First, the SBIR program is poorly matched to the goals of VC-funded firms. VCs are interested in growing rapidly and "cashing out" as soon a possible. The three year schedule for SBIR projects is far too slow for VCs, and VCs prefer the shoot the "walking wounded" that are not highly successful instead of nurturing them to a moderate success, as we all saw in the last technology bubble. Our company would be dead if we had been VC funded because of the time required to develop our products; with patience, now we are a world-class supplier of accelerometers for industrial and military products. It is likely that only the highly successful SBIR projects meeting VC success criteria would create continuing US jobs.

Second, I believe that VCs would be motivated to set up companies to act as SBIR "proposal mills", with the sole objective of acquiring SBIR contracts without any intention to produce products. The work would be used only to develop, evaluate and patent technology using government funding without any follow-on. Such work has the same commercialization gap present in university research, a gap the SBIR program was originally created to close. Some companies exploited this strategy successfully in the 1980s, and in the early 1990s Congress required Phase III success reports on previous Phase II efforts to be included with subsequent proposals so that this strategy was easily identified.

And third, the megabucks available to VCs would allow them to "buy into" SBIR contracts unfairly, so that the competition would be between small, individually owned companies and VC-owned small companies with the capital of a large company. Such unequal competition is the reason that Congress set up small-business "set-asides". VCs are essentially small-business conglomerates and do not have the same limited resources as independent small businesses.

I believe that the successful SBIR program will be subverted if VCs are allowed to own companies that compete in it.

Any company with 500 employees is not small and should have ample resources to compete. If anything eligibility size in SBIR awards should be reduced not increased. In my opinion VC companies and venture capitalists in general are universally greedy they do not need access to one of the only sources of capital available to a hard working scientist of engineer who happens to have a good idea and can successfully compete under the present SBIR eligibility rules.

The SBIR program is an enabling force in the development of new technologies and fosters competition among the best small technology businesses in America. The SBIR program is a valuable asset to job creation and is an investment in our future. The recent attack by the Venture Capital institutions is threat to this program and, if the Venture Capital community is allowed to prevail, it will undermine the foundations of this valuable and successful program.

The SBIR program intent is to provide entrepreneurs with capital to pursuer high-risk, high-payoff concepts, and make available the resources to assist in the development of these concepts into new technologies and businesses. Venture Capitalists have their own venue to develop funding for promising technology businesses, both large and small.

The funding process and, generally speaking, the business model for SBIR companies differs substantially from the Venture Capital model. It is essential that we insure that the SBIR program does not just simply become another source of money for Venture Capitalists. The SBIR program is just too valuable of a national resource to be consumed by the voracious appetite of the Venture Capital community.