[House Hearing, 117 Congress] [From the U.S. Government Publishing Office] OVERVIEW OF THE SMALL BUSINESS INNOVATION RESEARCH AND SMALL BUSINESS TECHNOLOGY TRANSFER PROGRAMS ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTEENTH CONGRESS FIRST SESSION __________ HEARING HELD MAY 13, 2021 __________ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 117-012 Available via the GPO Website: www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 44-564 WASHINGTON : 2021 ----------------------------------------------------------------------------------- HOUSE COMMITTEE ON SMALL BUSINESS NYDIA VELAZQUEZ, New York, Chairwoman JARED GOLDEN, Maine JASON CROW, Colorado SHARICE DAVIDS, Kansas KWEISI MFUME, Maryland DEAN PHILLIPS, Minnesota MARIE NEWMAN, Illinois CAROLYN BOURDEAUX, Georgia TROY CARTER, Louisiana JUDY CHU, California DWIGHT EVANS, Pennsylvania ANTONIO DELGADO, New York CHRISSY HOULAHAN, Pennsylvania ANDY KIM, New Jersey ANGIE CRAIG, Minnesota BLAINE LUETKEMEYER, Missouri, Ranking Member ROGER WILLIAMS, Texas JIM HAGEDORN, Minnesota PETE STAUBER, Minnesota DAN MEUSER, Pennsylvania CLAUDIA TENNEY, New York ANDREW GARBARINO, New York YOUNG KIM, California BETH VAN DUYNE, Texas BYRON DONALDS, Florida MARIA SALAZAR, Florida SCOTT FITZGERALD, Wisconsin Melissa Jung, Majority Staff Director Ellen Harrington, Majority Deputy Staff Director David Planning, Staff Director C O N T E N T S OPENING STATEMENTS Hon. Nydia Velazquez............................................. 1 Hon. Blaine Luetkemeyer.......................................... 3 WITNESSES Dr. Joyce Tung, Vice President of Research, 23andMe, Inc., Sunnyvale, CA.................................................. 5 Ms. Pat Keady, Founder, CEO, and President, Aerosol Devices Inc., Fort Collins, CO............................................... 6 Ms. Rebecca Todd, Innovation Consultant, Arkansas Small Business and Technology Development Center, Little Rock, AR............. 8 Mr. Jere Glover, Executive Director, Small Business Technology Council, Washington, DC........................................ 9 APPENDIX Prepared Statements: Dr. Joyce Tung, Vice President of Research, 23andMe, Inc., Sunnyvale, CA.............................................. 34 Ms. Pat Keady, Founder, CEO, and President, Aerosol Devices Inc., Fort Collins, CO..................................... 43 Ms. Rebecca Todd, Innovation Consultant, Arkansas Small Business and Technology Development Center, Little Rock, AR 45 Mr. Jere Glover, Executive Director, Small Business Technology Council, Washington, DC......................... 55 Questions and Answers for the Record: Question from Hon. Leutkemeyer to Mr. Jere Glover and Response by Mr. Jere Glover................................ 84 Question from Hon. Williams to Mr. Jere Glover and Response by Mr. Jere Glover......................................... 85 Question from Hon. Davids to Mr. Jere Glover and Response by Mr. Jere Glover............................................ 86 Question from Hon. Meuser to Mr. Jere Glover and Response by Mr. Jere Glover............................................ 87 Question from Hon. Newman to Mr. Jere Glover and Response by Mr. Jere Glover............................................ 88 Additional Material for the Record: New England Innovation Alliance (NEIA)....................... 89 OVERVIEW OF THE SMALL BUSINESS INNOVATION RESEARCH AND SMALL BUSINESS TECHNOLOGY TRANSFER PROGRAMS ---------- THURSDAY, MAY 13, 2021 House of Representatives, Committee on Small Business Washington, DC. The Committee met, pursuant to call, at 11:00 a.m., in Room 2360, Rayburn House Office Building, Hon. Nydia Velazquez [chairwoman of the Committee] presiding. Present: Representatives Velazquez, Crow, Davids, Mfume, Phillips, Newman, Bourdeaux, Delgado, Houlahan, Mr. Kim of New Jersey, Craig, Luetkemeyer, Williams, Stauber, Meuser, Tenney, Garbarino, Ms. Young Kim of California, Van Duyne, Salazar, and Fitzerald. Also Present: Representative Schneider. Chairwoman VELAZQUEZ. Good morning. I call this hearing to order. Without objection, the Chair is authorized to declare a recess at any time. Let me begin by saying that standing House and Committee rules and practice will continue to apply during hybrid proceedings. All Members are reminded that they are expected to adhere to these standing rules including decorum. House regulations require Members to be visible through a video connection throughout the proceeding, so please keep your cameras on. Also, please remember to remain muted until you are recognized to minimize background noise. If you participate in another proceeding, please exit this one and log back in later. In the event a Member encounters technical issues that prevent them from being recognized for their questioning, I will move to the next available Member of the same party and I will recognize that Member at the next appropriate time slot provided they have returned to the proceeding. For those Members physically present in the Committee room today, we will also be following the health and safety guidelines issued by the attending physician. That includes social distancing and especially the use of masks. Members and staff are expected to wear masks while in the hearing. With that said, Members will be allowed to briefly remove their masks when recognized by the Chair for their statement and questions. Otherwise, masks are expected to remain in place. I thank you in advance for your commitment for a safe environment for all here today. During my tenure on this Committee, I have seen countless examples of how small businesses drive innovation. Technology has changed rapidly over the years thanks to pioneering entrepreneurs leading the way. Congress has facilitated this innovation through investments in federally funded research and development, also known as R&D. As a result, federally funded R&D has produced countless inventions and discoveries that have changed our country for the better. From Doppler radar to computers to the first wind energy turbines, government-funded research has a rich legacy of helping launch ground-breaking inventions. For innovative small businesses, it can often be a struggle to access early funding critical to building a new product. To reduce risks of investment in small businesses and encourage entrepreneurs to commercialize federal R&D innovations, SBA launched the Small Business Innovation Research (SBIR) program in 1982. Ten years later, the agency launched the Small Business Technology Transfer (STTR) program to stimulate partnerships between small businesses and nonprofit research institutions. These programs are funded through federal set-asides of government agencies, and development funds. SBIR and STTR have an impact on small businesses across a variety of different sectors every year. In FISCAL YEAR 2020, agencies contributed $454 million for 1,030 awards to 744 small businesses. Not only do these figures represent an investment in our nation's small firms, but they are also funding our country's future. Over the course of the last 3 decades, SBIR/STTR have funded small businesses that are now economic powerhouses. The programs provided companies like 23andMe, Qualcomm, Semantic, and Da Vinci Surgical Systems with the early funding they needed to develop new technologies and build their enterprises into what they are today. These programs also have the potential to address persistent barriers that hold back women and people of color operating in the STEM fields. Minorities often have a harder time accessing seed capital to pursue the creation of new technologies and this program helps bridge that gap. Women hold less than 20 percent of U.S. tech jobs and only 5 percent are in leadership positions at technology companies. According to a recent survey by Pugh Research, Asian Americans hold 13 percent of STEM jobs while African Americans hold 9 percent and Latinos hold 8 percent. These numbers are staggering and show we have a long way to go. And I may add, increasing the number of women and minorities who participate in the SBIR/STTR program is a top priority of mine. Today, our country is at a crossroads when it comes to our innovative capacity, just as we were when Congress created SBIR/STTR. In the latest Bloomberg Innovation Index, the United States dropped out of the top 10 entirely. Regaining our footing as one of the world's most innovative nations should be a bipartisan goal. If we are to accomplish it, it is vital that we utilize the power of small businesses. I hope that today's discussion sheds light on the importance of small business innovation, and I look forward to working with my colleagues to improve these critical programs. I now yield to the Ranking Member for his opening statement, Mr. Luetkemeyer. Mr. LUETKEMEYER. Thank you, Madam Chair. And good morning to all. I thank all of you for being here as we examine the Small Business Innovation Research and Small Business Technology Transfer or SBIR and STTR programs. Innovation is the engine that drives our economy. Technological breakthroughs and the entrepreneurship it spurs build our economy and creates new jobs by finding state-of-the-art solutions to difficult problems and capitalizing on those new products. This correlation is particularly important in the small business arena. Small businesses tend to be more nimble, responding to the market changes more rapidly than their bigger counterparts. They drive the innovation sector and make us more agile in the world economy. In this area of globalization, making it easier for small businesses to develop and commercialize new, innovative products is essential not only for America's competitiveness but for its national security as well. This is why programs like SBIR/STTR are very important. These programs, envied and emulated around the world, were created based on the premise that small technology-based firms tend to be highly innovative and inventive and that this innovation should be better harnessed by the Federal Government. Binding these new developed technologies with other Federal R&D efforts was seen as a natural extension to both boost small business participation in Federal R&D activities and to solve agency institutional problems, whether at the Department of Defense, National Institutes of Health, or Department of Energy. All too