It's a Prize Fight: Wall Street vs. Main Street. The Prize: SBIR Money and more.

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Are you ready to rumble? There's gonna be a big fight! A Floor Fight! In the House of Representatives!

In one corner: Wall Street. The Challenger. Big. Brawny. Polished. Well heeled. Slickly packaged and promoted. Big guys trying to muscle in on the little guys' territory and grab some money.

In the other corner: Main Street. The Defender. Small. Scrappy. Agile. Impecunious. Ragtag organization and promotion. Little guys trying to hold onto the only source of money they've got.

The Prize: Money of course. Millions, even billions of dollars. But wait -- There's more! (Be patient, we'll get to it...)

In the ring for the Wall Street Challenger: Velazquez the Chairwoman. A Rep from New York. The Big City. The Challenger's home territory. Tough. Stubborn. Aloof. Bows to the almighty VC. Believes that the only ones worthy of her time are those who've been anointed by the almighty VC. Won't even let the little guys speak in her presence. (Huh! Doesn't she actually lead the Gang that allegedly protects the little guys' interests? What's she doing in the Challenger's corner anyhow?)

In the ring for the Main Street Defender: Markey the Magnificent. A Rep from Massachusetts. Bows to no one. Energy is his thing. Willing to stand up for the little guy and challenge the Gang. Gets it that small businesses can have great ideas and innovate even if they haven't been anointed by a VC yet. Just as stubborn as the Challenger's avatar. Ready to fight. Ready to lead.

The Referee: Pelosi the Speaker. All powerful. Owns the ring, so to speak. She can stop the fight by imposing rules that no one else understands. Both of the avatars in this fight are "Dems", Pelosi's Party, so it's really gonna be interesting! Hopefully, she'll decide to preside over a fair fight and give both sides a chance to throw some punches.

The Prize: SBIR Money. Not a lot per award actually -- just enough to get started. Plant the seeds and grow a product. Prove it works.

Is SBIR really worth fighting for? The little guy thinks so. He has no other source for seed money. The already anointed have VCs with deep pockets. And the VC's bucks are bigger, much bigger. So what's the deal?

The deal is -- there's more! Along with the prize money comes Validation. Acceptance. Proof that a great idea can produce solid results. Results that make money. (The almighty VC reveres money over all else.)

And, for the little guy it's jobs. The SBIR prize creates jobs. Especially valuable when jobs are hard to find.

How does the winner of this fight get chosen? All the House Reps vote. Winner gets to define SBIR (H.R.2965). So, there's a lot at stake.

Women and minorities don't get anointed by VCs much. If the Wall Street Challenger wins, they should probably just forget about SBIR.

Most VCs seem to live in big cities by the ocean. Not many live elsewhere. What's more, they only anoint those who live near them! If they find someone to anoint who doesn't - they usually force them to move close by. If the Wall Street Challenger wins, SBIR money will flow to the big cities on the coasts.

So what about the middle of the country and away from the big cities? If the Wall Street Challenger wins, fewer SBIR Prizes will be won there. If I were a House Rep from ANYWHERE the VCs don't hang out, I'd back the Main Street Defender!

That's what makes Markey the Magnificent so special. He's from a big city by the ocean that does have VCs hanging out. But he's not swayed by their slick talk. You other Reps need a role model? He's your guy. Follow his lead. We Main Street Defenders are proud to have him in our corner.

So, get ready for the Big Fight. Bell rings just after the Fourth of July fireworks. They're lacing up the gloves as we speak.

We'll be covering the fight on www.SBIRreauthorization.com. There will be lots of information from the SBTC and others you can use to cheer on the Defenders and try and influence the House Reps to back our cause. The more cheering and influencing we do the better.

All together now: "Follow Markey's Lead! Follow Markey's Lead!"

House Reps can be convinced if you find their WIIFM (What's In It For Me). More than anything, they want to get re-elected. They need to be able to show how they did good to protect and support those who vote for them. Give them a reason to back the Main Street Defender. Give them several reasons. We have the data you need on www.SBIRreauthorization.com.

Hang on! And get ready for a really raucous rumble!
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BIO Endorses Senate SBIR Reauthorization Bill -- Co-Sponsors Sought

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They said it couldn't be done! Impossible. Never happen. But it did!

