A Tradition of Federal Innovation

We appreciate the perspectives on the Small Business Innovation Research/Small Business Technology Transfer (SBIR/STTR) programs shared by Gail Cohen, Maryann Feldman, and Scott Stern in “Nurturing America’s Seed Fund” (Issues, Summer 2026), and are grateful for their work and the work of the larger National Academies of Sciences, Engineering, and Medicine teams in conducting rigorous and thoughtful evaluations of SBIR/STTR efforts across the federal government.

The US National Science Foundation’s approach to providing funding through the SBIR/STTR programs has historically focused on early-stage, higher-risk start-ups. The median first-time awardee has two employees and is less than two years old. More than 90% of new Phase I awardees have not previously received SBIR/STTR funding from any federal agency. First-time applicants are more likely to be funded than are repeat applicants, a statistic rare in the world of federal research and development funding programs.

NSF-supported companies have produced extremely strong impacts and commercial outcomes: They have raised $36 billion in follow-on private capital over the past decade, compared with less than $2 billion in direct NSF investment over the same period, and more than 60 have achieved confirmed valuations exceeding $250 million, according to the venture capital monitoring firm PitchBook.

The willingness to consider applicants in nearly any market or technology area has also opened SBIR/STTR funding to a wide range of young firms whose technologies may not fit the mission-specific priorities of another federal agency. At the same time, NSF has worked diligently to establish new processes and policies to screen every new award for research security and foreign influence risks, consistent with strengthened safeguards established by Congress.

While SBIR was established government-wide in 1982, its origins date to a pilot launched within NSF in 1978. Congress then expanded the model based on strong early outcomes from that experiment, which was possible because NSF empowered a small group of program staff to test an unproven approach.

That tradition of employing program staff with prior experience as founders and investors in their own right, and with the willingness to be entrepreneurial in their approach to program management, continues as a hallmark of NSF’s implementation of SBIR and STTR today. The NSF Innovation Corps (NSF I-Corps) program, which is perhaps the most successful existing program for improving the commercial prospects of SBIR/STTR firms, was launched at NSF in 2011, when agency leadership backed the vision of an experienced program director who conceived of the idea based on years working with SBIR/STTR and in the start-up world, and connections to the Lean Launchpad methodology pioneered by a Stanford University professor. The NSF Directorate for Technology, Innovation, and Partnerships (NSF TIP), authorized by Congress in 2022, builds on this tradition of innovation. It represents a significant step by NSF to stand up new structures and foster entrepreneurial and experimental cultures within the nation’s research and development enterprise. NSF TIP is designed to plug the “micro-valleys” in the journey from lab to market by allowing the next visionary translational program concepts to be developed, launched, and assessed. To learn more, see https://new.nsf.gov/tip/latest.

Gail Cohen, Maryann P. Feldman, and Scott Stern should be commended for their deep and thoughtful examination of the Small Business Innovation Research and Small Business Technology Transfer programs. Operating across 11 federal agencies, SBIR and STTR represent some of the most impactful federal research financing programs, playing a unique role in enabling small firms to commercialize their research and advance US economic and national security interests.

Perhaps most importantly, as the authors highlight, SBIR and STTR represent models of “mission-oriented innovation.” The programs diverge from the United States’ longstanding tradition of curiosity-driven research by supporting the translation of strategic and critical technologies from the laboratory to real-world applications. This bridge between research and commercialization, commonly referred to as the “valley of death,” is increasingly important as the United States faces growing techno-economic competition from China.

China’s emphasis on translational and applied research in critical advanced technologies has turned it into one of the leaders, if not the outright leader, in a host of diverse technologies and related industries, including electric vehicles, drones, solar panels, and chemicals, among others. (Indeed, China has surpassed America in aggregate expenditures on research and development, based on purchasing power parity, which reflects the prices of specific goods in different countries and is used to compare the absolute purchasing power of the countries’ currencies.) Although the United States cannot and should not aim to directly emulate the innovation strategies of the Chinese Communist Party, it should recognize the importance of translating scientific advances into commercial technologies. SBIR and STTR provide an existing and proven mechanism for doing so.

These programs have demonstrated their ability to turn early-stage research from capital-poor start-ups into meaningful technological and economic outcomes. Since their inception, they have generated over 70,000 patents, produced more than 700 publicly traded companies, supported 12% of all new drug approvals, and helped develop success stories such as Qualcomm and Symantec. SBIR-supported firms historically accounted for about one-quarter of America’s top innovations (as measured by R&D 100 winners). And various National Academies studies have found that commercialization rates from SBIR/STTR Phase II awards range from 40% to 70%, varying by federal agency. The programs’ value also extends beyond simply commercialization, as they help to broaden participation in federal R&D, giving small firms that may otherwise struggle to enter government procurement pipelines access to federal agencies.

Yet Congress’s recent failure to maintain continuous authorization, as the authors note, underscores a fundamental issue. Despite their bipartisan support, the recent lapse in authorization introduces recurring uncertainty for the programs, undermining the long-term planning necessary for innovation at the firm and federal levels. Firms need confidence that a program will exist long enough to support their investment in research and development. Given the critical importance of the SBIR and STTR programs, Congress should act to make them permanent. Doing so would ensure the stability needed to sustain one of the federal government’s most effective mechanisms for translating research into technology that advances US economic and national security interests.

