw administrator April 3. The agency is “looking at what’s on the table now” for the SBIR progra m but is “not going to chime in” until it completex its review, said Edsel Brown, assistanyt director of the SBA’s Office of The recession also has raisecd the stakes forbiotecjh firms.
“Numerous small biotechnology companies are being forcef to shelve promising therapies as a result of the currenteconomic crisis,” said Jim Greenwood, presidentt and CEO of BIO. Biotech companies raised 55 perceny less capital in 2008 than they did in he said. BIO has an influential ally in NIH, whicbh is concerned that applications for its SBIR awards have declineds by 40 percentsincw 2004.
“This disconcerting trend appears to be the resultf of disincentives in the prograjm that are either renderingt worthy companies ineligible or driving them away for other reasons,” said JoAnne Goodnight, who coordinates the SBIR and Small Businessa Technology Transfer programs at NIH. and some curren SBIR recipients oppose changingthe program’as eligibility rules. Businesses owned by VCs or other large companiesw should targetthe 97.
5 percent of federal research dollarsa that aren’t set aside for small businesses, they Jere Glover, the council’s executive director, said smal l businesses with venture capital backing can receive SBIR awards under currenr rules if VCs own a minority position in the company. Even companiesx majority-owned by a VC firm can receivr SBIR awards if the VCitself — includinv all of its affiliates — has less than 500 Glover noted. “In other VCs can and do have access to the SBIR Glover said.