Remember when Congress voted to reauthorize the program and the President signed the bill into law on December 31, 2011. We were all really excited about the changes to the program, especially the provision that allows small firms that are majority-owned by venture capital operating companies (VCOCs), hedge funds, or private equity firms to compete for SBIR grants. Click here to see all of the changes. That was really exciting! But wait, what happened? Have you heard of any VC majority owned companies relieving SBIR grants? I participated in those flyins and advocated for the changes, but I have not heard of a company receiving a grant, and I haven't given it much thought. Until today's Council of State Biotech Associations meeting. A panel lead by Joe Panetta, CEO of BIOCOM, reviewd the progress of the implementation to the changes.
Put your party hats back on, because the changes have finally been implemented. The SBIR/STTR Reauthorization Act of 2011 brought about numerous changes to the programs many of which were quite complex. The SBA had to translate the law into more detailed regulations and directives that govern how the program works and is administrated. As you can imagine, there are a very precise set of rules and procedures (read hoops and red tape) about how this rule-making is supposed to be done:
- The Agency drafts a proposed rule or amendments to a directive, and includes consulting the the SBA Office of Advocacy.
- The proposed rule and amendments to the directive are published in the Federal Register and posted on Regulations.gov for a 60-day public comment period.
- The Agency reviews and considers all comments and modifies rule or directive as appropriate.
- The final rule or directive is published, including SBA’s response to comments and an effective date.
Congress gave SBA an aggressive time frame to implement these changes.
- SBA issues guidance to the agencies that for fiscal year 2012, per the statute, agencies should raise the set aside to 2.6% for SBIR and .35% for STTR.
- For changes in the size regulations relating to venture capital participation etc., Congress tasked the SBA with getting proposed regulations out within 120 days (end of April), and a final rule done within one year (end of 2012).
- Finally for the policy directive the target is 180 days (end of June).
On December 27, 2012, the SBA published a final rule to amend regulations governing eligibility for the SBIR/STR program. Sequester aside, this is great news for the community that these new rules are (almost) rolled out. SBIR is a innovation driver for our community. Though 2009, 112,500 awards have been made, totaling $26.9 billion. Increasing the funds, increasing the awards and opening up 25% of SBIR funds available to majority VC funded companies will really help drive innovation and help companies that are seeing a more risk adverse investment environment stay in business. Now if only we had state matching.
This is like ordering something that has been back ordered. You were initially excited when you ordered it, then you kind of forget about it, then surprise there is a package waiting for you at your door.
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