often, good ideas never materialize because of a myriad of obstacles. It can be lack of funding, lack of understanding, or perceived lack of a marketplace for the truly new and amazing technology. The SBIR and STTR programs bridge the gap between the fantastical and the practical, while building our economy and improving the function of the Federal Government in the process. The small businesses that participate in these programs are rapidly pushing the boundaries of what is possible in a variety of fields. From supporting our warfighters, to battling cancer and COVID, the SBIR and STTR programs are emboldening our small firms to contribute mightily to the fight. Current authorization for these programs is set to expire at the end of the next fiscal year. Getting a jump on this process is essential and I am very happy the Chairwoman worked with me to schedule this hearing and discuss our normal mutual problem here. Thank you very much, Madam Chair. Today, we have an excellent panel of witnesses to discuss these programs and provide the Committee with suggestions to make them better for small businesses and participating agencies alike. I am looking forward to the hearing, hearing those ideas, and working with my colleagues across the aisle and across the capital to draft legislation we will all be proud of and support. With that, Madam Chair, I yield back. Thank you very much. Chairwoman VELAZQUEZ. Thank you, Mr. Luetkemeyer. The gentleman yields back. I would like to take a moment to explain how this hearing will proceed. Each witness will have 5 minutes to provide a statement and each Committee Member will have 5 minutes for questions. Please ensure that your microphone is on when you begin speaking and that you return to mute when finished. With that, I would like to introduce our first witness. Our first witness is Dr. Joyce Tung, the Vice President of research for 23andMe in Sunnydale, California. Now considered a startup unicorn worth approximately $4 billion, 23andMe received its first SBIR grant from the National Institute of Health in 2020. She joined 23andMe in 2007 and leads the research team which is responsible for consumer health and ancestry R&D, academic and industry collaborations, and new research strategies. She earned her Ph.D. in genetics from the University of California, San Francisco, where she was a National Science Foundation graduate research fellow. Welcome Dr. Tung. Our second witness is Ms. Pat Keady, cofounder, CEO, and President of Aerosol Devices, Inc., in Fort Collins, Colorado. She is the past President of the American Association for Aerosol Research. Ms. Keady received her Master of Science degree in Mechanical Engineering from the University of Minnesota and holds two patents from Aerosol Instrumentation with three more pending. Earlier this month, she was awarded a Businesswoman of the Year award by CEO Today. Congratulations and thank you for joining us, Ms. Keady. Our third witness is Ms. Rebecca Todd, the Innovation Consultant for the Arkansas Small Business and Technology Development Center located in Little Rock, Arkansas. Ms. Todd assists technology-based small businesses and university researchers throughout Arkansas with navigating federal funding opportunities within the SBIR and STTR programs that support innovation with high commercial potential. She leads SBIR/STTR training events and has strong working relationships with agency program managers and state funding organizations. Welcome, Ms. Todd. Now I yield to the Ranking Member to introduce our final witness. Mr. LUETKEMEYER. Thank you, Madam Chair. Jerry Glover serves as executive director of the Small Business Technology Council, SBTC, a trade association of small, high-tech companies, most of whom are highly involved in the SBIR program. Through the laws existence, she has been one of its most active supporters. Mr. Glover has a unique blend of private and public sector experience. A former CEO and attorney in private practice, he has testified before Congress over 30 times and appeared in over 100 agency proceedings, including rulemakings, adjudications, enforcement proceedings predominantly within the SBIR and STTR programs. He probably knows or would be able to know what our questions are before we even ask him, Madam Chair. He obtained his undergraduate law degrees from the University of Memphis and a LLM in administrative law and economic regulation from George Washington University. Mr. Glover, we welcome your participation in today's hearing and look forward to your testimony. I yield back. Chairwoman VELAZQUEZ. Thank you, Ranking Member. He yields back. Dr. Tung, you are now recognized for 5 minutes. STATEMENTS OF DR. JOYCE TUNG, VICE PRESIDENT OF RESEARCH, 23ANDME, INC.; PAT KEADY, FOUNDER, CEO, AND PRESIDENT, AEROSOL DEVICES INC.; REBECCA TODD, INNOVATION CONSULTANT, ARKANSAS SMALL BUSINESS AND TECHNOLOGY DEVELOPMENT CENTER; JERE GLOVER, EXECUTIVE DIRECTOR, SMALL BUSINESS TECHNOLOGY COUNCIL STATEMENT OF JOYCE TUNG Ms. TUNG. Chairwoman Velazquez, Ranking Member Luetkemeyer, and other members of the Committee, thank you for the opportunity to testify at today's hearing and share our experience with the Small Business Innovation Research Program. 23andMe is a leading consumer genetics and research company. Founded in 2006, based exclusively in the U.S. with offices in California and testing performed in North Carolina, the company's mission is to help people access, understand, and benefit from the human genome. 23andMe has pioneered direct access to genetic information as the only company with multiple FDA clearance for over-the-counter genetic health information and has created the world's largest crowdsourced platform for genetic research. In 2010, the year of our first grant application, we had fewer than 50 employees and minimal revenue from our direct-to- consumer genetics product. The business also had a goal to accelerate scientific discovery by developing a highly scalable, consumer centric research platform. This platform needed a significant amount of investment in order to develop the infrastructure, breadth, and size needed to make it a scientifically valuable asset that would meaningfully benefit the company. Because we were a small business and because our mission was aligned with the mission of the National Institutes of Health, we decided to apply to the SBIR program. Over approximately 8 years, 23adMe applied for 10 SBIR grants and received eight. Reflecting back on our participation in the SBIR program, we believe that we saw four main benefits. First, our SBIR funded work helped us establish our scientific credibility. In total, the work funded by our SBIR grant produced at least 32 scientific presentations and publications. This credibility allowed us to realize the second benefit which was the development of a commercially viable research platform. By 2014, paid research partnerships with industry partners made an important contribution to the company's revenue. The growth and development of the research platform also enabled the establishment in 2015 of the Therapeutics development program at 23andMe. Third, our SBIR grants helped us to make a substantial contribution to the scientific community. The scientific publications mentioned previously shared genetic insights on conditions ranging from asthma and allergy to Parkinson's disease. More than half of those publications were written in collaboration with academic researchers at no cost to them. We have also used SBIR funding to improve the ethnic diversity of data in a protected NIH data repository for use by other researchers. Lastly, the SBIR program has helped us develop our early career scientists. The exercise of applying for and executing a grant builds very useful skills for the investigator which benefits not only the individual but also the company. The main challenge we experienced was the administrative overhead of running the grant, specifically, the challenge of adequately meeting the accounting requirements. The accounting system requirements, which include time tracking on an hourly basis and audit preparation were very intimidating, and even with help from our finance department, the team spent multiple hours every week on time tracking. Given the cost of setting up the accounting program, having a singular small grant was not really worth the effort. Thus, the dollar limit to the awards was also a disincentive to applying. Based on this experience, we have three recommendations. The first is to reduce the administrative overhead for time tracking and creating an accounting system. The second is to consider increasing the max award. Given the cost of setting themselves up to administer an SBIR award, some small businesses may be more motivated to apply for the program if the potential reward were greater. Lastly, we recommend continuing to fund venture-backed companies. In our early days as a venture-backed company, most investors were interested in the development of our consumer product rather than the research platform and there was skepticism about our value as a research partner. Without SBIR support, it would have been more difficult for us to build our program. We see venture funding and SBIR funding as complementary resources to drive higher risk, higher award, technology innovation, and commercialization. SBIR grants supported our scientific innovation at a time when we lacked the track record and credibility to get significant funding from other sources for our research and development work. We believe research in industry, particularly in small startups, will play an increasingly important role in innovation and that the SBIR program can play a key role in nurturing that innovation. Though we are now too large to be eligible for SBIR grants, we appreciate the opportunity to express our support for this important program. Thank you. Chairwoman VELAZQUEZ. Thank you, Dr. Tung. Now we recognize Ms. Keady for 5 minutes. Welcome. STATEMENT OF PAT KEADY Ms. KEADY. I would like to thank Chairwoman Velazquez, Ranking Member Mr. Luetkemeyer, and the entire Committee on Small Business for inviting me to testify. My name is Pat Keady. I am CEO and president of Aerosol Devices, Inc., a small woman-owned business incorporated in 2014 in the state of Colorado. We develop advanced sampling and measurement instruments