Small businesses are the fabric of the U.S. economy. They make up 99 percent of American companies and employ nearly half our private-sector workers. They define our national character of entrepreneurship, innovation and opportunity.
In the energy sector, they develop and deploy groundbreaking solutions that are creating new industries, promoting job growth and providing cleaner sources of power and fuel. Shouldn’t we be doing everything at our disposal to leverage America’s unique entrepreneurial culture to tackle climate change?
On Sept. 19, the House Small Business Subcommittee on Innovation and Workforce Development held a hearing on federal programs that help small businesses grow and accelerate innovation, with a focus on the Small Business Innovation Research program. While not widely known, SBIR is critically important to thousands of small businesses across the nation, investing more than $3 billion in research and development at nearly 3,600 firms in fiscal year 2018.
SBIR is administered by 11 federal agencies to stimulate technological innovation and private-sector commercialization. In its nearly 35-year history, SBIR funding has helped awardees generate 70,000 patents, create almost 700 publicly traded companies, and trigger nearly $41 billion in venture capital investments.
Many companies within the Clean Energy Business Network, a nationwide community of more than 3,000 small businesses across the clean energy economy, have been able to make their innovations a reality because of SBIR programs.
Flash Steelworks is one of those companies. Based in Michigan’s Lower Peninsula, Flash Steelworks is using patented heat-treating technology to make steel lighter and stronger than titanium. The promise of this technology is significant: lighter, more fuel-efficient cars and trucks; tougher military vehicles that require less fuel; and stronger steel that can be used across a range of American industries.
Multiple rounds of SBIR awards helped Flash take its technology out of the laboratory, demonstrate proof of concept and collaborate with auto manufacturers to build pilot lines, validate the technology at large scale and test production tooling wear. Flash Steelworks embodies the power of the SBIR program; on its current trajectory, the company can boost the competitiveness of the U.S. steel industry, support job growth and save billions of gallons of fuel. With a modest $3.6 million federal investment, Flash Steelworks is now attracting private capital to fully commercialize its technology.
SBIR’s benefits to both taxpayers and small businesses are clear, but there are some improvements that Congress can make to unleash the program’s full potential.
First, preparing a high-quality SBIR application is a complex and time-intensive task for any small business. To streamline the process, federal agencies should more consistently use short-form applications for the first round of consideration and competitively award financial assistance to help promising candidates pay for the technical assistance needed to complete a full application.
Secondly, once businesses receive SBIR grants, they should be given more flexibility to use their grants on activities such as investing in skilled employees and conducting market research. These companies know their technologies and market pathways better than anyone else; they should be empowered to use entrepreneurial discretion to bring their technologies to market.
Additionally, federal agencies should provide more funding to “entrepreneurship boot camps,” which pair entrepreneurs with national labs, universities and incubators to collaborate and find solutions to technical challenges. As an example, Flash Steelworks worked with Oak Ridge National Laboratory experts and equipment to better understand the underlying microscopic mechanisms of its heat-treating technology.
Finally, we need to ensure greater consistency in the staffing of federal agencies to support implementation of SBIR. Several agencies have adopted novel management approaches or dedicated staffing to strengthen SBIR. We need to share lessons learned about best approaches and help apply these across the 11 agencies with SBIR programs.
As the discussion on how to address climate change continues to intensify, we should not overlook the small businesses working to provide solutions. The SBIR program has a long track record of supporting this key source of innovation.
Moving forward, we should recommit to this critical tool for unleashing small business potential, which has reduced the constraints that have kept breakthrough technologies from reaching the market. With a few programmatic changes, this successful program can further enhance its impact and help develop the technologies of a cleaner energy future.
Small businesses have been innovating for decades with critical support from SBIR funding. It’s time for policymakers to step up and innovate right along with them.
Lynn Abramson is president of Clean Energy Business Network, and Gary Cola is the founder and chief technology officer of Flash Steelworks.
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