New 'Game-Changing' Rules for Innovation Grants From the Feds

Federal grants to start small businesses don’t exist, despite popular perception that they do. What the government does fund are research grants for small businesses developing technology innovations that benefit certain federal agencies, such as the Defense Dept. The decades-old Small Business Innovation Research program was reauthorized in December 2011 amid controversy over the level of venture capital-backed small business participation allowed.

Now, with new commercialization requirements taking effect—and less private investment capital going to startup ventures—SBIR may become more relevant than ever to entrepreneurs, says David P. Metzger, one of the original drafters of SBIR in the late 1970s, who is now a partner at the Washington (D.C.) law firm Arnold & Porter. The push toward commercializing SBIR research grants was fueled by government cost cutting and renewed focus on job creation, he says, as well as complaints about awards going to purely academic researchers who should be funded by universities and other organizations.