sold primarily to scientists studying the chemical and biological properties of airborne particles. Our method of gently collecting aerosolized viruses, including SARS-COV2, is considered by leading scientists to be the best approach for determining whether airborne viruses present, as well as the infectivity or viability of such viruses. In 2020, we had revenue of $2.17 million, approximately half in product sales and half in grants. We have 11 employees, including nine with science and engineering degrees. We have been named by Biz West Magazine as one of the 50 fastest growing private businesses in Northern Colorado 2 years in a row, ranking number one in our size class in 2019. Most people recognize that starting a company is no easy task and often requires significant financial resources. This is especially true when developing a physical product that requires design, prototypes, testing, patents, regulatory approvals, tooling, and inventory. Having a good idea for a product that customers will buy is essential but is certainly not sufficient for achieving economic success. Ninety-six percent of the startup funding for our company came from the personal assets of the two cofounders, including myself. Our startup capital totaled $587,000. This amount covered the commercial development of our first product but was insufficient for product refinement, global marketing, or continuing new product research and development. This is the point in our company history where the SBIR/ STTR program came in with necessary financial assistance. Since our first NSF STTR phase one grant was awarded in 2017, we have been awarded six phase one, three phase two, and two subawards for a total of $4.68 million. Nearly half of our grants were awarded in just the past 12 months to address the COVID pandemic threat and to provide early warning of a bioterrorist attack. With an NSF grant awarded 1 year ago, we fast tracked development of a compact, easy-to-use virus sampler that was launched into the market last week. COVID-focused developments can also be used for measurement of other respiratory pathogens, such as seasonal influenza and tuberculosis. Our grant funding has come from five different Federal agencies demonstrating the versatility that our platform technology has for addressing a wide variety of industry and societal needs. Approximately half of the funding is a passthrough to our university and industry collaborators. We have partnered with five public universities and three companies, two of which are also small private businesses. The university collaborations support graduate students and help to build our Nation's intellectual capital. Other products at least partially funded by the grants include three patent applications, two publications and journals, and dozens of conference presentations. Our primary interest lies in developing commercial products, not simply doing cool research projects. We look forward to the day when we can fund our own internal research and development without government support. Writing grant proposals and the reporting requirements and managing the projects is a considerable effort for a small company. A weakness in the SBIR/STTR model is that there is no true funding to launch a product, what is called commercialization. Because of the shortfall, we are actively seeking an outside investor. But bringing on an investor has its own set of complications and is not the right path for all businesses. Until we reach that critical revenue milestone where we can truly self-fund, we are grateful for the financial assistance of the SBIR/STTR programs. Our goal is to offer an increasing number of good-paying jobs and sell quality products to customers around the world. We aim to provide an exceptional return on the taxpayer investment. The SBIR/STTR grants have been a lifeline for our small, early stage company. I strongly encourage Congress to continue and strengthen this vital program that provides essential funding for America's entrepreneurs and helps de-risk technology for potential investors. Thank you. I look forward to your questions. Chairwoman VELAZQUEZ. Thank you, Ms. Keady. Ms. Todd, you are now recognized for 5 minutes. STATEMENT OF REBECCA TODD Ms. TODD. Good morning. My name is Rebecca Todd, innovation specialist at the Arkansas Small Business and Technology Development Center (ASBTDC) based at the University of Arkansas at Little Rock. I am proud to be here to share some success that the Federal and State Technology (FAST) program has brought to innovative Arkansas businesses. Hopefully, too, I can share some insight on how I believe Congress could and should expand the success of the FAST program. The ASBTDC has competed for and successfully performed on FAST grants, averaging 125,000 for 1-year projects that are matched by the University of Arkansas at Little Rock and the state in 2010. This program has made an important impact on our ability to provide the statewide average about the SBIR/STTR program and related ASBTDC services. From 2016 to 2020, ASBTDC assisted mentees with winning 52 SBIR/STTR awards totaling more than $23 million. The mentees that we served through our FAST project are often too early stage to attract private investment but as the largest source of nondiluted funding for early stage research based companies, the SBIR/STTR program critical to helping them successfully develop and commercialize new products and services. We continue to see sustained growth in our mentees' success, both in number of SBIR/STTR proposal submissions, and more importantly, awards. Since our 2010 opening FAST project, ASBTDC has seen a 467 percent increase in total number of SBIR/ STTR awards for our mentee clients. Our participation in the programs has positioned us as the state's leading resource in providing SBIR/STTR proposal development services. As a rural state, Arkansas has many areas that are underserved. They lack the awareness of funding opportunities available through the SBIR/STTR program. Our staff routinely travel the state and utilize data conferencing to offer formal and informal educational outreach specific to the SBIR/STTR program and related ASBTDC service offerings. As a result of this outreach, two faculty members of this program engaged our services to submit SBIR applications to the U.S. Department of Agriculture. ASBTDC has used its participation in the FAST program to reach strong statewide partners over the last decade. Referrals from these partners and through mentees learn of our centers SBIR/STTR services and expand the research of our program. Mentees are often inspired by success stories. Women leaders in innovation often serve as speakers at our training events and their SBIR/STTR successes are featured in our Lab Launch newsletter. For example, GSS Group, woman-owned horticulture company, GSS Group won USDA SBIR phase one awards on their first try after engaging our center services. This company's CEO has been a strong champion for our center, leading to a number of new mentee referrals from other AgTech companies. This success story in our Lab Launch newsletter and in our YouTube SBIR success stories video have attracted attention of other women researchers across the state. As the number of programs grows in Arkansas, particularly at the university level, it has become increasingly important that ASBTDC grow capacity to actively serve potential mentee base. In essence, the FAST program has enabled us to establish a network of support for small business innovation and provide access for all small businesses that would not have existed without the support of the FAST program. While the funds supporting our efforts have been limited, ASBTDC has still managed to help mentees, especially with SBIR and FAST projects. We believe other underserved areas should have the ability to access the FAST program funds to increase SBIR programmatic outreach and services to their populations. The FAST program [inaudible] greater value for grant participants if the amount of the grants was expanded. This would support programmatic offers. If the FAST grant was extended to 3 years per project, it would allow FAST awardees, like ASBTDC to expand efforts, dedicate more time to existing and new programmatic offerings. The more that FAST awardees like ASBTDC can cultivate SBIR/ STTR success for small businesses across the country, the greater the economic payoff in terms of growth and the number of new innovative companies, high-tech, high-paying jobs that will attract more students willing to go to universities and new solutions for technological challenge areas. For every state that participates in FAST, as word continues to spread about Arkansas's success in growing innovative companies and jobs around a founder's scientific passions, the motivation for companies to participate in the SBIR/STTR program will continue to grow all across our state. This has been a successful model for Arkansas, and we believe that it can and should be replicated. Chairwoman VELAZQUEZ. Thank you, Ms. Todd. Now we recognize Mr. Glover for 5 minutes. STATEMENT OF JERE GLOVER Mr. GLOVER. Good morning. I am Jere Glover, executive director of the Small Business Technology Council of the National Small Business Association. I had the privilege 40 years ago of testifying before Congress in support of the SBIR legislation. At that time, the U.S. was the world leader, worldwide leader in innovation. We dominated the technology capital world. We had the best education system and the strongest patent system in the world, America's small business, the most innovative sector of the economy and a wellspring of entrepreneurial energy but received only 5 percent of Federal R&D funding. Today, about half of venture capital investments are made overseas. Eighty percent of all venture capital seed investments, early stage investments go into just four industries and to a limited number of states. Our patent system is severely weakened and small business still receives a very small portion of the Federal R&D dollars. Small business, with the help of the SBIR program, is still the most innovative sector in the U.S. The SBIR program provides seed corn for innovation combining private enterprise with American ingenuity to enable innovations and Federal R&D funding while building on the new products and