The SBIR Advocacy and the Biotechnology Industry Organization (BIO) agree on an SBIR Reauthorization bill!

In a unanimous endorsement, the Senate Small Business and Entrepreneurship (SBE) Committee passed S.1233 up to the full Senate for consideration yesterday.

BIO immediately endorsed it too, joining the SBTC in recommending its passage!

In an article that appeared on GenomeWeb.com moments after the SBE Committee's action was announced, Jim Greenwood, BIO's CEO, is cited as having lauded the Bill! That's not to say that BIO won't promote amendments, but lauding is lauding! Guess we'll just have to wait and see what ensues in the full Senate debate.

Greenwood is quoted as urging Congress to reauthorize the SBIR program "as soon as possible in a way that provides a level playing field." Oh, really? Sort of ironic, eh what! A tip of my hat to you, JG! I appreciate chutzpah, being somewhat unabashed myself!

And, way to go, SBE Committee! And especially, thank you Senators Landrieu and Snowe for leading the way on this.

OK, let's get S.1233 Co-Sponsors lined up! If we can show overwhelming bi-partisan support for this Bill, there will be intense pressure put on the House to conform to it.

There's a Call to Action for enlisting S.1233 Co-Sponsors on the www.SBIRreauthorization.com website.

You'll find a model letter, links to Senatorial contact information, and a copy of the GenomeWeb article to attach.

Any questions? OK, team, let's get busy! Everybody's in the game! Fax letters, make calls.

We can do this. Nothing is impossible. It just takes a little longer!
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It's All about Deal Flow - Where's the SBIR Money Gonna Go?

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I agree with others in our Advocacy in thinking we've been focusing on the wrong message. We've been pleading not to un-level the SBIR competitive playing field. We've eloquently elaborated on the logic of fostering innovation via SBIR and being fair to start-up businesses with an idea for new technology development and no other way to get funding. Yadda yadda yadda. Good logical arguments, but they're getting little or no traction. Why not? They don't relate to what a legislator cares about -- how much money will flow to his/her State?

If companies with VC majority funding wind up getting SBIR awards, then more Federal R&D money will flow to States where companies with VC seed investment are located. Want to see a map showing the distribution? Click HERE to download it. (It's also viewable on the www.SBIRreauthorization.com website along with some tabular data and messages about it from Advocacy leaders.)

The numbers show the deal count. The colors show the dollars. The lighter the color of the state, the more VC-involved money flow. Change the SBIR eligibility rules as the House would have us do, and the States with virtually no VC deal flow will inevitably lose Federal R&D money flow. Bummer!

OK! So, who's going to vote to have fewer Federal R&D dollars coming to their State? Step up -- let's see a show of hands! (Looking around...) No one?    ;-)

This message will resonate. Watch for the tell-tale furrowed brow when you show this to your Congress-person and Senators. Stress that H.R. 2767 must be amended or defeated. (See links to the text of all of the bills on www.SBIRreauthorization.com.)

BUT, DON'T FORGET THERE ARE OTHER ISSUES TO SETTLE!

The most important ones with contention:

Will we increase the Allocation Base?
The House says NO; the Senate says YES.

Will we increase the Award caps?
Both say YES, but the House wants them higher than the Senate.

• Increasing the award caps without increasing the allocation base will inevitably result in a reduction of awards. Do we really want reduced deal flow? The States that get few awards will get even fewer!

Will we allow a bypass of Phase I?
The House provides a way to actually do it! The Senate doesn't.

• I call this the "Missouri Clause". Phase I is a vetting step for the Agency. You say you've already demonstrated feasibility? OK... "Show Me!"

Will we allow multiple Phase IIs?
The House says YES. The Senate doesn't make such allowance.

• Follow-on projects are Phase III not II. The meager funds in the allocation base should not be used for follow-on work, even if it's further development.

When will we go through this Reauthorization process again?
The House says in two years so we can assess the impact of the changes! The Senate says not 'til 2023.

• Assess impact in two years? Really? How? It'll take almost a year to start the first project under new rules. Three years to finish an SBIR project. Another year to evaluate results of ANY kind, but probably three to five to get statistical validity. That's five years at a minimum, but more like eight. Two years? Get real.

I don't want us to be perceived as a one-note chorus, so help me out here. Let's see some good commentary on these other issues.

