OF MISSOURI

IN THE HOUSE OF REPRESENTATIVES

WEDNESDAY, OCTOBER 8, 2003

Mr. GRAVES. Mr. Speaker, I rise today to urge the Small Business Committee to continue working to restore the eligibility for Small Business Innovation Research (SBIR) grants to venture backed biotechnology start-up companies. Under the SBIR program, a specific percentage of all Federal research and development grant monies are reserved for small business applicants. These funds provide critical ``seed'' money to new business innovators.

However, recent changes in the Small Business Administration's (SBA) interpretation of eligibility standards for SBIR grants now disqualify many start-up biotechnology companies with venture capital backing. Specifically, SBA regulations require that, in order to be eligible for a grant, a small company must be at least 51 percent owned by one or more individuals. Recently, the SBA has interpreted ``individuals'' to mean only natural persons, resulting in the disqualification of companies with venture capital backing from the SBIR program.

Home to a burgeoning biotech industry, Missouri relies on the SBIR program to fund early-stage companies. In addition, venture capital plays a vital role in the financial support of the very companies the SBIR program has been designed to benefit. However, this interpretation will prevent the most innovative small biotech companies in Missouri from participating in SBIR grant programs, resulting in an adverse impact on the industry as well as the economy.