Testimony to the Senate Committee on Small Business and Entrepreneurship

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Testimony to the Senate Committee on Small Business and Entrepreneurship

Testimony Date: 
Thursday, April 24, 2014
Congressional Testimony Delivered To: 
Congressional Testimony From: 


Seattle Field Hearing: Small Business Innovation Research Program

Thank you, Chairwoman Cantwell, for convening this hearing and for your outstanding leadership in the Senate to support America's innovators and entrepreneurs. Washington State has been a laboratory for how to create the hi-tech, high-paying jobs of the future. From software to aviation to manufacturing, the Evergreen State is showing the world what 21st century economic leadership looks like. At the SBA, we want to help create more success stories like Seattle.

I appreciate this opportunity to discuss the SBA's work overseeing the Small Business Innovation Research Program and the Small Business Technology Transfer Program. Thank you for your leadership in passing a six-year reauthorization of the SBIR and STTR programs back in 2011. This long-term reauthorization provided certainty and stability for the small business community.

It's no exaggeration to say that SBIR and STTR recipients have changed the world. They've created life-saving drugs, pioneered breakthroughs in cellular technology, and helped launch the human race into the cosmos. In fact, as we sit here today, the Mars rover Curiosity is exploring the planet's surface with systems designed by five different small businesses that received SBIR funds.

These programs are vital, because America's small businesses are leading the way in innovation. By reserving a specific percentage of federal R&D funds for smaller firms, we help level the playing field with larger corporations.

Here in Washington State, over the last decade, more than 1,100 small businesses have received 1,800 grants totaling $629 million. Since the program's inception, Washington small businesses have received more than $1 billion under these two programs to spur innovation.

The mission of the SBIR program is to support scientific excellence and technological innovation by investing federal research funds in small businesses. STTR focuses on partnerships between small businesses and America's premier universities and nonprofit research institutions. It helps ensure that the world's greatest academics and inventors have the resources they need to transform their ideas from the lab to the marketplace.

We are proud of the small business R&D happening through university collaborations. The University of Washington, Washington State University and Gonzaga University all participate. Since 1998, small businesses working with these schools have received more than 250 STTR grants totaling $70 million.

When we invest in innovation, America thrives. According to the Department of Commerce, innovation has been responsible for approximately two-thirds of our country's economic growth since World War II. Small businesses have been a big part of that story.

Across every field of innovation, our agency has awarded 145,000 grants totaling more than $35 billion to America's small businesses. In 2012, these programs put over $2.5 billion directly into the hands of small businesses nationwide. Nearly a quarter of that money was awarded to women-owned, minority-owned, or HUB Zone small businesses. And Madame Chairwoman, we're working to get that number even higher.

SBIR is a program that pays for itself many times over. To give you one example, the company Biogen used early SBIR funding to develop breakthroughs in cancer drugs that have saved and improved the lives of millions of people around the world. This one company alone is worth $69 billion today. In other words, the wealth created by just one SBIR recipient is double what American taxpayers have invested in the program over three decades. Biogen is just one example of a business that went from small to big with SBIR support. We've helped seed innovation-driven companies like Qualcomm and Symantec in their infancy. From 2002 to 2006, about 25 percent of R&D Magazine's top 100 innovations came from companies that had received an SBIR grant at some point in their history.

SBIR and STTR are "win-win." Federal agencies are able to meet their R&D needs. Small businesses get the support they need to turn innovative new ideas into job-creating new businesses. And America strengthens our competitiveness and global economic leadership.

We're excited about the long-term reauthorization. It increased allocations for small businesses as a percent of federal agencies' total external R&D spending. This will drive more money into the hands of the innovators with the greatest potential to commercialize their products and create jobs.

The SBA is now in the final stages of launching a new database that will allow us to centralize federally funded technologies available for commercialization. Using this database, the private sector can easily search SBIR-funded research by industry, technology, and end-use applications, among other things. This will make it much easier for larger private firms to invest in small businesses and support their growth.

As SBA Administrator, I will work closely with our sister agencies to make sure SBIR and STTR are top priorities across the federal government. I will hold agencies responsible for the allocations required by statute. And I will work across the government to improve outreach and awareness of these programs. They are true gems, and we must make sure our small businesses know about these opportunities.

This program has created many success stories in this great state. SBIR helped Hummingbird Scientific in Lacey become a global leader in the design of electron microscopes. They've developed more than a dozen ground-breaking platform designs. Their achievements have helped scientists do amazing work in fields like 3-D mechanical design, complex circuitry and software development.

Hummingbird received SBA's Tibbets Award, our highest honor in the area of high technology. They've received worldwide attention for their products and turned down multiple buyout offers from larger competitors. Today, Hummingbird has grown from a three-person start-up to a company with 25 employees.

Just up the road, SBIR supported Micronics in Redmond. This company patented technology that allows health professionals to perform medical tests on the spot and get results in just minutes, compared to hours in a lab. Micronics was eventually acquired by Sony Corporation of America. This is emblematic of the many M&A capitalizations and venture capital investments that follow early-stage research supported by this program. And Sony has continued to add jobs in Redmond since the acquisition.

Madame Chairwoman, these are just two of the successes made possible by one of the federal government's most powerful and effective programs.

Our work to foster innovation is an important part of SBA's core mission: to ensure that entrepreneurs have access to capital, counseling, and contracting opportunities, as well as disaster assistance in times of emergency. We're also focused on exploring new opportunities to expand our exports, because we know there's global demand for cutting-edge products made here in Seattle's high-tech corridor. Finally, I'm committed to opening new doors for underserved small businesses – those entrepreneurs who happen to be women, minorities, veterans and immigrants. These groups have so much to offer, and a little support from the SBA can go an awful long way in creating the next great American success story.

Thank you for this opportunity to testify. I share your strong commitment to SBIR. And again, I look forward to working to help our hi-tech entrepreneurs create excellent jobs, economic growth, and a better world. I'd be happy to take your questions.