But, focus on the deal flow. Where's the money gonna go?

"Why, its gotta go to OUR State of course!"   Me-yow!*
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[* See the June 14th column:
    It’s all about herding cats and pushing wet noodles]

It’s all about herding cats and pushing wet noodles

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I’ve always admired Howard Baker, the Tennessee Republican who led the Senate back in the 1980s. He’s frequently quoted as having likened Congressional leadership to “herding cats” and the process of enacting legislation to “pushing a wet noodle”. I never appreciated the truth of his witticisms until now.

The political process of getting legislation through the system and having laws enacted has very little to do with logic. Cats have never been swayed by logic. They respond only when they’re offered something that interests them or when they’re hungry.

What are our legislators interested in? Let’s see…I know! Getting re-elected! What gets them re-elected? Money to spend on campaigns. What they’ve done or haven’t done - unless it’s really egregious - doesn’t really seem to matter.

What are they hungry for? Let’s see...I know! Money! What's the only thing they’re allowed to use contributed money for? Their re-election campaigns! Hmmmm…

Nowhere in this mix does logic play a role. That’s our problem. We’ve been trying to herd cats using logic. Those who would reshape the SBIR Program are using money, not logic. That’s gotten the cats’ attention, and their affection. We’re ignored. Cats are really good at ignoring.

All of our arguments about how small business creates jobs and how innovation drives economic growth are immaterial to the wet noodle process of influencing policy and enacting legislation. Those at the far end of the noodle are oblivious to what’s happening at our end. They don’t feel the effects of our pushing. They’re not even aware that we are pushing!

I attended a two day NSBA meeting in Washington DC last week, their 72nd annual Washington Presentation. We were provided with two briefings – one at the White House and another at the Capitol.

The White House briefing featured people who ostensibly influence administration policy that affects small business. Mostly we heard bureaucratic rhetoric.

The economist who spoke, Jason Furman, he of the impressive resume, was largely incomprehensible to most of us. He served as Obama’s economic advisor during the presidential election campaign, and now holds a key post on the National Economic Council. Small business is merely a small statistic to him. He had no idea how to talk meaningfully to us.

Health care was promoted by Dr. Robert Kocher, President Obama’s Special Assistant on Health-Care Policy. He talked up how much better health care was going to be, including the important role of small business in creating innovative technologies and systems to improve the quality of care, etc., etc. But in response to my question about why the Administration had allowed HHS, its health care agency, to exclude small business from its ARRA Stimulus funding, he was caught flat-footed and speechless, obviously completely unaware of the situation. He actually took out his pad and jotted a note. His end of that noodle had no idea that our end was in convulsions!

The obligatory SBA speaker, Penny Pickett, is the point person in SBA Director Mills’ office for entrepreneurial development including SBIR. Mostly she talked about SBA loan programs. SBIR was only mentioned once, in passing. I was really disappointed. Kinda tells us the priority SBIR has with the SBA, doesn’t it?

The next morning, at the Capitol briefing, we, of the National Small Business Association, were addressed by no less than six Representatives and a Senator. You’d think that at least one of them would be serving on either the House or Senate Small Business Committee. Nope. How sad is that? Sure points out how important small business really is to them.

Only one speaker, Congresswoman Carolyn Maloney (D-NY), took a single question. I was privileged to ask it: “What is Congress doing to halt the attempt of larger businesses to redefine and manipulate what is meant by a “small business” to their advantage?” Her answer indicated that she did not realize that there were multiple standards for defining a small business. When I challenged her on that she actually stammered a moment before giving a stock answer and promising to look into the situation. Yeah. Right. Not a clue, and not her problem.

So, it appears the cats in the House are going to do their thing and pass (some would say steamroll) an SBIR Reauthorization bill that pleases the ones who feed them. Our logic, recitation of facts, and clamoring for attention will be ignored. We can push noodles all day long to no effect.

The bottom line: Small business is great for making popular points in political speeches. Always gets applause. But will other than token money be put up to fulfill the promises? Nope. Not by these cats.

More’s the pity.
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SBIR on the front burner - stir the pot!

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After months of virtual inaction and indifference, the House Small Business Committee has finally put SBIR on the front burner. The Committee is in the process of marking up four separate bills that address SBIR reauthorization. The intent, we're told, is to eventually combine them into a single bill and send it up to the full House for approval.