new businesses. When it comes to worldwide competition, the United States, as the Chairwoman has pointed out, has dropped from first to 11th, not even the top 10. Basically, China is simply eating our lunch. The Beijing Institute of Collaborative Innovation has funded 150 U.S. universities' technologies. One hundred eight of those they have commercialized. They have a venture fund now to develop these U.S. technologies of $616 million. Europe, the European Union is funding 20 percent of its R&D to small business. That is at least twice what the U.S. does. France has created a $13 billion disruptive technology fund. The one important thing to remember about the SBIR from an international competition point of view, it is the only U.S. program that requires funding to U.S. companies owned by U.S. citizens and the work be done in America. The SBIR program is working and working well. After 20 National Academy of Sciences study, four economic impact studies that look over half of the SBIR phase two awards, we can clearly say that it is an engine that drives innovation in America. The return on investment for the STTR/SBIR firm program at the National Cancer Institute is 33 to 1. At DOD, it is 22 to 1. For every dollar invested, $3 of Federal, state, and local taxes are generated. In terms of success, I can guarantee you that at least three technologies you use on a regular basis were funded by SBIR. The GPS on the chip, combining Wi-Fi and Bluetooth and the CMAS camera technology, all of which are used in your cellphones. So you can clearly see that this, among all the technologies, there is a list of SBIR success stories in the back of my testimony. The market actually loves the SBIR program. Seventeen countries have copied it. As I pointed out, China has done an excellent job of copying it and taking it further. Ten percent or 3,000 SBIR firms have VC inventions. Eight hundred twenty- nine SBIR firms have gone public. Thirteen hundred have been acquired by other companies. And 70 percent of all university licenses are going to small business, which recognizes the importance of small business to university commercialization. What is working with he SBIR program? One, job creation. Small business created over 1.5 million jobs. And it is a state-by-state analysis how many jobs are being created in each. Fifty to 70 percent of all phase two SBIRs are commercialized. GSA has done one billion dollars worth of phase three contracts in the last 2 years. Likewise, the Air Force and Navy combined have done over $2 million of phase three contracts. Agencies are speeding up the contracting process but more needs to be done. We need to encourage innovation and support small business innovation by, one, making SBIR permenant; two, doubling the SBIR/STTR program and restoring the Rapid Innovation Fund funding. We need to strengthen the patent system. We need to increase the Federal R&D spending. We need to set a goal of 15 percent for Federal R&D for small businesses. And we need to continue streamlining and simplifying the contracting process. If we take these actions, you will unleash new technologies for America while strengthening our economy, rejuvenating America's leadership in innovation. We can beat China and become number one in innovation again if we effectively use the SBIR/STTR program. SBIR is like printing money without inflationary effect. Three dollars are generated for every dollar spent. It is working well. Thank you. Chairwoman VELAZQUEZ. Thank you, Mr. Glover. I will begin by recognizing myself for 5 minutes. Dr. Tung, I would like to address my first question to you. One of the goals of the SBIR/STTR program is to increase private sector commercialization of innovations derived from federally funded R&D. Dr. Tung, how did early seed funding from SBIR help develop the genetic testing services available today? Ms. TUNG. I can provide a few examples. In the early days of 23andMe, the genetic health information we provided to customers was based solely on published research and the scientific literature. Today, many of our new genetic health reports are based on scientific results from our own research platform, the development of which was partially supported by SBIR funding. In addition, we have published 32 scientific papers supported by SBIR funding. Those results may be used by others in the scientific community to develop their own products and services. Chairwoman VELAZQUEZ. Thank you. Ms. Tung, the SBIR and STTR programs share four goals and one is to foster inclusion and diversification among innovative firms. Yet, this continues to be a challenge. One of my top priorities for the upcoming reauthorization is to improve participation of minority and disadvantaged persons in the program. In your experience, what strategies have worked and what are the greatest challenges to this effort? Ms. TODD. So our primary areas of industry and regions where large populations of these groups are based, it would helpful if SBIR/STTR opportunities were presented in a way that highlighted specific research interests that align with these industry types. For example, SBIR/STTR research topics might be highlighted in regions where agriculture is a prominent industry. Sharing success stories of companies with team members who share demographic features of the groups that you are targeting for increased SBIR/STTR program participation is always helpful. Videos and feature articles in newsletters that have photos are a couple of ways to communicate these inspirational stories. To encourage participation from HBCUs, highlighting the partnership opportunity inherent in both SBIRs and STTRs would be particularly helpful. ASBTDC previously hosted an introductory SBIR/STTR workshop at an HBCU that featured SBIR awardees both from local companies and their university subcontract leadership team. Chairwoman VELAZQUEZ. Thank you, Ms. Todd. We hear time and again about the struggles that small businesses face in overcoming the ``Valley of Death'' where research is derailed because of a lack of funding. This Committee is dedicated to modernizing the program in such a way to better assist businesses in overcoming this stumbling block. To the panel, what have you found to be the best mechanisms to help businesses commercialize their products? Mr. Glover, I would like to start with you. Mr. GLOVER. I think Phase III of the SBIR program, which is no Federal money and no SBIR money. It has been the single best. That is why I wanted to highlight how many billions of dollars are now going into Phase III. We are starting to see that happening. It needs to happen a lot more. There are agencies that do virtually nothing in that area and do not have a good record. Some are just getting started. But phase three is an opportunity. The use of venture funding was the core for the first 20 years of the SBIR program for Phase III. As VC moved on to later stage investments, that VC investments of RAVC waned. I think phase three has got to be the best way we can do that and make sure focus where it is not SBIR dollars but it is private sector and non-SBIR goverenment dollars. Chairwoman VELAZQUEZ. Thank you. Ms. Keady, would you like to comment? Ms. KEADY. Well, I would definitely agree that the phase three commercialization grants would be extremely helpful. We have never gotten one. The agencies where we have gotten our grants do not offer money for this and so we have just had to do our own bootstrapping in terms of paying for the commercialization. And because we have a global product, it is also quite expensive to adequately market internationally. And so one of the things we are looking at is trying to start a search for investing funding. Investors are very risk averse so the SBIR funding is good for helping de-risk that. But so far we have been deemed too early for significant investment in terms of attracting a lot of investment money. But we are starting that path. But that is the biggest challenge I would agree. Chairwoman VELAZQUEZ. Thank you, Ms. Keady. My time has now expired. I will recognize the Ranking Member, Mr. Luetkemeyer. Mr. LUETKEMEYER. Thank you, Madam Chair. Mr. Glover, I would like to start with you. One of my biggest priorities on the Committee is to root out and rectify the waste, fraud, and abuse in every SBA administered program. Recent audits that we have been told about here are very concerning with regards to this. So my question basically is, how are these two programs faring with regards to waste, fraud and abuse in comparison to other SBA programs? Mr. GLOVER. In the history of the program, I think there have been less than 20 waste, fraud, and abuse cases that have been brought and that is .0001 percent of all of the SBIR program awards. Because of the competitive nature, it is really tough to try to engage in fraud there. You have got to first win a phase one, then win a phase two, and it has been not fraud free but has been very limited, and most of those cases involved university connection with a small business where they crossed the line and did something---- Mr. LUETKEMEYER. So the competitiveness of the program sort of minimizes the ability for fraud because it is not something that if you qualify you automatically get the money. If you qualify for it you compete for other people against that. Therefore, there is sort of a bump in the road there to prevent that from happening. Would that be a fair statement? Mr. GLOVER. Absolutely, sir. Mr. LUETKEMEYER. Okay. Thank you very much. Ms. Todd, can you explain to me how the FAST program differs from the original SBDC model of outreach in counseling, please? Ms. TODD. I am not familiar with the original model. I can speak to some of the offerings of our FAST program. Would that be---- Mr. LUETKEMEYER. Well, the SBDC model is such that they do have outreach. They do have counseling in it. And is that not what a big part of the FAST program is? Ms. TODD. Okay, yes. In addition to the standard services offered through our center through the FAST program, we are able to offer enhance outreach specific to our technology clients across the state, including SBIR/STTR program exploration, proposal planning guidance and review. Mr. LUETKEMEYER. I wish you would answer me rather than reading your answer. I understand what you are doing there but I asked you a question