How the Government Helps Software Startups
I, Cringly: How Much is Enough
Cringly is an iconoclast; this is what he does for a living – and, surprisingly enough he is successful at it.
This is from his latest posting. He has been on a road trip, looking at successful high-tech startups outside of Silicon Valley.
Remember these are companies outside Silicon Valley. Most of the companies we visited this summer had never even met a venture capitalist. Most were funded by family and friends. A surprising number relied on government funding, primarily in the form of Small Business Innovation Research (SBIR) grants.
If there’s a role for government in encouraging tech startups, SBIR defines that role. For those unfamiliar with the SBIR program, federal agencies that spend more than $500 million per year on outside research are required to set aside a small percentage (I think it is two percent) of that money for research contracts with small businesses. The two-phase contracts are for $100,000 and $600,000 to develop technologies of interest to the government. But while the government gets use of the technology, they don’t get to own it or even have equity in the developing company, so from an entrepreneurial standpoint this is ideal.
From what I have seen, the SBIR program is modest, yet extremely successful at encouraging innovation. Perhaps it should be expanded.
The Small Business Administration, in his opinion, is of no help.
Read the whole article, it will open your eyes.
I cannot help but compare this to our family business. My father was a strange fellow and developed his own whole wheat mill and bakery business. It was so strange people used to line up to visit and and look at his strange machinery. When his health failed, and he had to retire, no one could take over the business – because only he could run it.
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