New Report Recommends Reforming the Federal Small Business Innovation Research Program to Better Drive Innovation

September 26, 2019

WASHINGTON— Small businesses can play a critical role in driving innovation, but they often lack early-stage capital to bring new ideas to fruition. A new report from the Information Technology and Innovation Foundation (ITIF), the world’s top-ranked think tank for science and technology policy, recommends reforms that would focus federal agency support for small businesses more sharply on commercializing innovations derived from federal research and development (R&D). The reforms are modeled after the Small Business Innovation Research and Small Business Technology Transfer (SBIR) programs at the National Science Foundation (NSF).

“NSF’s program embodies the SBIR slogan of “America’s Seed Fund” by funding promising small businesses and providing them with the tools and support they need to grow,” said ITIF Senior Policy Analyst Robert Rozansky, author of the report. “It’s a model of how the federal government can enable small businesses with bold ideas to work towards addressing some of our greatest innovation challenges.”

SBIR is a federal program coordinated by the Small Business Administration that funds small business R&D. The program has helped seed companies such as Apple, 23andMe and Qualcomm, and it has been copied by 17 countries around the world.

While eleven agencies currently participate in the SBIR program, NSF reinvented its program to specifically target growth-focused startups. The report offers a model for other agencies to follow based on NSF. The approach would more effectively stimulate private-sector commercialization of SBIR-funded R&D, enhancing its impact to benefit society. The model includes:

  • Targeting growth-focused companies;
  • Centralizing program management;
  • Hiring dedicated program directors; and
  • Coordinating SBIR awards with other agency programs that provide support for commercialization.

To support agencies seeking to implement the model, the report recommends that Congress:

  • Reform SBIR funding to allow agencies more autonomy;
  • Require agencies to increase the weight of a project’s’ 'commercialization potential in funding decisions;
  • Allow small businesses to use a portion of SBIR awards for commercialization activities; and
  • Increase overall federal funding for R&D.

Read the report.