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Do we really need this? Is there some lack of private venture capital that this is overcoming? As a taxpayer, I'm not cool with this. I would much rather this m

Do we really need this? Is there some lack of private venture capital that this is overcoming? As a taxpayer, I'm not cool with this. I would much rather this money be granted for research that then becomes public domain. Why should our taxes be handed out for risky business endeavors with no direct public benefit, when the private sector already has the means to handle this? "But the government gives tons of handouts to existing companies" isn't a good answer, either. Two wrongs etc.

gnodar 8y ago
> Why should our taxes be handed out for risky business endeavors with no direct public benefit, when the private sector already has the means to handle this. SBIR/STTR money is primarily used for R&D work for high risk technology. The risk being that it might not work, or might not solve the problem you're trying to solve. You don't spend the money on marketing and sales. It's meant for technologies precisely in the stage that the private sector is not good at handling, for similar reasons that the private sector isn't good at funding basic research. This stage is referred to as the funding gap or the valley of death[0][1]. [0] https://www.nap.edu/openbook/18944/xhtml/images/p37.jpg https://www.nap.edu/openbook/18944/xhtml/images/p37.jpg [1] https://nsf.gov/eng/iip/innovation.pdf https://nsf.gov/eng/iip/innovation.pdf
hesdeadjim 8y ago
It’s a hell of a lot better way to spend money than our military industrial complex and tax breaks to wealthy individuals and corporations.
- icedchai 8y ago
  You know that many SBIR grants actually go to the military industrial complex, right? There are 1000's of small-ish government / defense contractors that get some funding through this...
- mruts 8y ago
  Whatabout-ism is very a good line of thought. Moreover, a lot of this money (maybe even most) is going to the military industrial complex.
flaque 8y ago
This provides stable, consistent funding from a relatively unbiased source. Imagine investors got really hesitant and started pulling cash out; the tech industry would collapse. Government grants are a long-running driver of innovation. Plus, many areas of the country have limited access to capital. This helps alleviate that.
- caymanjim 8y ago
  No, the tech industry wouldn't collapse. That's how it works for everyone already. The tiny, tiny number of SBIR grants isn't propping up the industry. And if your business sucks, they should pull the money out. This program is so small that it's not having any real positive impact. It's just a handout.
  - pm90 8y ago
    You're making a lot of random assertions with no basis in research at all. These programs weren't created on a whim. They've been created based on research that funding small businesses ultimately generates more value than the initial investment, which I rely more on your gut feeling (or wherever the fuck you're getting these ridiculous notions from). https://www.govinfo.gov/content/pkg/CHRG-111hhrg48735/pdf/CHRG-111hhrg48735.pdf https://www.govinfo.gov/content/pkg/CHRG-111hhrg48735/pdf/CH...
Alex3917 8y ago
> Why should our taxes be handed out for risky business endeavors with no direct public benefit, when the private sector already has the means to handle this? The private sector's way to handle risky businesses is just to not fund them at all, or else to fund them in exchange for a huge percentage of equity. Both of those result in a net loss for society, so I don't really see how this is something the private sector even addresses let alone well.
pm90 8y ago
> Do we really need this? Is there some lack of private venture capital that this is overcoming? - VC funding is a thing only in SV and a few other cities. Most cities do not have a vibrant ecosystem that is accessible to Small Businesses - VC's only invest in ideas that have both a high likelihood of success and a large payout. SBIR focuses on ideas that have a high likelihood of success without a large payout a.k.a the vast majority of small businesses in America > I would much rather this money be granted for research that then becomes public domain. Y not both? > Why should our taxes be handed out for risky business endeavors with no direct public benefit, when the private sector already has the means to handle this? - its not risky - private VC cannot be relied on to fund certain kinds of businesses. American Bank loans are decidedly low-risk too (and can't be swapped for equity) > "But the government gives tons of handouts to existing companies" isn't a good answer, either. Two wrongs etc. That is not the answer. If that was, I agree it wouldn't be a good one. In general, grants of Capital to small ventures that have good foundations is not a "waste of taxpayer money". The success of those businesses creates jobs, that pay taxes, support the local economy etc. They're a waste only if you think giving grants is literally burning a pile of money, which it is not.
- wallace_f 8y ago
  >is not a "waste of taxpayer money" If the premise is that inefficient markets and long time horizons inhibit investments that provide a net-return, then why does it need continued taxpayer funding?
  - pm90 8y ago
    > If the premise is that inefficient markets and long time horizons inhibit investments that provide a net-return Haven't you answered your own question? Or perhaps I'm not understanding your statement. Inefficient markets and long term horizons _do_ inhibit investments by private sector entities which are more focused on short term plans. This _is_ why it requires taxpayer funding.
    - wallace_f 8y ago
      What I was trying to say was that if those are profitable investments then they will return their principle and even earn a return. So the program would not need continued taxpayer money.
0x00000000 8y ago
>I would much rather this money be granted for research that then becomes public domain That's not how it works though https://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act https://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act Research from publicly funcded universities gets patented then turned around to fuck you and make you pay for it twice all the time
- caymanjim 8y ago
  This falls under two wrongs.
tbenst 8y ago
It’s hard to justify an investment that has both significant market and technical risk as a VC. SBIR is a great mechanism to help fund technical development when companies are too early for investors and too applied for academia.
rkido 8y ago
VC funding is completely inappropriate for early stage startups, and it's a last resort even if you're mature enough. Aside from that, there are entire industries that VCs don't touch until after SBIR, such as life sciences startups, where you're looking at 10 years of R&D and regulatory approval processes before you can launch on the market. That's way too long for VCs. I empathize with your general sentiment, but non-profits and governments exist to fill in gaps that the free market cannot.
vidarh 8y ago
There is a significant public benefit. The very existence of silicon valley is a testament to the effects pouring in government funding can have. That's of course not to say that it always works. But such funding is also quite low risk for governments: even when the funded companies fail it serves to build talent pools, and a substantial proportion of every dollar comes back to the government in taxes because they get spent on things like salaries, and the remainder gets spent on products and services where a further proportion ends up paid in tax. And when they succeed, the economic activity has a massive ongoing value both in taxes, reductions in benefits payments due to increased overall employment and indirect economic boosts (the successful companies increase other economic activity by buying products and services). It's not either/or - there are many types of projects that are not suitable for VC funding for various reasons that can still have long term beneficial effects to society.
Fomite 8y ago
Do we really need this? - This is a major way that academic discoveries get moved into the private sector and into the commercial space. And, in my mind, one of the least harmful ones when compared to corporate funding of research directly or corporations just outright buying faculty-run startups. Is there some lack of private venture capital that this is overcoming? - VC has some very specific requirements, and often has some expectations that many of the things funded through SBIR won't meet. VC money is not the be-all, end-all of small business finance. I would much rather this money be granted for research that then becomes public domain. - A bunch of my research is in the public domain. But there's a leap from basic (or even highly applied) research to an actually commercially available product in the world.

