Photo by Al ghazali on Unsplash

The Small Business Innovation Research (SBIR) grant is a program that agencies can use to encourage scientific excellence and technological innovation through research and development (R&D).

But is it an economically bold enough tool for the Pentagon?

Participants at a roundtable that Defense news hosted in December said ‘No.”

The SBIR is run by the Small Business Administration and requires that federal agencies reserve a certain percentage of their research and development funds for small firms.

SBIR offers three levels of R&D funding for new technologies such as: maximum of $150,000 at Phase I (lasts for 6 months), up to $1 million at Phase II (lasts for 2 years) and Phase III which tests the commercial value of the technology and seeks funding from the private sector.

Trae Stephens, Anduril Industries chairman and a partner at the Silicon Valley venture capital firm Founders Fund said it’s better for the Pentagon to make a few big investments vs many smaller investments. He based his remarks on his experience at a venture capital firm.

He said, “One recommendation that I’ve been trying to push people on is if you think a company is really good, give them $10 million, give them $20 million.”

Steve Bowsher, an executive with In-Q-Tel, a venture capital company, said that investments provided by SIBR would be seen as “a distraction” to a research and development startup. He added that without “recurring funding in the double-digit millions of dollars, it’s not a market.”

It seems that Mike Madsen, the director of strategic engagement at the Defense Innovation Unit is with Stephens that the Pentagon has to provide a “strategic fund of that magnitude to make those bets pay off.”