with regards to the SBDC model. It is not in your answer. Would you please answer that question? What is the difference between the FAST program and the outreach and counseling program of SBDCs? Ms. TODD. The FAST program allows us to create programs and other offerings of our own that we know will be tailored to address the needs of our audiences here in the state. So we were able to identify what the needs are among all the---- Mr. LUETKEMEYER. Okay. That is what the FAST program is. You still have not answered my question. So the problem here is that the FAST program for almost 2 decades, almost 20 years has not been appropriated. The annual appropriation has not come through; yet, they have been able to get the money for it. And my question I guess is why is it so essential that somebody apparently in the Senate keeps putting money in there in spite of the fact that it is not authorized? Do you have an idea on that? Ms. TODD. We have been able to achieve lots of success in the state of Arkansas through the FAST program, so obviously they have more capacity to serve companies and inspire companies across the state. Help them with the very competitive and challenging process of preparing and submitting these applications. Mr. LUETKEMEYER. You are doing it better than---- Ms. TODD. So we have things---- Mr. LUETKEMEYER. So you are doing it better than what the SBDC model can actually accommodate? Ms. TODD. We are able to expand on that through the FAST program to tailor it and make it our own. It is successful here in the state of Arkansas. Mr. LUETKEMEYER. Okay. Mr. Glover, you made a lot of comments with regards to the phase three here stuff and I think Ms. Keady may have misstated here when she indicated that it was money that they need for this from the standpoint that it is actually not a grant. It is a contract that the government, if I am not mistaken here, has with the individual or the company. To the first two phases, money is granted, and to the third phase you are then given a contract to provide this good or service to the government or to whomever as the phase three. Is that not correct? Mr. GLOVER. It is correct. The phase three money from the government would be in the case of the Defense Department, now $4 billion over the last couple of years buying SBIR technology and putting it in the field for the warfighter or taking the technology to a further level of readiness so that it is ready---- Mr. LUETKEMEYER. Okay, so you wanted to further dollars to the government to be able to purchase whatever the innovation is that is being paid for through the SBIR program; is that correct? Is that what you are saying? Mr. GLOVER. That is correct. Mr. LUETKEMEYER. Very good. I see my time is up. Thank you very much. Madam Chair, I yield back. Chairwoman VELAZQUEZ. Time has expired and now we recognize the gentleman from Colorado, Mr. Crow, Chairman of the Subcommittee on Innovation, Entrepreneurship, and Workforce Development. Mr. CROW. Thank you, Madam Chair. Ms. Keady, last year you developed a product that helped researchers confirm that COVID spreads through the air and your technology likely saved lives by informing scientists and policymakers on how to prevent infection. And your case also demonstrates why Federal investments in R&D are so important. In your testimony, you mentioned that your grant funding came from the National Science Foundation, the Department of Energy, the NIH, Department of Defense, and Department of Homeland Security. Can you just briefly explain the differences between each agency's administration of the SBIR and STTR programs? Ms. KEADY. All of the agencies have very different policies, procedures, web portals for submitting grants. They have different procedures for reviewing proposals and for funding. So each one of them we have to treat as an entirely separate thing. It would very helpful if there were common portals or common procedures but that is not the case today. We have only recently gotten grants from the DOD and DHS, so I am less familiar with what all of that entails. We are just at the very, very beginning of those. I have the most experience with NSF and they have lots of opportunities for learning. For example, we participated in an I-Corps program which is about customer discovery. I think that was initiated by NSF and some of the other agencies have taken that up. But they are all very, very different. So we just really have to treat them all as a separate customer if you will and learn what their particular process is. Mr. CROW. And you kind of got to my point by just talking about how more complicated it is if you are having to review and understand and learn all these different entities, different processes. Could you just paint a very short picture for us as to how, if you had a common portal and a common process, how would that impact you and what type of resources would be freed up for you to do the R&D that you do so well? Ms. KEADY. Thank you for that question. I just think from an administrative point of view it would save time in having to create the reports that are needed, submit the reports. I just think it would streamline the administrative side. The R&D, you know, is unique for each grant and so that does not change but the administrative side would be much easier. Mr. CROW. And then you mentioned that the SBIR/STTR has limited support for the final stage of development in bringing a product to market. What could be done in your view through these programs or through other programs to help businesses find investors for that final stage that is obviously so critical to getting it done? Ms. KEADY. So I appreciate the comment earlier about that there are phase three contracts but only certain agencies issue those, and DOD being one of them. We have just started with them so we have not gotten that far yet. NSF does not, and I do not believe NIH does, at least not for the programs that we have had. Now, your question about how to help companies find investors, I think we have been very successful at getting the grants. We have so far not gotten an investor, although we are trying. And we need to learn how to attract investors because they are looking for different things. And I would just say that an investor is a long-term commitment, just like a marriage. You are entering this relationship for the long term, at least until you have an exit. So you have to be very careful about who your partner is and so the investor and the company's goals are in alignment. And so that is what we are seeking. We are confident we will find an investor. We just have not yet. Mr. CROW. Thanks, Ms. Keady. I know, you know, I hail from your home state as well, from Colorado, and we are all very proud of you in Colorado. And the picture behind you of the mountains is making me anxious to head west. So I will be heading your way shortly. Thank you for your testimony. Madam Chair, I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentleman from Texas, Mr. Williams, Vice Ranking Member of the Committee for 5 minutes. Mr. WILLIAMS. Thank you, Madam Chair. The Small Business Administration under President Biden has had problems overseeing programs for the past few months. Just to name a few, there has been miscommunication between the Inspector General and Administrator Guzman, fraud with the EIDL program, and delays of implementing critical funding programs like the Shuttered Venue operator grants. The SBIR and the STTR programs discussed today are carried out by several agencies that are overseen by the SBA. And before we authorize these programs we must ensure the proper guardrails are in place so that both are fulfilling their intended purpose in helping small business grow. So Mr. Glover, what recommendations can you give to the SBA for these programs so that we can avoid some of the problems we have seen out of the agency this year and some of those that I just mentioned? Mr. GLOVER. Well, the SBIR program relies extremely strongly on competition. And it has been targeted for audits. They looked at everything very carefully. And quite frankly, they found very little. And I think it is because there is so much competition. Quite frankly, it is tough to win an SBIR award. It is very hard to do. And you do not find somebody who wants to commit fraud having to spend that kind of energy putting it together. SBIR proposals are reviewed primarily by scientists who are familiar with the technology and familiar with the area. It is hard to con those reviewers. So I think the SBIR program is fortunate in that regard but I think that there is a problem with the agencies that could be doing more Phase III. We have been talking to the Department of Energy about their cost share. They have for follow-on grants outside the SBIR program and even for Phase III cost sharing. You have a million dollar award. You have to come up with $200,000 cost share. Small business just cannot do that. So basically, small business is shut out of all DOE's follow-on, non-SBIR funding. They get less than 3 percent there. So it is a problem but it is a problem that is diminished because of the way the program was carefully structured at the very beginning when it first started and what we maintained throughout its history. Mr. CROW. Let me move on. Thank you. Innovation drives economic growth and gives America a strong presence in global markets. Many of these innovators start out as small businesses with great ideas but maybe do not have the knowledge on how to expand operations to get in the pipeline for Federal contracts. Often there is excessive amounts of red tape, administrative burdens that make it overwhelming for small businesses to attempt to do business with the Federal Government. So Ms. Tung, you mentioned in your testimony that this can be intimidating for scientists who are not familiar with this process. So can you discuss personal challenges you experienced with the application process for 23andMe and how we can cut red tape to streamline proposals for SBIR and STTR programs? Ms. TUNG. Sure. So I would say that our primary challenges were not with the application process itself which I think was relatively straightforward. I think we were more intimidated by the rules that we saw afterwards for setting up an accounting system and for tracking time because that is how we got