House Subcommittee Considers Increase of Incentives for Small Business Accelerators
When Foster Care Technologies created an algorithm to match foster children with foster parents, the University of Kansas’ Innovation Park was able to assist the non-profit agency’s creation and management of the Every Child A Priority software platform. Now, this research-backed management system has placed over 25,000 children across the country, said E. LaVerne Epp, executive director of KU Innovation Park.
Innovation Parks’ ability to create, manage and capitalize ECAP was made possible by the Small Business Administration’s Growth Accelerator Fund Competition program, Epp said. She was speaking at Wednesday’s House subcommittee hearing on how to reinvigorate the effectiveness of SBA’s initiatives to help businesses access capital to develop products in their early stages.
The GAFC awards business accelerators and incubators with prizes of $50,000 per project to support, mentor, and guide the commercialization efforts of these startups, especially as these small businesses tend to have a 60% failure rate without proper support.
Federal investment in research and development has decreased to 12% of total federal spending from its peak of 30% in the 1960s, and still is only 2% of the country’s Gross Domestic Product, said Chairwoman Sharice Davids, D-Kan.
“By focusing on expanding innovation to underserved entrepreneurs, Congress can certainly unleash economic potential that has long gone untapped,” she said.
Seeking to fill geographic and demographic innovation gaps in rural communities as well as for women and minorities, the SBA’s Office of Investment and Innovation oversees programs across the nation like the GAFC, and the Regional Innovation Clusters program that fosters specific regional public-private partnership efforts.
The GAFC’s flexibility to support a variety of different projects, which are both scientifically and financially vetted, has eliminated a lot of red tape that would otherwise make the process more cumbersome for entrepreneurs by imposing less restrictions and requiring less reporting, Epp said.
This flexibility – in GAFC, RIC and other SBA programs – allows for “pivoting” the technology as businesses develop their innovative products, said Dr. Gabriel Burks, vice president and head of Research and Development at FrostDefense Envirotech.
“Pivoting for early-stage tech startups frequently equates to success, but funding and resources must be as flexible as the startup environment itself to serve the greatest benefit,” he explained, as “all great ideas require refinement and polishing to become viable solutions for the country.”
While developing technology to assist vineyards with late spring frost, which costs the agricultural industry an annual loss of $10 billion, FrostDefense at first found unfavorable results for their product when conducting some field tests. However, they also found “key factors” that would lead them to a new version that was successful a few months later – without the stricter, red-tape deadlines that usually accompany a federal grant.
“This success will go on to serve as the backbone for our petition for new funding,” Burks added.
Aside from maintaining the programs’ flexibility and funding, to truly recover the U.S. economy, Congress needs to meet the workforce and capital needs of small businesses, said Rep. Dan Meuser, R-Penn.
According to the National Federation of Independent Business’s June 2021 Jobs Report, he pointed out, 46% of small business owners have job openings they cannot fill. This past spring, he continued, 80% of small business owners reported costs of supplies had increased with 20% of those claiming increases of higher than 25%.
“I believe this can be an American decade if we do in fact help unleash the power of American innovators and entrepreneurs, but we cannot do that under the yolk of untargeted unemployment compensation supplements, government mandates that don’t make sense to businesses, higher taxes and runaway inflation,” he charged.
