Friday, March 12, 2010


I have written about the battle in Washington between small business and the large venture –backed companies. Basically venture backed capital companies want to redefine the SBA’s criteria of small business.

On March 4 a document passed by the House contained the following statement put forth by Chair of the House Small Business Committee Nydia Velazquez:

“Without the participation of venture-backed companies, the SBIR program has become little more than corporate welfare for marginal companies who are unable to secure external market based funding."

The passage of the document was with the proviso that the document could be changed to make punctuation and technical changes.

For some background information, if you go to the website, you will see The US Small Business Administration[SBA] Office of Technology administers the Small Business Innovation Research[SBIR] Program and the Small Business Technology Transfer{STTR] Program. Through these two competitive programs, SBA ensures that the nation’s small,_high-tech innovative businesses are a significant part of the federal governments research and development efforts.

Eleven federal departments participate in the SBIR program; five departments participate in the STTR program awarding $2 billion to small high-tech businesses.

It should be noted that the SBIR program does not prohibit venture-backed companies from participating in the SBIR program just those that do not meet the definition of small business put forth by the SBA.

There was a firestorm around the country about Ms. Velazquez' comments. As a result Ms.Velazquez revised her statement to say:

“In addition, SBA should permit venture capital-backed small businesses to be able to fully participate in the Small Business Innovation Research program. Such participation is essential for high- growth small firms seeking capital, particularly during this period of economic weakness”

Seems to me this is a bit more than punctuation and technical changes but the bottom line is that Ms Velazquez has become a real problem for small business. Not only on the SBIR issue but she prevented an amendment to include small businesses from being included on the credit card reform bill passed by the legislature and signed by the government and voted against the $125 million included in the Defense bill which extended stimulus funding for SBA loans

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

1 comment:

Anonymous said...

It is small business that is the backbone of new job growth and of innovation. A quarter of the American R&D 100 awards go to SBIR companies, on 2.8% of the budget. That is about a ten fold multiplier.

It is unfortunate that our friends in Washington still have not understood that the 38% of America's scientists and engineers (S&Es) work for small business, and they are the most productive, innovative S&Es in the world. Sadly, our government chooses to starve these very same productive, innovative engineers who create the most jobs by underfunding them by an order of magnitude. Instead, they choose to fund Wall Street Venture Capitalists (at the tune of 1/2 billion dollars per year in the new health care bill) so we will continue to get more Wall Street financiers' bloated salaries, instead of hard working main street engineers.

Until the decision makers in Washington start to understand this, or they are replaced by people who do, our economy will continue to flounder and joblessness will prevail.