SBIR Gateway

SBIR Insider Newsletter
May 25, 2009 Edition

Dear SBIR Gateway Insider,

We have lots of ground to cover in this issue such as BIO's huge International Convention last week in Atlanta (some blockbuster news from that), Congress on their Memorial Week recess, aka "State Work Period", Obama's nominee for SBA Chief Council for Advocacy (quite a surprise), one SBIR hearing and one roundtable scheduled on the Hill for the first week in June, and much more.

In this issue:

Obama Nominates Winslow Sargeant As SBA Chief Counsel For Advocacy

In a move that surprised many in the small business community, President Barack Obama nominated Dr. Winslow Sargeant, currently the managing director of Venture Investors LLC, in Madison, WI, to become the next SBA Chief Counsel for Advocacy. If confirmed by the Senate, Sargeant will replace "acting" chief Shawne McGibbon who has been in that role since October of 2008 when Thomas Sullivan left to join the private sector after 7 years as Chief.

The role of Chief Counsel is to run and represent the SBA's Office of Advocacy, an "INDEPENDENT" voice for small business within the federal government. The Chief Counsel advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policy makers. Economic research, policy analyses, and small business outreach help identify issues of concern. Regional Advocates and an office in Washington, DC, support the Chief Counsel's efforts. Bottom line, this is a very important and influential position for the small business community including SBIR.

Dr. Sargeant has quite a resume including SBIR experience as an NSF SBIR Electronics (ET) program manager from 2001 through 2005. He co-founded Aanetcom, a fabless semiconductor chip startup company with seed funding from Cisco systems which was acquired by PMC-Sierra. Prior to Aanetcom, he held senior engineering positions at Lucent, AT&T Bell Labs and IBM. He has been a managing director of Venture Investors LLC since 2006 and currently serves on the Boards of Silatronix and Pattern Insight.

The selection of Dr. Sargeant has brought about much concern within the small business and SBIR community due to his close ties in the VC community as well as large corporate entities.

This didn't go unnoticed by the Wall Street Journal who neatly tied the VC issue to SBIR reauthorization.

The Wall Street Journal's Venture Capital Blog (Venture Capital Dispatch) headline reads: " Obama’s SBA Nomination Nods In Favor Of VC Industry." Even though SBIR is such a tiny part of SBA, Tomio Geron, the WSJ's blog reporter leads off the article by stating: " President Obama may have sealed the deal for venture capitalists who are hoping the Small Business Innovation Research program broadens its policy to include venture-backed companies." Read Geron's article at

Sargeant was not available for comment in that article but he did weighed in on the SBIR VC issue back in 2006 in a Wisconsin Technology Network article (see ). If you check out that article, please note the comments from Wisconsin's State Outreach Director, Phil Sobocinski. Dr. Sobocinski, who passed away last year, was an outstanding State SBIR leader and is missed by many.

The concern about Dr. Sargeant's background is coupled with the fact that the new SBA Administrator, Karen Mills, is also from a Venture Capital and large corporate portfolio community background. There is a also a question of Dr. Sargeant not being an attorney.

However, it should be noted that the position does not call for a law degree, and not all SBA Chief Councils have been attorneys, although most have been. In the 30+ years of Chief Counsel for Advocacy, only two have been SBIR leaders, Milton Stewart who helped create the position (1978-81) and Jere Glover (1994-2001). Both were legendary in their work on SBIR creation, support and subsequent reauthorizations. Perhaps Sargeant's SBIR background could be a "plus" for the SBIR community.

As for the VC connection, it should be remembered that Milt Stewart was also once a VC, but that was tempered with his tenacious advocacy for small business, a reputation that earned him the title on the Hill as "Mr. Small Business." In fact, both Stewart and Glover continued in SBIR and small business advocacy roles after leaving the SBA, Stewart leading the Small Business High Technology Institute until his passing in 2004 (see ), and Glover with the Small Business Technology Council (SBTC) where he is Executive Director (see )

For an interesting peek into the first 25 years of the SBA Chief Council for Advocacy, please see

NIH'S National Cancer Institute (NCI) Claims A 34% Increase In SBIR Submissions!