reimbursement for the funding that we received. So we were very fortunate in having a colleague who had done some accounting and auditing work. And so he helped us sort of understand and interpret the guidelines. But I would say some of our scientists, of course, were also scientists who had gotten grants in academia and those sorts of RO1 grants did not have the same sort of accounting, auditing, and time tracking requirements. So I think if you want to use those dollars to allow the scientists to spend more time on the actual research, you might consider reducing some of the auditing, accounting, and time tracking requirements. Mr. WILLIAMS. All right. Thank you. The SBIR program has had bipartisan support since it began during the Reagan administration. Each reauthorization since then has made significant changes from increasing award sizes to shifting focus of the program to commercialization. Currently, it is set to expire September 30th of 2021. As reauthorization conversations continue, we should be looking to make sure we are getting the maximum return on investment for these taxpayer dollars. So finally, Mr. Glover, can you explain the effects it would have on small business if this program was not authorized? Mr. GLOVER. Well, the first thing, there would be 7,000 individuals and farms around the country that would not be getting money to take their ideas, their technology, and even advanced innovations at all. Given the fact that venture capitalists only make a couple thousand seed investments a year, that 7,000 SBIR is absolutely critical to fund it. It should be a lot higher. When we look at the rest of the world, we look at what China is doing, we look at even what the European Union is doing, everybody else is doing more. They far passed us. They have taken the SBIR program, copied it, and then made it bigger and better. So it would mean a lot of companies would not have any chance at all to get their technology advanced at all. Mr. WILLIAMS. Okay. Thank you. And I yield my time back. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentlelady from Kansas, Ms. Davids, Chairwoman of the Subcommittee on Economic Growth, Tax, and Capital Access for 5 minutes. Ms. DAVIDS. Thank you, Chairwoman. And I am, of course, glad we are holding this hearing to review the importance of the SBIR and STTR programs. And how we can improve them as Congress must reauthorize the programs this year. As we have heard, these programs play an incredibly valuable role in our entrepreneurial ecosystem by providing support to innovators and entrepreneurs throughout their creation, development, and commercialization stages of their products and businesses. And the Kansas 3rd Congressional District, of which I have the privilege of representing, has some pretty amazing SBIR and STTR funded centers and partners. Folks like the Mid-America Manufacturing Technology Center, the Bio Science and Technology Business Center at the University of Kansas Medical Center. You know, these centers are invaluable resources to entrepreneurs and innovators who are looking to develop and advance their small businesses and to commercialize their products. But even with these awesome resources that we have in my state, Kansas has historically received a pretty low number of SBIR/STTR awards. In 2019, I had the chance to hold a field hearing in Kansas City, Kansas, to focus on what we like to call the Silicon Prairie in the technological entrepreneurship and innovation that is going there in the heartland. And these programs are essential in expanding and supporting the small businesses that we have got. So I would like to start off with Ms. Todd. As an expert on bringing these federally funded R&D products to the marketplace, I am curious if you could talk to us a little bit about the programmatic changes that would have the most impact on the types of businesses that you have been supporting. Ms. TODD. Sure. Thank you. So in terms of commercialization, many of the agencies have adopted the Technical and Business Assistance Program, even in phase one. And I have seen here in Arkansas, it has been a great support for our companies as they are looking to expand on not just the research and development projects but also to put into place practices that would help them further down the road as they plan their marketing sale strategies for successfully commercialized products and services. So I would say one thing that would help is to have all the resources needed to help all the agencies, even if they wanted to offer these TABA programs for awarded companies, so they can have those resources to be successful in commercialization. Also, many of the agencies offer programs that are on Customer Discovery, the act four models. And I think that would be helpful for all the agencies to offer. It is a key piece of successful commercialization. They learn about the market need and limitations of current solutions. So this is a great way for awardees to be able to ensure that their final technology really aligns with what those needs are which typically changes over time as well. Ms. DAVIDS. Yeah. Well, I appreciate that. And Mr. Glover, you know, I kind of want to take you back on some of what you were bringing up earlier. I am curious if you could maybe, if you have some recommendations about ways to support businesses through phase three. You had mentioned that in your previous response. Just curious if you have some recommendations for us. Mr. GLOVER. Well, one, getting a Phase III from the government is part of it, but getting Phase III from the private sector. We were challenged with the ``Valley of Death.'' We may sometimes make the ``Valley of Death'' wider but we do not make it any shallower. And our venture capital, which had been the mainstay of American ingenuity for 40 years. It came shortly before the SBIR program really kicked in. It really has moved offshore and to later stage investments, so it is really tough. Creating a program to help there. Angel investors are there but they are not as busy as we think they should be. They are not making as many investments. So it really is a challenge. And what is scary is when you see other countries doing a better job of this than we do. So creating funds that will take technology to a next level, not necessarily SBIR funds because we want to keep that program that has worked so well pure but it is time for us to realize that we are at a competitive disadvantage and we need to create new activities. This is the only small business program for innovation out there. There should be more. Ms. DAVIDS. I appreciate that. Chairwoman VELAZQUEZ. Thank you. Ms. DAVIDS. Thank you. And I yield back, Madam Chair. Chairwoman VELAZQUEZ. The gentlelady yields back. Now we recognize the gentleman from Pennsylvania, Mr. Meuser, for 5 minutes, who is the Ranking Member on the Subcommittee on Economic Growth, Tax, and Capital Access. Mr. MEUSER. Thank you, Madam, Chair. Thank you to our witnesses. I appreciate your input and your information. So Mr. Glover, in your testimony you say that the primary strength of the SBIR program is invest in early innovation well before venture capital firms and such. Yet, many companies receive the SBIR grant year after year. So is that common or is it usually they receive it for 1 year, maybe 2, but not 8 to 10 years in a row? Mr. GLOVER. Well, when we look at the government's pattern of buying things what we see is that if you are a large company, we buy from them every year forever. If you are a large university like Johns Hopkins with $2 billion a year of coming in, everybody accepts that. For small business, we need more small businesses at every level. Roughly 25 percent of all SBIR winners are brand new to the program and that has been true for the whole history of the program. The government actually buys SBIR research for technology for government purposes. So a big part, one of the core reasons the SBIR program was founded in the congressional mandate is to give the government research that it needs. So there are companies, yes, that do year after year and they do it because they are really good. It is a very competitive program. If they were not giving the government the research they wanted for their programmatic needs, they would not get follow-on awards. So you need the mix of all. Mr. MEUSER. I can appreciate that. I can appreciate that. I have been a small businessperson for almost 25 years and I worked with thousands of small businesses over time, some doing business with the government, many with R&D budgets. I am not sure I know of any that have actually received this. And our role here is not to be critical but to provide oversight. So when the companies do receive these investments, okay, the taxpayer dollar investments, do you review their EBIDTA at the end of the year? What sort of financial disclosures go into it? I mean, if a company, you invest $200,000 and 2 years later their net earnings are $10 million and their R&D budget is pretty substantial as well, does that perhaps disqualify them or does that make them more attractive because you are seeing a perceived return on investment? Mr. GLOVER. The criteria to be eligible for the SBIR program is 500 employees. And if you are a very wealthy company and doing very well, that is okay. It is perfectly legal under the program and it happens. Mr. MEUSER. But it is not necessary. Mr. GLOVER. Many of our companies graduate. They get bigger. They get acquired by new companies. I have in the back of my testimony a list of 10 major DOD contractors that have acquired SBIR firms through the years, a list of the first them have acquired. One company I think has acquired 44 SBIR firms through the years. Mr. MEUSER. Okay. Mr. GLOVER. So it is a career ladder. If you try to only seed companies, you may get a few home runs. What we see in the program is---- Mr. MEUSER. Do you do a real ROI estimate annually on the taxpayer dollars that go in versus the company's growth? Mr. GLOVER. We do audits certainly for defense. Now, grants, some agencies do grants and only grants for universities, for small business, and for everybody else. Those grants are a little softer audits. The DOD audits SBIR firms. DCAA is working on that. So they do look at it. But what they are auditing for is to make sure that there is no waste and fraud and that the money is properly spent. The return on investment is what we have seen, the economic impacts that it shows, and that is where you are getting 22 to 33 percent return on investment and the taxpayer is getting $3 of taxes for every dollar they invest in the SBIR program at the National Cancer Institute and at DOD which is well over half the program. Mr. MEUSER. Okay. Well, I had a couple of questions for Ms. Keady to see what her experience is but my time is about wrapped up. So Ms. Keady, I may send those questions over to you if you do not mind. But I yield back, Madam Chair. