Sep 09 2014

How Government Is Funding Small-Business Innovation

The Small Business Innovation Research program has provided billions in seed money to companies, including Symantec and Qualcomm.

Companies such as Qualcomm, Symantec, iRobot and Genentech know the power of financial backing from the federal government.

They’ve benefited from a 32-year-old Small Business Innovation Research (SBIR) program, which has doled out more than 112,500 awards to small businesses, worth more than $26.9 billion, through fiscal year 2009, according to the most recent data.

Nagesh Rao, chief technologist at the Small Business Administration’s Office of Investment and Innovation, called it one of the best “unsung-hero” programs in the federal government, noting its track record for seeding the future. Rao said the origins of 3D printing can be traced to the National Science Foundation’s SBIR program, which provided funding for pioneering companies such as Z Corp. and DTM Corp. (now 3D Systems Corp.) back in the 1990s.

Rao is leading modernization efforts of the program’s flagship website,, and making it easier for smaller companies to access online resources. His work includes refreshing the public-facing aspects of the website and the backend interfaces that enable agencies to upload data to the site. One goal of the program is to boost performance measurements and ensure the program’s effectiveness government-wide.

“My game plan is to help modernize and help us think forward with the program so that we’re not doing government as usual, [but] we are actually seeding the new and the right innovation pipelines going forward across all 50 states,” Rao said Monday at the Nextgov Prime conference in Washington, D.C.

Using Data to Measure Innovation

Those involved with the program are exploring new ways to use its data to show that the government knows how to innovate and helps to fund the right innovations. Companies that receive funding must adhere to performance benchmarks that set minimum requirements for commercialization activity, or how much in sales and investments have been generated.

Where it makes sense, agencies should collaborate to identify needs that are not being met by the private sector but could be addressed through seed money to startups or other small companies, Rao explained.

The 11 agencies on board with SBIR are charged with providing incentives to entrepreneurs to maintain control of their companies and to develop next-generation technology. The Defense, Energy, Homeland Security, and Health and Human Services departments are among the member agencies.

State governments are also aligning themselves with the program. Kentucky has a matching-funds program for in-state companies and those willing to relocate to Kentucky that have obtained SBIR government funding.

“We’re talking about long-term development, sustainability issues, growing the economy, developing and seeding [the] next generation of critical infrastructure and technology development,” Rao said.

Check out to learn more about the program.

Robert Churchill/thinkstock

Become an Insider

Unlock white papers, personalized recommendations and other premium content for an in-depth look at evolving IT