As noted above, NWBC is dedicated to encouraging more women to start and grow their businesses in STEM-related industries, which have significantly higher growth potential. Furthermore, part of the Council’s mandate of providing advice and policy recommendations also includes conducting research and sharing important findings with Congress, the White House, the SBA, and the public.
Given these priorities, and as discussed previously, the Council partnered with the SBA’s Office of Investment and Innovation (OII) to commission a study titled
America’s Seed Fund – Women’s Inclusion in Small Business Innovation Research and Small Business Technology Transfer Programs.77
For an overview of this study’s key findings, please refer to the By The Numbers section of this report.
“[T]he SBIR and STTR programs fund a diverse portfolio of startups and small businesses across technology areas and markets to stimulate technological innovation, meet [f]ederal research and development (R&D) needs, and increase commercialization to transition R&D into impact.”78 There are 11 federal agencies that participate in the SBIR/STTR Programs including:
THE DEPARTMENT OF DEFENSE (DOD) • HEALTH AND HUMAN SERVICES (HHS) • DEPARTMENT OF ENERGY (DOE) • NATIONAL SCIENCE FOUNDATION (NSF) • NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) • U.S. DEPARTMENT OF AGRICULTURE (USDA) • DEPARTMENT OF HOMELAND SECURITY (DHS) • DEPARTMENT OF COMMERCE (DOC) • DEPARTMENT OF EDUCATION (DOED) • DEPARTMENT OF TRANSPORTATION (DOT) • ENVIRONMENTAL PROTECTION AGENCY (EPA).
Each agency manages its own programs and distributes its own funds. In Fiscal Year 2018, across the 11 federal agencies, there was $3.6 billion available for the program through grants and contracts that fund R&D. Notably, the program is structured as a two-phase model:
- Phase I provides $50,000 to $250,000 over six months to one year for proof-of-concept work.
- Phase II provides up to $1.5 million for up to two years of further R&D and prototype development.
Data Collection and Targeted Outreach to Women
SBIR and STTR mandated data collection and reporting lacks consistency across participating agencies. Beyond agency culture and mission considerations, the variations in the type of awards managed by the agency—contracts, grants, or a combination thereof—may be another influencing factor impacting data collection efforts. As noted in the study, agencies vary in the funding vehicles used to fund extramural R&D. DoD, DHS, DOT, EPA, and NASA all use contracts. Most other agencies use grants.79
Improving information sharing on data collection and reporting best practices via SBIR.gov would increase agency leadership awareness. Ideally, it would create a greater sense of urgency to ensure full compliance with the SBIR and STTR congressional reporting mandate noted above. However, if certain participating agencies fail to adequately collect and report data on women, it will not be possible to get a complete and accurate picture of WOSB and female principal investigators (PI) participation in these programs. This could be detrimental to the development of sound policy recommendations in future years.
Further, with respect to outreach efforts, the years between 2011 and 2018 are notable. This time frame encompasses “a period of major policy and programmatic changes to the SBIR and STTR programs occurring with the SBIR/STTR Reauthorization Act of 2011. This included an Administrative Funding Pilot Program that allowed agencies to dedicate funding to outreach activities and other initiatives to increase the participation of women and socially or economically disadvantaged individuals.”80
The SBA should work more closely with the 11 SBIR/STTR participating federal agencies to ensure streamlined and more consistent data collection, as well as reporting on women’s inclusion in these programs.
Congress should ensure that the 11 participating federal agencies have adequate resources to hire and retain staff dedicated to implementing innovative outreach strategies to women and other economically disadvantaged groups.
Definition of WOSB for SBIR & STTR Purposes
For SBIR and STTR purposes, a WOSB is defined “as a small business that is ‘at least 51% owned by one or more women, or in the case of any publicly owned business, at least 51% of the stock is owned by women, and women control the management and daily business operations.’” This current definition of a WOSB is too restrictive because it excludes the participation of women who may be co-founders, equal owners, or may have an executive role in which she has decision-making authority and control without having greater than 51% ownership of the company. It differs slightly from the definition used by the SBA for the WOSB federal contracting program.81
Further, it discourages or potentially limits access to capital opportunities for women-owned businesses in STEM. Companies funded through the SBIR and STTR programs are frequently the types of companies that would also take on equity investment through venture capital or other institutional financing vehicles. As such, this definition should be uniform across all SBIR and STTR participating federal agencies.
Specifically for purposes of participation in these programs, the definition should be expanded to allow women- and women minority-owned firms to accept venture capital and equity investments that would constitute more than 50% of the ownership of the firm, while still maintaining ownership and control of the business for purposes of being considered WOSB.
The definition of “women-owned business” for purposes of participation in the SBIR/STTR programs should be expanded to allow women- and women minority-owned firms to accept venture capital and equity investments.
Initial Pitch Phase
As stated in our 2019 policy recommendations, and given the feedback NWBC received regarding the onerous SBIR and STTR application process, the Council continues to recommend that the SBA and other federal agencies explore implementation of an initial pitch phase review. This approach would provide women-owned businesses in STEM (or those just entering STEM fields) with valuable, preliminary feedback on their SBIR and STTR proposals. This would also prospectively encourage more women entrepreneurs to submit proposals.
NSF has made a concerted effort to design their program for startups and first-time applicants. The agency has also removed administrative landmines that would lead to rejection of a proposal for a simple omission or lack of grantsmanship. For instance, in 2019, NSF introduced a short Project Pitch to enable entrepreneurs to submit their idea to NSF with greater ease.82 Entrepreneurs who submit a three-page Project Pitch will know within three weeks if they meet the program’s objectives.
SBIR/STTR participating agencies should consider instituting an initial pitch phase approach as recommended in NWBC’s Fiscal Year 2019 Annual Report.