Venture Capital Wants Back Into Small Business Research Grants

In late April, the House passed an apparently routine bill to reauthorize research grants for small businesses. But the appearance of “small business as usual” was deceiving: The action actually capped a fierce lobbying battle that pitched wealthy venture capitalists’ pet research projects against more modestly funded enterprises in the pursuit of more than $2 billion in federal grant money.

New York Democrat Nydia M. Velazquez, who chairs the House Small Business Committee, sponsored the measure. Should the Senate go along with it, Velzquez’s bill would extend grants and contracts for innovation research and technology transfer through 2010, and in the process allow small businesses backed by venture capital firms to qualify, as long as no single investment firm owned 50 percent or more of a business. Multiple investment firms could collectively own more than half.

Two small-business groups, the American Small Business League and the Small Business Technology Council, charge that Velazquez’s adjustments to grant-funding protocols effectively would bar their members from competing for the annual $2.3 billion of federal outlays in grants and contracts for technology research. Most of the grants come from the Defense Department and the National Institutes of Health.

By Shawn Zeller, CQ Staff

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