Gail Cohen, Maryann P. Feldman, and Scott Stern conclude that the Small Business Innovation Research and Small Business Technology Transfer programs do not operate identically across the federal government, and that variation is not necessarily a flaw. We agree. From the US Small Business Administration’s coordinating perspective, we would go a step further: The program’s diversity is one of its strengths but also makes cross-agency coordination essential.

We both came to the SBA after managing SBIR/STTR programs at federal science agencies, including the National Institutes of Health and the National Oceanic and Atmospheric Administration. Together, we have 25 years of experience. Combined with the SBA’s government-wide role across 11 participating agencies and nearly 40 components, that experience gives us a perspective difficult to see from any single agency.

The differences among agencies are structural. Each agency operates under its own appropriations, statutory authorities, award systems, financial processes, workforce constraints, and funding instruments. Those differences shape how policies can be implemented. A requirement that is simple for one agency may be unworkable for another. Reform must account for that reality if it is to improve outcomes rather than create new layers of unnecessary compliance.

The same diversity exists among the companies and technologies the programs support. SBIR/STTR serves firms across industries, business models, stages of development, and time horizons. Its goals are broad: advancing innovation, meeting federal research and development needs, attracting new companies to government, and helping promising research reach the marketplace. No single agency will balance those goals in the same way, nor should it.

Where coordination becomes indispensable is in areas that cut across agencies. Four of the five recommendations that Cohen, Feldman, and Stern offer depend on that government-wide perspective. That role has taken on added importance following Congress’s recent reauthorization of SBIR/STTR through 2031, which provides long-term certainty while reinforcing priorities around accountability, national security, broader participation, and measurable results. The SBA’s role extends beyond SBIR/STTR’s traditional Phase I and Phase II framework. We help small businesses enter the federal innovation ecosystem, expand participation, support commercialization and Phase III pathways, train the acquisition workforce, and connect small businesses with customers and regional innovation networks. Recent SBA efforts, including the America’s Seed Fund Summit and cross-agency work to connect innovative small businesses with commercialization opportunities and private capital, reflect that broader role.

The authors are also right to highlight weaknesses in the program’s data infrastructure. The challenge stems partly from SBIR/STTR’s decentralized design. Better connective infrastructure would improve transparency, evaluation, and policy implementation across agencies, but achieving that will require sustained investment. The five-year reauthorization gives the federal government an opportunity to strengthen SBIR/STTR without sacrificing the agency-level flexibility that has made it successful. America’s “seed fund” works because it combines mission-driven flexibility with a shared national purpose. Our task is not to eliminate variation, but to make the system easier to navigate, more transparent, and more effective for the innovators it serves.

Gail Cohen, Maryann Feldman, and Scott Stern provide a great accounting of the Small Business Innovation Research and Small Business Technology Transfer programs. I have spent 25 years helping hundreds of start-ups win these awards. The authors’ coverage of the programs’ value is exactly right. Where I part ways is on several recommendations.

First, permanence. Lapses hurt firms, and Congress’s recent six-month reauthorization gap, which the authors cite, was inexcusable. But the answer is not to remove congressional deadlines. It is to elect a Congress that does its job on time. Reauthorization is the only mechanism that forces lawmakers to look at the program, and nearly every meaningful reform since 1982 arrived attached to a reauthorization bill. Make the programs permanent and the oversight disappears with the deadline. The last thing we need are innovation programs on autopilot that fail to evolve.

Second, transition pathways. Agencies simply fund too many technologies that never had a plausible path to use, and no amount of late-stage training can fix an award that should not have been made. The National Science Foundation is the gold standard. It forces applicants to identify a real customer and a real need before committing any funding. Other agencies should copy this front-end practice rather than build more scaffolding at the back end.

Third, broadening participation. The idea that technologies sit undiscovered because their creators have not heard of the SBIR/STTR programs does not match reality. Innovation clusters tightly around the best research institutions. What I see every time a state or agency launches a broadening participation initiative is large numbers of companies with no realistic chance of winning being convinced they should apply. The diversion of their time and money hurts the very firms the initiative claims to help. The programs exist to fund the best technology the country has, not to distribute funding evenly.

Fourth, and most critically, the authors defend multiple-award winners. There is a difference between a firm with a dozen awards reflecting accumulated capability and a firm with hundreds or thousands. At some point we have to say: If you cannot fund your own research and development by now, you never will. Despite the lip service, the late reauthorization in April 2026 did nothing to stop this. Limiting proposals per topic is not the same as limiting awards per company. Congress should cap lifetime awards per firm. Recommendations three and four would take care of themselves if a handful of companies stopped absorbing an outsized share of the budget.

Finally, an omission. The authors do not mention foreign disclosure, now the largest source of friction at the National Institutes of Health. Fundable applications are being denied based on minimal foreign affiliations, under rules that are vague, inconsistently applied, and unmoored from any statutory definition of risk. NIH is violating the intent, if not the letter, of the law by failing to meaningfully identify the basis for these denials. Nothing in the current process would stop a determined adversary. We will not win a tech race with China by refusing to fund the best technologies. The authors are right that SBIR/STTR should be preserved. The programs need defending from the well-meaning as much as from the hostile.