Congress may stop some start-up funds


Bill Radke: Congress faces a deadline next week to keep government R&D money flowing to small businesses. And there is a battle brewing over whether any of that funding should go to firms backed by venture capitalists -- those powerful wheeler-dealers of the high-tech economy. From the Entrepreneurship Desk at Oregon Public Broadcasting, Mitchell Hartman reports.

Mitchell Hartman: The Small Business Innovation Research program sets aside $2 billion a year for everything from robotics to weapons research. Until now, only "independently-owned" small firms could qualify. The House bill would let in companies that have significant venture capital funding or are even controlled by VCs.

Mark Heesen: Just because you get venture financing doesn't mean you're rolling in the money.

Mark Heesen heads the National Venture Capital Association. He says start-ups often can't make it without VC money, but that shouldn't cut them off from government R&D.

Lloyd Chapman of the American Small Business League disagrees. He says small businesses face enough challenges already.

Llyod Chapman: I don't think we need a federal law that changes the definition of a small business to include firms that are actually owned by not only some of the nation's wealthiest investors, but potentially some of the largest VC firms.

A Senate bill maintains most current restrictions. If the chambers can't compromise, they'll probably extend the program as-is into the fall.

I'm Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.
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