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentleman from Maryland, Mr. Mfume, Chairman of the Subcommittee on Contracting and Infrastructure for 5 minutes. Mr. MFUME. Madam Chair, thank you very much. And thank you for what clearly is a very important hearing to look at seed programs and other things that are available. I would like to just, if I might, direct my question to Dr. Tung. I was going through your testimony, Doctor, and you mentioned that you had an 80 percent success rate with SBIR applications. And I do not know if this question may have been previously asked, but that just strikes me as an extraordinarily high number. And so I wanted, for the sake of better understanding, to get you to talk about what you think is directly attributable to that rate and can it be or is it being replicated. So I would like to know whether or not it is a matter of innovation, it is a matter of who the innovator is, or if it is a matter of the nature of the research so that I might better understand how we get up to and maintain, I guess, an 80 percent figure, success rate. Ms. TUNG. So, you know, of course I cannot speak to the grant review Committees who are the ones who actually assess the grant applications. I can say that what we were told by our program officer was that the comments they had gotten back was that the quality of the science that we were doing was very high. It was like fairly unique and I think we also have a track record, to Mr. Glover's point, of actually executing on the things that we said that we did and really getting the results out there into the scientific community because it is a competitive process. So I think that if we had not continued to do that grant over grant, my guess is that we probably would not have continued to receive them. Mr. MFUME. And Mr. Glover, may I go back to the line of questioning of the gentleman before me with respect to the average number of years that a business can qualify and get funded with follow-up rewards? And I am assuming, this is only my assumption, that there is no limit to that, or is there? Mr. GLOVER. There is no limit to that. Mr. MFUME. Okay. Does anyone at your agency review their earnings before interest, taxes, depreciation, and amortization, to see whether or not these businesses are growing or not growing the way they should be? Mr. GLOVER. The agencies have had economic impact studies done that do analysis of that and show how many follow-on research dollars are given, how many follow-on jobs are created. They have done a careful analysis of over half of all the SBIRs in the last 10 years. And so they look at all of that. They do detailed reports and provide those back to the public and to the agency and to Congress. Mr. MFUME. But are they also looking at the EBIDTA of each one of those applicants that continue to get funded? Mr. GLOVER. No. And quite frankly, I would urge you not to have that happen because that is more paperwork and more challenge. This is a program that is primarily driven by science. The science and innovation. And when we add different layers of review, it slows down the process. It makes the scientists take time away from doing the science and innovation and have to do paperwork. And one of the common complaints we have now is that there is already way too much paperwork involved in this process. Mr. MFUME. I am sure the members of this Committee would argue with you that there is too much paperwork that we are involved in, but in order to assure taxpayers that there is not any waste, not any fraud, not any abuse, I think that additional work in that area is warranted. I think it is justified. What I am really concerned about though is if I can get unlimited awards year after year because of my innovation, who I am as an innovator or the research or whatever, it seems to me that reduces the amount of money available for a larger pool of applicants who want to get funded but the money is not there because if it is 3 or 5 years, 6 or year 10, one particular business continues to get awards. Could you just kind of speak to that? Mr. GLOVER. This is basically the only program that gives small business a clear window into the Federal R&D research funding. And you have got giant corporations, you know, who get hundreds of billions of dollars of Federal money. Small business needs this window open and it has worked very successful. Remember, one of the missions is to give the government research that it wants. Without this program, small business is virtually shut out of the Federal R&D research program. We need to open up more windows for small business. Mr. MFUME. I understand. It just seems that without any cap on the number of years, Business A could get these awards for 15, 20 years, let's say, and there are a ton of other small businesses trying to get in because they have got clear needs for innovation and research but there is a finite number of dollars available today. And so if those dollars are eaten up because we do not try to get people in and graduate them out, it just seems to me that we are complicating the problem. But I will yield back, Madam Chair. Thank you for the opportunity to ask questions. Chairwoman VELAZQUEZ. Is he on? Mr. Garbarino, I think that you are muted. Mr. GARBARINO. Thank you very much, Chairwoman. I just have a quick question. This is a lot of good testimony, a lot of great answers so far about the SBIR program. But this is really for anybody on the panel. I know Mr. Crow asked about standardizing the template or making things easier or standardizing some of the paperwork, but based on the experiences with SBIR, do any of you have any specific recommendations? And I know some of you touched on it a little bit in the testimony, about how to help improve the program to make it even better? And anybody can just jump right in. Ms. KEADY. I have one thing I would like to mention that has not been mentioned yet. There is a significant time gap between receiving a phase one and a phase two and that can be very challenging for a small company who is trying to keep their employees on the payroll. Sometimes it is 4 months, it could be 12 months or more gap, and so you want to continue the work but there is this challenge of how to overcome that as well. Mr. GARBARINO. So you would say making it more of a standardized time? I mean, a 4 month to a year delay, that is a big gap. What would your recommendation be, just making it more standard or moving paperwork quicker? Ms. KEADY. I have not thought about it in depth but some way to streamline the reviews of going from a phase one to phase two would be helpful. And we are also not guaranteed of getting a phase two so there is that uncertainty as well, although the phase twos have a higher success rate in general than the phase ones just because it is a smaller pool of applicants and they are already successful in having gotten the phase one. But that is something that if there was a way that that could be shortened that period of time for review and granting award would be shortened, that would be extremely helpful as well. Mr. GARBARINO. I appreciate that. Mr. GLOVER. If I may comment, last year's NDAA required DOD to at least standardize, simplify, and expedite a contract award. The GAO did a study a few years ago that shows it takes 2 years to get between phase one to phase two in many cases. There should be oversight on that making sure that, in fact, happens. There ought to be a standard contract for phase one, a standard contract for phase two, and a standard contract for phase three. And once a decision is made it should happen. And that delay is costing valuable time, especially with innovation happening so fast and having such a short half-life. We have got to do it quickly and the government is years behind in terms of that area. You hit a very sensitive area. I would be happy to talk to you more about that. Mr. GARBARINO. I appreciate that. It seems like we get in our own way sometimes. So I think we should look into addressing that. From the other witnesses, is there anything else you would like to add to that specifically or any other ideas that we should be looking at? If not, I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentleman from Minnesota, Mr. Phillips, Chairman of the Subcommittee on Oversight, Investigations, and Regulations for 5 minutes. Mr. PHILLIPS. Thank you, Madam Chair. And greetings to our witnesses. Thank you for being with us. I represent a district in Minnesota that is home to a number of the world's largest medical device firms, many of them founded and cultivated right in the Twin Cities and started in garages. And those are the great American success stories that we all love and wish to nurture more of. I, like many of my colleagues on this Committee are dismayed by the fact we seem to be falling behind other countries in the world. My first question is on that subject to you, Mr. Glover. You had mentioned in your earlier comments that China and the EU have taken the SBIR model and made it ``bigger and better.'' I would love for you to take a little time and share with our Committee how they have done so with some specifics so that we might be able to better understand how they have leveraged it and do better ourselves. Mr. GLOVER. Well, they have steadily increased the percentage of their research dollars going to small business. And I footnote that because most frankly most people do not believe it but it is going on. A few years ago it was 16 percent. It is now up to 20 percent. So they are putting more money there. Now, quite frankly, Europe does not have the entrepreneurial spirit, the entrepreneurial drive that we have but they are putting more money into it. So the main thing is more money. I highlighted