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Thursday May 13th, 2021

U.S. govt funding seen key to start-up success

Raleigh-Durham, USA (ECONOMYNEXT) – A little-known American grant programme for research has been critical for the success of startup technology companies, some of which, like chip maker Qualcomm and cyber security firm Symantec Corp., are now multinationals.

The United States federal Small Business Innovation Research (SBIR) programme emerged out of concerns about U.S. competitiveness in the late 1970s, especially in the face of competition from Japanese exports, particularly in electronics.

John Hardin, Executive Director of the Office of Science, Technology and Innovation (OSTI), North Carolina (NC) Department of Commerce, said SBIR was created in 1982 to support small businesses which lack resources, mainly funding.

In 2015, the programme allocated US$1.5 billion from 11 government agencies to small businesses nationwide, he reporters on a tour of US innovation and start-up hubs organised by the US State Department’s Foreign Press Center.

Since 1983, about $43 billion has been awarded through 160,000 awards to small businesses nationwide

The federal government funding programme has led to 70,000 patents, the creation of around 700 public companies, and some $41 billion in VC or venture capital investments.

“Qualcomm started with an SBIR grant,” Hardin said, referring to the smart phone-chip maker and telecommunications equipment company which supplies semiconductors to Android phone manufacturers and Apple Inc.

Qualcomm Inc., set to become a top supplier to the booming automotive chips market with its planned $38 billion takeover of NXP Semiconductors, developed the Code Division Multiple Access technology that transformed wireless communications.

Cyber security firm Symantec Corporation, another beneficiary, set up in 1982 with an SBIR award from the National Science Foundation, is today one of the world’s largest software companies.

Another is Cree, the designer and manufacturer of LED lighting which is based in the Research Triangle Park, in Durham, North Carolina, known as one of America’s hottest start-up and innovation hubs.

“The SBIR programme is one of those that’s really important but people don’t know much about,” explained Hardin. “The federal government has done a lot to help these businesses and economies.”

A Department of Commerce study has showed that between one‐third to one-half of economic growth in U.S. can be attributed to innovation, showing the importance of supporting research and development.

“Innovation occurs most efficiently and effectively in a vibrant, healthy innovation ecosystem,” said Hardin of the North Carolina (NC) Department of Commerce’s Office of Science, Technology and Innovation.

OSTI’s mission is to improve the economic well being and quality of life of all North Carolinians through advancing science, technology, and innovation.

How the SBIR programme works could be useful for Sri Lanka which has only recently started programmes to support R&D and start-ups and is talking of creating an innovation ecosystem.

SBIR grants are awarded by U.S. federal government agencies, the largest of which is the Defense Department, which has the largest R&D budget of all federal agencies.

“It is not just about weapons but everything tech-related,” explained Hardin. “From healthcare and agriculture requirements to transportation and electrical power requirements – the Defense Department is responsible for a lot of the innovation that occurs in the USA.”

Federal agencies participating in SBIR programme include National Aeronautics and Space Administration, Department of Health and Human Services, Department of Energy, National Science Foundation, Department of Agriculture, Department of Homeland Security, Department of Education and the Environmental Protection Agency.

These agencies put out solicitations describing the kind of technology they are looking for with proposals judged on scientific and technological merit and business potential.

Only one of eight proposals get funded on average, Hardin said. 

SBIR has two phases of funding with phase one evaluating the viability and feasibility of an idea over a six-month period and the average size of the grant being $158,304.

Phase two is more advanced and covers prototype completion, field testing and final development of a product over a two-year period with the average size of the grant being $919,943.

The program aims to fill funding gaps between innovative ideas and the creation of products and services and their commercialisation and subsequent growth of start-ups which create more jobs. 

(This story is part of a series from a tour of America’s new innovation and start-up hubs, covering Raleigh-Durham in North Carolina, Austin in Texas and San Diego in California organised by the U.S. State Department’s Foreign Press Center.)
(COLOMBO, May 25, 2017)


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