Many news items, including a blockbuster on SBIR, came out of last week's BIO International Conference in Atlanta, GA.

According to Alex Lash of The, NCI's SBIR program manager, Dr. Michael Weingarten told him that NCI's SBIR applications were up by 34% this year after years of declining numbers!

Did I miss something? In two House hearings a few weeks ago I never heard anything from NIH suggesting that their largest SBIR component, NCI, was actually seeing a substantial increase in submissions this year! Instead, NIH and several BIO proponents (including witnesses as well as a few elected officials) were more than happy to oblige in conversation and innuendo about 40% decrease in SBIR submissions over the past several years, and linking it to the VC eligibility issue.

Shouldn't the NIH have made Congress aware that some important new trends were taking place that may provide a clearer picture of the reason(s) for the former downturn in applications? Perhaps not, because it was the diminishing submissions claim that was part of NIH's leverage to "sneek" an exclusion of SBIR funding from the ARRA stimulus package.

Speaking of the Stimulus funding, Dr. Weingarten declined to state how much of the NCI's stimulus money would go to SBIR. For more insight on biotech sessions and SBIR, please read Mr. Lash's excellent article at

NCI'S $10M SBIR Bridging Program Discussed At BIO Conference

According to Cole Werble of the IN VIVO Blog, Dr. Ali Andalibi, NCI program director for therapeutics development, was at a BIO breakout session to discuss the latest about NCI's SBIR bridging program that was launched several months ago.

The NCI has patterned this program after NSF's Phase IIB, which is not surprising since Andalibi used to be with the NSF SBIR, and the NSF phase IIB program has been viewed as successful by many.

For more information please read Cole Werble's article at

National Research Council Issues Pre-Publication NIH/VC Study

The NIH commissioned study, "Venture Funding and the NIH SBIR Program" performed by the National Research Council of the National Academies, has been released in its prepublication copy form.

Like many studies, if it confirms and supports your view it's great, but if not, it was done by a bunch of bums, and/or "the fix was in."

Led by Dr. Charles Wessner with an excellent supporting cast including lead researcher Dr. Robin Gaster, I can tell you that these people are not bums and I don't believe for a second that "the fix was in." I know both of these gentlemen and respect their integrity and abilities, but I also respect and reserve my right to raise questions and occasionally disagree.

This is a large report of 132 pages and brings up many points that should have been discussed and vetted in House hearings. Many of these points were discussed in the Senate under both Kerry and Snowe, and I suspect Landrieu will continue.

To cut to the chase we will address the last paragraph of the executive summary:

"Based on the Committee’s analysis of the impact of restricting venture funding on the NIH SBIR program and its experience in the larger evaluation of SBIR programs at five agencies, the Committee recommends that consideration should be given either to restoring the de facto status quo ante eligibility requirements for participation in the SBIR program or to making some other adjustment that will permit the limited number of majority venture funded firms with significant commercialization potential to compete for SBIR funding."

The latter recommendation is precisely what the Senate SBIR reauthorization bill tried to do. The former recommendation of restoring the "de facto" status is complicated by the interpretation of "de facto" which again brings into question the legal intent under SBA rules. Did the SBA and the legislation intend to allow an opening for unlimited VC ownership and control, while no other SBA program ever has? Or did these "few" companies just happen to pass through without notice?

Hopefully the House S&T Committee can play a role to bring about a dialog for respectable compromise in the House. I am hearing faint voices from the direction of the White House urging and expecting a compromise, because everyone involved wants this wrapped up before July 31, which is a tall order with all that congress has on its plate.

