The Big Story: SBIR reauthorization on the horizon, heads to the House
After months of negotiations, a key grant program for startups is expected to be reauthorized just in time for its scheduled expiration at the end of the month. The House is expected to vote next week to reauthorize the Small Business Innovation Research (SBIR) program, following a vote in the Senate to reauthorize the program for three years this past Tuesday. The program serves as a critical funding source for many startups engaged in research and development (R&D).
Reauthorization has been delayed for months, leaving innovators, including startup awardees, on standby as lawmakers negotiated over potential changes to the program aimed at addressing perceived issues around national security and recipients that received multiple awards but do not ultimately commercialize a product. The SBIR program provides essential government funding in the form of non-dilutive grants and critical connections to government agencies for innovative companies. It was created in 1977 on a non-permanent basis, but has been reauthorized consistently ever since. It has been particularly effective—700 public companies have resulted from the program—and it is a critical part of the startup ecosystem.
As CEO and Founder of Raydiant Oximetry, Inc. Neil P. Ray—a medical device startup in the women’s health care space and recipient of multiple SBIR awards—emphasized this week, bringing life-saving innovations like theirs to market would never “have been possible without the initial support SBIR gave us.” R&D in technology often requires vast financial resources and government support like SBIR grants are necessary to fund startups to a point where they are able to attract private investment. And when so few federal and venture capital dollars are spent in support of women’s healthcare innovation, he asks, “Without the SBIR program to seed ideas, how do innovators, like myself, solve unmet clinical needs that plague our healthcare system?”
With a three-year reauthorization, Congress will quickly find themselves in the position of having to reauthorize the program again soon. Rather than risking expiration of the program in the future and leaving innovators hanging in the balance, lawmakers should focus on ensuring timely reauthorization or even consider permanent reauthorization. In the interim, policymakers need to think about ways to make the program better and more accessible for startups, including by boosting diversity amongst awardees and better aligning grant timelines with the startup lifecycle.
Policy Roundup:
State social media laws likely heading to the Supreme Court. Last Friday, the Fifth Circuit Court of Appeals upheld a controversial Texas social media law that prevents Internet companies from moderating content on their platforms based on their “viewpoint.” The law, which was originally stayed last December by a lower court, would frustrate companies’ efforts to keep their platforms safe and relevant spaces for users and impinge their First Amendment rights. That stay was vacated in May before being reinstated by the Supreme Court. The Fifth Circuit's decision this week differs from an 11th Circuit ruling in May overturning a similar Florida Law. The conflicting rulings, along with Florida’s decision this week to appeal, make it likely for the Supreme Court to weigh in on the constitutionality of the social media laws.
Senate committee advances media negotiations bill. On Thursday, the Senate Judiciary Committee voted 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. Over the past two weeks, the bill was amended behind-the-scenes to overcome a party-line dispute about content moderation that led it to fail in committee earlier this month. While the amendment addressed one political concern and allows JCPA to move toward the Senate floor, the bill’s co-sponsors have still failed to address the concerns of other Committee members, public interest groups, tech groups, journalist representatives, and others.
Antitrust officials testify before Senate subcommittee. Assistant Attorney General for Antitrust Jonathan Kanter and Federal Trade Commission Chair Lina Khan appeared before the Senate Judiciary antitrust subcommittee for an oversight hearing on Tuesday where they overviewed their agencies’ enforcement priorities and appealed for additional funding. A bipartisan collection of Senators echoed the agency heads’ call for additional funding by highlighting S.228, the Merger Fee Modernization Act, a bill that would raise filing fees on certain proposed mergers and increase the resources for the agencies. Their testimony also confirmed a forthcoming draft of new merger guidelines is expected next month. Engine earlier participated in a comment period about the potential new merger guidance to highlight the importance of acquisitions for startups and startup investment.
Unpacking how proposals to redefine patent eligibility could impact startups. In a new blog post, Engine examines the recently-introduced Patent Eligibility Restoration Act (PERA)—which proposes changing the rules over governing what can be patented—and explains how startups could be impacted if the bill becomes law. Currently, patent eligibility law prevents companies from trying to own abstract ideas and leaves those basic ideas free for other companies and innovators to use. Among other things, it has been useful in weeding out low-quality patents and curbing abusive litigation. PERA would change this framework, giving rise to concerns that it would allow patents on abstract ideas that tie up innovation, create confusion about patent eligibility, and increase the amount and cost of patent lawsuits.
Small Business Committee advances trade program reauthorization, hearing highlights possible future changes. This week, the House Committee on Small Business advanced a bill reauthorizing and broadening the State Trade Expansion Program (STEP), which provides grants through the states to small businesses engaging in international trade. While the program is focused on exporting small businesses, at a related hearing earlier in the week, members of Congress expressed interest in expanding trade assistance to companies who make software and technology products in the future.
Startup Roundup:
#StartupsEverywhere: Asheville, NC. Ecobot is a mobile and cloud platform optimizing fieldwork by speeding along regulatory approval and lowering costs. We had a conversation with Co-Founder and CEO Lee Lance about Ecobot’s impact on environmental permitting fieldwork, his experience raising capital as an Asheville-based founder, and how the increasing broadband access impacts Ecobot’s work.