On first glance, this is almost a de-ja-vu of last year's H.R. 5819 that died (thankfully) without being enacted. But there are a few differences that tells us they have been listening.

The big same-old is that despite our best efforts and the entreaties of over forty House members that SBIR eligibility requirements not change, the VCs are evidently getting their way. Would we really expect different? After all, no small businesses have been invited to testify to the Small Business Committee on this subject.

The four bills being marked up are:

H.R. 2769, “Commercializing Small Business Research and Development Act”
H.R. 2767, “Investing in Tomorrow’s Technology Act”
H.R. 2772, “SBIR and STTR Enhancement Act”
H.R. 2747, “Rural Technology Development and Outreach Act”

Got opinions? Stir the pot by calling, emailing, or better yet, faxing all the Representatives on the Small Business Committee ASAP! No time for form letters. Just make your opinion known.

[Added 6/12: Actually, fellow advocist Jonathan Pearl has provided a model letter -- see Comment #3!]

Then get the word to your Representative and everyone else in the House that you might influence that small business is being threatened. Don't let them just ramrod this through again.

Links to data files of legislator contact information is on www.SBIRreauthorization.com.

[Added 6/13 : Note - some excellent comments have been submitted since this was first published. Be sure to read them, and feel free to add your own!]
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NIH Tosses Small Business a Few Crumbs

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I'm not ungrateful. Really. Small technology businesses appreciate any funding opportunities, and the NIH is doing the right thing. But why did it take so long for them to do it? And why is it so pitifully small?

Want to see what they tossed us for Stimulus-funded SBIRs?: RFA-OD-09-009, Recovery Act Limited Competition: Small Business Catalyst Awards for Accelerating Innovative Research

Small business (via SBIR) should have been allocated 2.5% of the NIH's Stimulus pop for R&D. That's something over $200 million. What are they offering us? $5 million. (Hmmmm.... That's 2.5% of 2.5%! Huh! Coincidence or are they sending us a not-so-subtle message?) Funding on these is for up to one year not to exceed $200K. That means a scant 25 awards. Big deal.

Yeah, there's an alleged pot sweetener. Another $35 million to "Spur the Acceleration of New Technologies". But this isn't a small-business only competition. Sure, we can apply. Gee, thanks. Another Challenge Grant-type competition?

Here's that announcement: RFA-OD-09-008, Recovery Act Limited Competition: Biomedical Research, Development, and Growth to Spur the Acceleration of New Technologies (BRDG-SPAN) Pilot Program

Well, whaddya know? Valley of Death funding! This is a whole new category for NIH, and I do congratulate them for introducing this. It's a good start. For a company extending SBIR funded technology, to get this award means it's a Phase III by definition. But it's not limited to SBIR funded companies or subject to SBIR eligibility rules. It's NOT an SBIR program. It even has a new NIH Grant Code: RC3.

You see, there's some interesting wording in the Eligibility section that says: "Applications received under this FOA may be given funding priority if the applicant is associated with an enterprise/commercial organization that is of small size (e.g., 500 or fewer employees), and/or of limited resources, such as an early-stage company, and/or one positioned for receiving funding or in-kind support from a third-party investor and/or strategic partner, etc." The key words are "MAY BE given funding priority". And there sure are a lot of conditions to be sorted out by the NIH funding decision makers.

A friend of mine is the savvy CEO of a small bio-tech company that has won several SBIR awards. He recently made the following very astute observation: "For many years the SBTC and others opposed to BIO’s legislative efforts have argued that VC owned firms should procure NIH funding from outside the SBIR set aside. BIO and NIH have always responded that there are no business funding opportunities outside of SBIR. This new RC3 program -- not SBIR -- is precisely where VC owned firms should be competing for NIH support."

Indeed, there's enough on the table here to attract a VC funded (dare I say controlled) company -- $3 million over 3 years. Much better than SBIR and more focused on where they probably are in their product development life-cycle.

RC3 is a new sandbox for the bigger boys to play in. (Now will you please stay out of ours?) How this new NIH funding category will color the SBIR Reauthorization debate remains to be seen.

But we have had some crumbs tossed our way, so let's get busy. Due date for grant applications in both of these programs is September 1st.
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