gnodar 8y ago

> Why should our taxes be handed out for risky business endeavors with no direct public benefit, when the private sector already has the means to handle this. SBIR/STTR money is primarily used for R&D work for high risk technology. The risk being that it might not work, or might not solve the problem you're trying to solve. You don't spend the money on marketing and sales. It's meant for technologies precisely in the stage that the private sector is not good at handling, for similar reasons that the private sector isn't good at funding basic research. This stage is referred to as the funding gap or the valley of death[0][1]. [0] https://www.nap.edu/openbook/18944/xhtml/images/p37.jpg https://www.nap.edu/openbook/18944/xhtml/images/p37.jpg [1] https://nsf.gov/eng/iip/innovation.pdf https://nsf.gov/eng/iip/innovation.pdf

hesdeadjim 8y ago

It’s a hell of a lot better way to spend money than our military industrial complex and tax breaks to wealthy individuals and corporations.

icedchai 8y ago
You know that many SBIR grants actually go to the military industrial complex, right? There are 1000's of small-ish government / defense contractors that get some funding through this...
mruts 8y ago
Whatabout-ism is very a good line of thought. Moreover, a lot of this money (maybe even most) is going to the military industrial complex.

flaque 8y ago

This provides stable, consistent funding from a relatively unbiased source. Imagine investors got really hesitant and started pulling cash out; the tech industry would collapse. Government grants are a long-running driver of innovation. Plus, many areas of the country have limited access to capital. This helps alleviate that.

caymanjim 8y ago
No, the tech industry wouldn't collapse. That's how it works for everyone already. The tiny, tiny number of SBIR grants isn't propping up the industry. And if your business sucks, they should pull the money out. This program is so small that it's not having any real positive impact. It's just a handout.
- pm90 8y ago
  You're making a lot of random assertions with no basis in research at all. These programs weren't created on a whim. They've been created based on research that funding small businesses ultimately generates more value than the initial investment, which I rely more on your gut feeling (or wherever the fuck you're getting these ridiculous notions from). https://www.govinfo.gov/content/pkg/CHRG-111hhrg48735/pdf/CHRG-111hhrg48735.pdf https://www.govinfo.gov/content/pkg/CHRG-111hhrg48735/pdf/CH...

