Friday, May 23, 2008

SBIR funding is vital to innovation

Dear Editor,

I read your recent article, “Changes to SBIR raise small-biz objections” (April 25-May 1, Page 1), with great interest. As a small-business owner and a recipient of SBIR (Small Business Innovation Research) funds, these issues concern me and business colleagues deeply. I would like to focus on one particularly disturbing part of your article, where Michael Greeley was quoted as saying, “It feels like an irresponsible use of government dollars if you are going to fund companies that couldn’t raise (private) funding on their own.”

There are two major flaws with this statement.

Anyone who is either an entrepreneur or investor knows about the funding gap. It is that point in the funding of a company, just after the entrepreneur has used his or her personal finances, friends and family, and possibly an angel or two. The average VC firm will not fund in this space. To date, the federal SBIR program is the only way to fund companies developing relevant technology in this space.

VCs only invest in certain types of business models. Typically, these types of businesses must be able to have both a large post-money valuation and provide liquidity within a certain time. This is not the only type of business model, nor is it a typical one. A VC firm is more than welcome to do what it wants with its own money, but public money like SBIR is different. Are we saying that only VC business models are appropriate for solving issues concerning all Americans?

Clearly venture capitalists play a role in bringing new technology to market, but they do not play the only role. Viable technology that is worthy of public investment comes in many forms, and SBIR is one of the few ways Americans benefit from these businesses and entrepreneurs. That is why I have contacted my representatives in Congress and articulated these very points. I encourage all my other colleagues who have views on these matters to do the same.
 

Al Prescott, President, Crescent Innovations, Worcester