The House Committee on Small Business passed a bill recently to reauthorize the Small Business Innovation Research (SBIR) program to include friendlier terms, or at least friendlier than a version of this same bill currently moving through the Senate, according to many in the VC industry.

The SBIR program provides government funding for small businesses to explore their technological potential. The House bill is beneficial to venture-backed firms because the House will not be placing a cap on the amount of funding that can be allocated to them.

The Senate, however, is proposing a cap of 8 percent (18 percent for funding provided by the Department of Health and Human Services). The Senate argues that their version, which lengthens the reauthorization nine years longer than the House bill, would aid more small businesses in bootstrap mode.

The House bill will also increase the amount of funding that is available from $100,000 to $250,000 at the Phase One level and $750,000 to $2 million at the Phase Two level. They are also proposing to add $27.5 million to a Phase Three program focused on the commercialization of technology.

Venture capital firms remain weary of both bills for the way this program has traditionally excluded them. The Small Business Administration had interpreted the previous law to mean that startups that are majority-owned by venture firms must count the employees of the VC firm’s other companies as part of their employee count, resulting in many of these startups being judged as having more than the 500-employee maximum set by the program. Nonetheless, VCs are hopeful about the progress occurring through this bill.

The SBIR program is scheduled to expire at the end of this month, so movement through the rest of Congress should be quick.

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