The Big Story: SBIR reauthorization remains at a standstill
Startups await the fate of the Small Business Innovation Research (SBIR) program as lawmakers continue to deliberate its reauthorization ahead of its fast-approaching September 30 expiration. With fierce support from advocates and innovators—who recognize the positive impact the program has on the innovation ecosystem—alike, this critical funding stream for R&D and commercialization risks drying up without congressional action.
The SBIR program, launched in 1977 as part of the America’s Seed Fund, provides awards to innovative companies to further R&D and technology commercialization with the support of the government, and it is a critical source of funding for many startups with research intensive needs. The program also opens up opportunities for entrepreneurs to access even more lucrative paths of funding through awardees work with government entities. However, even though many startups have achieved success through the program, it has been facing pushback from lawmakers who are concerned about companies receiving multiple awards but failing to lead to commercialization. But the proposed fixes to address these concerns could have a negative impact on the program’s operation.
As the deadline for reauthorization quickly approaches, it is critical that lawmakers, at minimum, extend the program as is; without reauthorization, agencies will be unable to grant new awards, limiting the ability of many startups to scale their companies. In the long term, policymakers should consider some reforms to make the program more equitable. Efforts to implement concrete metrics to measure the success of diversity initiatives, for example, could help to ensure representation in the program. And improvements to the application and award timeline could help to ensure more startups can apply by better aligning the process with the startup lifecycle. Congress could also consider making the program permanent, so that startups do not face the uncertainty that a funding stream may disappear.
Policy Roundup:
White House outlines tech policy principles. This week, the Biden administration convened a listening session and released principles concerning competition and Internet platform accountability, which cover a wide range of issues including privacy and intermediary liability. In thinking about technology policy, policymakers must be mindful of the impact policy changes would have on the entire ecosystem, especially startups. For example, while startups would benefit from clear rules of the road created by a federal privacy framework, changes to crucial intermediary liability frameworks like Section 230 would make it incredibly risky and expensive for startups to host and moderate user content. Additionally, some antitrust reforms designed to promote competition could actually harm investment in startups.
Congress sets tech, media negotiation bill aside for now. This week a Senate Committee failed to advance the Journalism Competition and Preservation Act (JCPA)—a bill that purports to address challenges facing local media organizations by creating a specific system to force certain larger tech companies to link to certain news content and pay for those links. During a Thursday hearing, some Senators flagged concerns the bill could stifle exchange of information online, force large platforms to share misinformation, and distribute wealth between large companies while leaving small companies and journalists behind. Similar concerns were also raised by, e.g., more than 20 public interest, consumer advocacy, and tech groups and 15 law professors, urging Congress to reconsider JCPA. While consideration of the bill stalled this week after committee Republicans added an amendment aimed at addressing alleged “censorship,” Sen. Amy Klobuchar (D-Minn.), the bill’s author, said she intends to move forward with the bill.
FTC holds forum on online consumer privacy. On Thursday, the Federal Trade Commission (FTC) held a hearing as part of its recently announced process to write privacy rules. The forum included roundtables featuring industry representatives and consumer advocates, several of whom discussed the role of behavioral advertising in the online ecosystem, the harms caused by unexpected uses of consumer data, and the use of data to discriminatorily offer certain products and services to specific groups of consumers. The startup voice should be front and center as policymakers consider privacy rules, as startups rely on data to innovate and have the fewest resources to navigate a complex and frequently changing privacy landscape.
Copyright hearing touches on infringement removal technology, challenges. On Wednesday, the Senate held an oversight hearing with the U.S. Copyright Office that discussed the Office’s study of technical measures used to identify and remove alleged infringement online and related legislative proposals. The Office indicated it plans to publish the results of its study on technical measures by the end of the year. As we’ve explained several times, current legal frameworks allow online platforms to work with users, creators, and rightsholders to develop tools and procedures around infringement that work for those communities. This is especially important for startups who cannot afford expensive yet imperfect content filters, vast teams of human moderators to flag potentially infringing posts, and lengthy copyright lawsuits.
DACA future remains in limbo. The Biden administration filed a brief last week in federal court as the court continues to consider the fate of the Deferred Action for Childhood Arrivals (DACA) program. While the administration has issued a final rule to preserve the program, the ultimate fate of the program remains in jeopardy unless Congress acts, especially as the program was found “unlawful” last year by a Texas judge, and new applicants are barred from obtaining status. We’ve long stated the value DACA recipients provide to the country, including our startup ecosystem.
FCC declines to expand regulatory fees to unlicensed spectrum users. Last week, the Federal Communications Commission (FCC) released its report and order on regulatory fees to fund the agency for fiscal year 2022, which rejected calls from broadcast industry groups to broaden who pays the regulatory fees. In an earlier notice and comment period, the FCC had asked whether to change how it calculates regulatory fees, including by expanding those who pay to include users of unlicensed airwaves. Creating new regulatory fees for unlicensed spectrum users—which include startups—would stifle the innovative use of unlicensed spectrum, as Engine noted in comments last year.
Startup Roundup:
#StartupsEverywhere: Portland, Maine. Eskuad is a field data platform designed to work offline, allowing fieldworkers to easily manage their data without the hassle of trying to find and connect to a signal. Founder and CEO Max Echeverria spoke with us about his experience working with accelerators and raising capital and how policymakers can better fill talent gaps.
