VC-owned firms may qualify for federal SBIR awards

A compromise bill up for a Senate vote in September – and now unanimously approved in committee – would allow business that are majority-owned by venture capitalists to receive Small Business Innovation Research (SBIR) grants.

The awards would be limited. The National Institutes of Health would be able to grant up to 18 percent of its SBIR dollars to such firms, and the other agencies that give out SBIR grants would be able to use up to 8 percent of their total. But for companies and associations who protested the Small Business Administration's 2003 decision – that VC-owned firms are no longer small businesses – it is something.

The House of Representatives already approved a bill in April that would restore SBIR eligibility as long as no one venture capital firm owned a majority stake. The Senate bill, which would still need to be approved by the House if the Senate votes it through, is aimed at compromise and introduced the percentage cap.