Alex3917 8y ago

> Why should our taxes be handed out for risky business endeavors with no direct public benefit, when the private sector already has the means to handle this? The private sector's way to handle risky businesses is just to not fund them at all, or else to fund them in exchange for a huge percentage of equity. Both of those result in a net loss for society, so I don't really see how this is something the private sector even addresses let alone well.

pm90 8y ago

> Do we really need this? Is there some lack of private venture capital that this is overcoming? - VC funding is a thing only in SV and a few other cities. Most cities do not have a vibrant ecosystem that is accessible to Small Businesses - VC's only invest in ideas that have both a high likelihood of success and a large payout. SBIR focuses on ideas that have a high likelihood of success without a large payout a.k.a the vast majority of small businesses in America > I would much rather this money be granted for research that then becomes public domain. Y not both? > Why should our taxes be handed out for risky business endeavors with no direct public benefit, when the private sector already has the means to handle this? - its not risky - private VC cannot be relied on to fund certain kinds of businesses. American Bank loans are decidedly low-risk too (and can't be swapped for equity) > "But the government gives tons of handouts to existing companies" isn't a good answer, either. Two wrongs etc. That is not the answer. If that was, I agree it wouldn't be a good one. In general, grants of Capital to small ventures that have good foundations is not a "waste of taxpayer money". The success of those businesses creates jobs, that pay taxes, support the local economy etc. They're a waste only if you think giving grants is literally burning a pile of money, which it is not.

wallace_f 8y ago
>is not a "waste of taxpayer money" If the premise is that inefficient markets and long time horizons inhibit investments that provide a net-return, then why does it need continued taxpayer funding?
- pm90 8y ago
  > If the premise is that inefficient markets and long time horizons inhibit investments that provide a net-return Haven't you answered your own question? Or perhaps I'm not understanding your statement. Inefficient markets and long term horizons _do_ inhibit investments by private sector entities which are more focused on short term plans. This _is_ why it requires taxpayer funding.
  - wallace_f 8y ago
    What I was trying to say was that if those are profitable investments then they will return their principle and even earn a return. So the program would not need continued taxpayer money.

0x00000000 8y ago

>I would much rather this money be granted for research that then becomes public domain That's not how it works though https://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act https://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act Research from publicly funcded universities gets patented then turned around to fuck you and make you pay for it twice all the time

caymanjim 8y ago
This falls under two wrongs.

tbenst 8y ago

It’s hard to justify an investment that has both significant market and technical risk as a VC. SBIR is a great mechanism to help fund technical development when companies are too early for investors and too applied for academia.

rkido 8y ago

VC funding is completely inappropriate for early stage startups, and it's a last resort even if you're mature enough. Aside from that, there are entire industries that VCs don't touch until after SBIR, such as life sciences startups, where you're looking at 10 years of R&D and regulatory approval processes before you can launch on the market. That's way too long for VCs. I empathize with your general sentiment, but non-profits and governments exist to fill in gaps that the free market cannot.

vidarh 8y ago

There is a significant public benefit. The very existence of silicon valley is a testament to the effects pouring in government funding can have. That's of course not to say that it always works. But such funding is also quite low risk for governments: even when the funded companies fail it serves to build talent pools, and a substantial proportion of every dollar comes back to the government in taxes because they get spent on things like salaries, and the remainder gets spent on products and services where a further proportion ends up paid in tax. And when they succeed, the economic activity has a massive ongoing value both in taxes, reductions in benefits payments due to increased overall employment and indirect economic boosts (the successful companies increase other economic activity by buying products and services). It's not either/or - there are many types of projects that are not suitable for VC funding for various reasons that can still have long term beneficial effects to society.

Fomite 8y ago

Do we really need this? - This is a major way that academic discoveries get moved into the private sector and into the commercial space. And, in my mind, one of the least harmful ones when compared to corporate funding of research directly or corporations just outright buying faculty-run startups. Is there some lack of private venture capital that this is overcoming? - VC has some very specific requirements, and often has some expectations that many of the things funded through SBIR won't meet. VC money is not the be-all, end-all of small business finance. I would much rather this money be granted for research that then becomes public domain. - A bunch of my research is in the public domain. But there's a leap from basic (or even highly applied) research to an actually commercially available product in the world.