SBIR Gateway VC Discussion Group
(Archived May 2004)
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The comments below are the views of submitter and do not necessarily reflect that of Zyn Systems or the SBIR Gateway. Please address your questions to: [email protected] .
Updated 05/22/0499 messages
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Jack Lapidas Watertown, MA
Msg 41 of 99
SBIR awards are granted based upon the technical and business quality of the submission. This is a direct reflection of the quality of the staff at a small business. Venture funding received by a small business will not affect the quality of the SBIR submission by itself or make the playing field unlevel with non-venture funded organizations. Submission quality is a function of the skill of the grant writer and the merit of his or her technology, and not a function of the funding source or funding amount received by the business.

Venture funded organizations generate many jobs and it is entirely appropriate that the government leverage the funding provided by venture capitalists to help these small businesses succeed. The receipt of venture capital is a form of validation that a small business has a reasonable chance for success. Congress should take all steps possible to assist in that potential success and should not restrict SBIR funding to venture-funded small businesses.

Vote:   YES 
Name withheld by request Wolf Point, MT
Msg 42 of 99
Please keep the big money guys out of the SBIR picture. We want to build our own company for the experience & well being gained from our own efforts. The VC's already have plenty of money & established businesses. One has to examine their motives for wanting in on the SBIR cash pipeline.
Vote:   NO 
Name withheld by request Lafayette, IL
Msg 43 of 99
The isn't about corporate welfare, unless your referring to the small business that live off of one SBIR after another without ever commercializing anything. I work in a building with many small businesses. Most of us have less than 30 employees, but nearly all of us have venture funding. If the SBA wants the best performance for their dollar small businesses with venture funding are going to have the best chance to actually commercialize the technology - not lifestyle companies that are designed to live off of SBIR's.

I also don't think this interferes at all with the intended purpose of the SBIR. After reading the SBA's "Fast Track" website I don't believe the author at SBA was aware of this rule. They certainly seem to encourage venture funding, and even give examples in which a VC owns more than 51%.

The 500-employee test for a small business and its affiliates should take care of any corporate welfare concern. This interpretation of the citizenship test is completely unwarranted, does not fit its intended purpose and will have a devastating impact on the commercialization of technology.

Vote:   YES 
David Stoltenberg Billings, MT
Msg 44 of 99
In my view it is vitally important that companies with access to and controlled by VC organizations not be allowed to compete in the SBIR program. Such companies are already adequately funding their research and commercialization efforts. The SBIR program has already produced many significant technology companies that started without significant amounts of VC funding. Allowing companies well funded and managed by large pools of capital will simply result in significantly decreasing the amounts of money available for qualified and deserving small companies, while funding larger companies at their expense. The SBIR program disperses a relatively small amount of money used to foster small business and entrepreneurial growth in the US, and it would not be wise to allow larger companies access to this funding.
Vote:   NO 
Deanna Campbell Bozeman, MT
Msg 45 of 99
It is hard enough for small business to compete with VC backed companies without having to go head to head with them for SBIR money. The program is designed for SMALL businesses without access to VC money. Please keep it that way to insure that good technology will continue to get commercialized.
Vote:   NO 
Name withheld by request , WI
Msg 46 of 99
Please keep the Small Business/Entrepreneurial machine healthy and diversified by maintaining the restrictions on VC ownership. VC involvement at the Phase I and II level is nothing more than an ownership grab of the future earnings and intellectual property of the “Skilled Grant Writer”. It’s not an issue of the government leveraging VC money, but rather an issue of VC’s leveraging the skill and property of the Grant Writer. In my opinion the SBIR program is an incubator program for technically rich but economically disadvantaged Small Business. Please leave it alone. If the VC’s feel they have something to offer, the Phase III involvement is available and adequate. Let’s not disincentives the “Skilled Grant Writer” by unduly compromising the incentives provided in future earnings and intellectual property.

As a side note, this effort to parse words by some of those who have requested a yes vote is really disingenuous at best. This program has been in existence far to long for that logic to hold water. In my 10 plus years of involvement with this program the bar has never moved, and the spirit of the program has always been to assist technically rich/ economically disadvantaged Small Business. The rules in words and intent are not ambiguous. I believe that those who are making these arguments are doing it only as a diversion while the real motivation is greed.

Vote NO

Vote:   NO 
Name withheld by request Norman, OK
Msg 47 of 99
A small business is a small business, no matter how it is financed. The founders of high-tech firms are staking their careers and reputation on a high- risk technology, the same as the 2-person garage company. Shame on the detractors for being afraid of competition. Because a SMALL business is well- funded should not disqualify it from SBIR funding.

And what about Return on Investment (ROI) for the SBIR agencies such as NASA and NSF? Do they see commercialization activity from the "SBIR Mills" that churn out proposals weekly? The real welfare in SBIR is given to these sorry excuses for corporations. I have reviewed proposals for two agencies, and have seen firms with 150 Phase 1 awards and 40 Phase 2 awards, that have generated $130,000 in total revenue. THAT'S OVER $60,000,000 IN SBIR AWARDS TO ONE COMPANY, THAT GENERATED A $130,000 RETURN, FOR YOU, THE TAXPAYER.

SBIR funding fills a critical gap between traditional seed funding and venture and/or mezzanine rounds. This is crucial for companies with a long- term ROI (greater than 5 years), most of whom are not traditional VC funding candidates. If the goal of government is truly the greatest good for the greatest number of people, let's spend capital where it is best utilized. It is vital to the future of small business in America.

Support this change to the ownership rules. Not only will it fix the SBIR program's poor ROI to the sponsoring agency and taxpayer, it will fix this faltering entity called the United States of America.



Vote:   YES 
Larry Nannis Needham, MA
Msg 48 of 99
I do not believe that VC's should be allowed to own SBIR awardees until such time as the awardee believes they can commercialize without the SBIR funding.

I do believe that the ownership rules should change to accomodate SBIR awardess who for business and tax reasons need their corporations owned by non- individual entities (like LLC's).

In your survey I would vote No on the question but would suggest modified language to allow some flexibility in the ownership without undermining the spirit of the SBIR program.

Sorry for the confusion. My home representative is Ed Markey; my senators are Kerry and Kennedy.

I have been a service provider to SBIR awardees since the inception of the program.

Larry Nannis, CPA

Vote:   NO 
Matt Clay Austin, TX
Msg 49 of 99
I fail to see how this is different than a large company creating a separate, "small" company which has access to the resources of the parent and is (ultimately) controlled by them.
Vote:   NO 
Name withheld by request Santa Clara, CA
Msg 50 of 99
companies with vc money should not need govt. funding to pursue development of their technology

it is difficult for truly small companies without vc resources to compete with organizations that have vc backing

Vote:   NO 
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