You can read the NRC study on-line at

House Small Business Subcommittee To Hold SBIR Hearing

The House Small Business Subcommittee on Contracting and Technology will hold a hearing on SBIR reauthorization on June 3, 2009. The subcommittee is chaired by freshman Congressman Glenn Nye (D-VA)

Although Nye is young and a new member of the House, he's very experienced in world affairs having volunteered to serve abroad in many capacities for organizations such as U.S. Agency for International Development (USAID), and the State Department.

Nye is close to the military and sits on the Armed Services, and Veteran's Affairs committees. This could be advantageous because so few DoD issues or other non-NIH issues have been vetted in the House Small Business Committee. It would be refreshing and substantive if this hearing doesn't turn out to be another BIO/NVCA exposé. However, don't be surprised to see Nydia Velazquez (full committee chair) at the hearing.

The topics and witness list has not been released.

Senate Committee On Small Business & Entrepreneurship To Hold SBIR Roundtable

The Senate SBE will host a special SBIR reauthorization Roundtable on June 4, 2009. Committee chair Mary Landrieu (D-LA) and ranking member Olympia Snowe (R-ME) are expected to lead the discussion. The invitees have not yet been announced.

ARPA-E Funding Opportunity Announcement (FOA)

The Advanced Research Projects Agency-Energy (ARPA-E) has released it's first ever "Recovery Act" Funding Opportunity Announcement (FOA) DE-FOA-0000065 (CFDA Number: 81.135) with an opening date for acceptance of concept papers of May 12, 2009 and a closing date June 2, 2009 (8:00p edt).

Although this is not an SBIR or small business program, many of the U.S. National Laboratories are interested in partnering with qualified companies and/or research institutions with expertise to address ARPA-E's FOA mission of to foster research and development (R&D) of transformational energy-related technologies.

Transformational technologies are by definition technologies that disrupt the status quo. They are not merely better than current technologies, they are significantly better. Often, a technology is considered transformational when it so outperforms current approaches that it causes an industry to shift its technology base to the new technology. The Nation needs transformational energy-related technologies to overcome the threats posed by climate change and energy security, arising from its reliance on traditional uses of fossil fuels and the dominant use of oil in transportation.

For more information on ARPA-E and their Funding Opportunity Announcement, please visit their web site at

SBTC To Host Washington Dc Fly-In

The Small Business Technology Council will be hosting a Washington DC "Fly-in" on June 10-11, 2009. Like their previous 2 fly-ins, SBTC will be hosting a breakfast from 8:30-10:00 in the Senate Small Business Committee Hearing Room, as well as a get-together the night before to go over the next day's meetings.

The purpose of the fly-in is to meet with your Senators and Representatives (or staff) and let them know about the importance of SBIR reauthorization to you, your company and their constituents.

For more information contact Alec Orban at [email protected] or by phone at 202 662-9700 ext 337.

Dutch Government Pleased With SBIR Biodiversity Responses

The government of the Netherlands have studied our SBIR program for some time and they have become SBIR proponents.

SenterNovem, the Dutch Ministry of Economic Affairs, has released an SBIR solicitation based on the topic of biodiversity and the response greatly exceeded their expectations. They expected no more than 40-50 proposals but received more than 110.

To give you an idea of their schedule, on June 6 they will close and send acknowledgements, assessment committees meet on June 30, July 14 decisions will be announced and all participants will be notified via phone. Now that's what I call service!

My angelic proofreader, Linda was unavailable for this issue so I apologize for any textual indiscretions.

I hope you had a good memorial day weekend. I watched the Indy 500 and was blown away with the technology employed. The pit crew knew more about car's status than the driver.

This is a long way from my days as a boy listening to the race over the radio, as my dad worked for Novi, described as the terrifying Novi, all at once, one of the most spectacular, intimidating and ill-starred cars in American racing history! You could hear the power of the Novi over the radio!

My thoughts were not only for our fallen heroes on this memorial day, but for my personal ones as well.



Rick Shindell
SBIR Gateway
Zyn Systems
40 Alderwood Dr.
Sequim, WA 98382
[email protected]

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