the one Chinese institute because they did 18 universities in China get together with dozens of universities in America to take U.S. research, collaborate with them, often, and I suspect most times, the follow-on research and commercialization is done in China. But they have taken 150 products and gotten 108 of them into commercialization. Now, SBIR is 50 to 70 percent commercialization but there is $600 million the Chinese Government has set up as an, in effect, venture fund to fund those technologies that they are basically taking from the United States and developing over there. So it is heartbreaking. To be honest with you, I mean, SBIR set out to be U.S. companies, U.S. ownership, and the work done in the United States. Much government research can be done elsewhere and seeing our technology go overseas is heartbreaking. It should not happen. Mr. PHILLIPS. Right. I could not agree more. Dr. Tung, I would like to as you, too, about your testimony highlighting the importance of maintaining venture capital as a source of outside cash flow for companies that are trying to secure other forms of early stage capital. Can you elaborate a little bit on the complementary relationship that you see between VC and the SBIR program? Ms. TUNG. Certainly. So I think for us, we have a model in which our research platform is based upon a consumer research cohort. About 80 percent of our customers consent to participate in research. It is those people participating in research that allows us to have this highly scalable platform. Now, the SBIR funding funded the research specifically, the collection of data, the analysis, the publication. However, the development of the actual online platform itself, all the design, all the product, all the engineering, all of that was funded by venture funding. So we could not have done what we did without the other part of the business having already been funded. So really, those two pieces had to exist together or we would not have been able to build what we did. Mr. PHILLIPS. Okay, thank you. I appreciate. With my remaining time, if any of you might chime in, I remember when I was a kid in elementary school, business day was perhaps one of my greatest forces to have to think about. Starting a little business, creating, generating revenues, identifying expenses, selling stock, and marketing. And I just wonder if you see opportunities in the United States to inspire younger generations still in school about the possibilities of entrepreneurship and innovation and are there any programs of which you are aware that we can go a little further upstream so that programs like SBIR and others will have an even wider universe to allocate resources to? Are you familiar with any programs trying to teach entrepreneurship to kids? Okay. Ms. TUNG. Well, I actually do have one thing. This may sound facetious but I actually do mean it seriously. There is a TV show called Shark Tank in which people are allowed to bring their ideas in front of a set of investors. But it is not uncommon that you actually see very young people, teens and sometimes younger than that, who actually have been inspired by that show to bring their ideas into businesses. So I think that sort of thing, making it relevant and part of popular culture is I think inspiring for a large portion of the community. Mr. PHILLIPS. And I agree. All right, well, I am running out of time. I thank you all. I appreciate this conversation and your testimony. I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentlelady from California, Ms. Young Kim, Ranking Member of the Subcommittee on Innovation, Entrepreneurship, and Workforce Development. Ms. YOUNG KIM. Thank you, Chairwoman. And I want to thank all the witnesses for being with us today to discuss these important programs. And thank you, Mr. Phillips, for asking the question, and for Ms. Tung answering it. Shark Tank is one of the programs I watch regularly, too. Getting back to our discussion here, SBIR and STTR programs are critical tools for small businesses to reach, develop, and commercialize innovative technologies to create good paying jobs for increasing our competitiveness abroad. China and other nations are making concerted efforts to bridge that innovation gap with the United States and put more resources to commercialize their own technologies. So we must not relent our country's position as the world leader on innovation and the development of new technologies. So keeping that in mind, I am concerned the Biden administration has yet to appoint an associate administrator in the SBA's Office of Investment and Innovation. So I would like to pose this question for all the witnesses. Considering SBA's responsibilities under the programs, including agency coordination, policy guidance and data collection, how important do you think it is to have an associate administrator appointed as soon as possible? I know this could be a very simple yes or no question. Respond very quickly. Mr. GLOVER. Yes. The Investment and Innovation Office should report directly to the administrator. Yes. Ms. YOUNG KIM. Thank you. Other witnesses, your answer, yes or no, how important is it to appoint an associate administrator right away? We need somebody to coordinate these important programs. You agree; right? Okay. Well, let me go to the next question. The Small Business Act requires the SBA to report annually to Congress on the SBIR and STTR programs but unfortunately, SBA compliance with this requirement has been an ongoing issue. So if we do not have the timely reports, it is difficult for Congress to legislate and improve the programs. So in your view, what can Congress do to ensure SBA's meeting the statutory reporting requirements? Mr. GLOVER. We mentioned in our detailed recommendations in our testimony making the reports available as soon as the agency does and put them on their website. In the old days you had to filter them through. DOD, for example, the services have to send it to DOD which has to review it, which sends it to SBA which the SBA has to send it to OMB to review. So there is a built-in process. There is no reason all that information should not be put on the web immediately. And so make those reports in a much shorter timeframe but put it on their own website immediately. Ms. YOUNG KIM. All right. Do you currently, Mr. Glover, do you think that SBA has the online web portal that makes it easier for different agencies to put together their report, that way the SBA can put together an overall report to Congress in a timely manner? Mr. GLOVER. The review process makes it untimely. So let's eliminate the review process. Put it on the web, be done with it, and move on. Right now, we have been working with DOE and we are looking at inside DOD data. DOE data, we are looking at things that they do not look at for years but were available-- spending USA track down how many phase threes are being awarded. What is happening? We did not know that 2 years ago but SBA could do it as well. Ms. YOUNG KIM. Thank you. I sense your frustration, sir. Thank you very much. Let me direct my last question to Ms. Pat Keady. With our experience of being women entrepreneurs, can you offer any advice to other women entrepreneurs who would like to participate in the SBIR program? Ms. KEADY. I appreciate that question. And one of the things that I wanted to mention is that there is a huge funding gap from venture capital or investors in general for women- owned businesses. That needs to change. I do not know if that is government's responsibility but that definitely needs to change. We start out with a disadvantage. I do not know if it is a bias or whatnot but there is definitely a gap. I think when I started my career in the `80s, there were very few women in aerosol science and now there are lines at the restroom at the conferences so I think we have made huge gains in terms of participation in STEM fields. I find that the field that I am in is very respectful of women. It is a very comfortable place to be. And so I feel that women should not hesitate. They just need to jump in. Ms. YOUNG KIM. Thank you. I know my time is up, so thank you very much all the witnesses. I yield back. Chairwoman VELAZQUEZ. The gentlelady yields back. Now we recognize the gentlelady from Illinois, Ms. Newman, for 5 minutes. Ms. NEWMAN. Good morning, everyone, and thank you, Chairwoman Velazquez and Ranking Member. Great conversation this morning. Thank you to all our witnesses. Learned a lot and appreciate our entrepreneurs so much. Having been one I am thrilled to see progress like this. And I will also just share a point with Ms. Keady. I agree. When I was an entrepreneur, I pitched my idea to over 60 VC firms and there was exactly one woman in the room. Exactly one across. And that probably meant about 150 people. So we need more women in entrepreneurial places but also in VC firms I will add, too. Turning my attention to Mr. Glover, thank you so much for your comments today, sir. And really appreciate your recommendations. So if I heard you correctly, it sounds like, and I agree with this because if you read the Wall Street Journal, it is clear that that is the case, but it sounds like over 80 percent of current funding goes to tech firms. Is that correct, sir, in the VC world and PE probably, too? Mr. GLOVER. Eighty percent goes to telecommunications, the Internet, healthcare and Biotech. It is on my chart in the testimony. Ms. NEWMAN. Okay, sure. So primarily tech? Can we agree on that? Mr. GLOVER. Yes. Ms. NEWMAN. Okay, good. And that is VC and PE funding probably, too, overall. So knowing that, is there a possibility that you would be comfortable recommending and adding to your recommendations that we look at, on our side of the fence, meaning this government-based program, balancing that out a bit and prioritizing things like green technologies, green infrastructure, those in green building substrates, anything in the space in the 21st economy, green economy. Do you think that there is an opportunity to recommend maybe not fully prioritizing but adding some priority to green-based technologies as well as women and people of color owned organizations? Mr. GLOVER. There has always been a reluctance for the Federal Government to pick winners and losers when that was pre-China and pre the rest of the world. When I look at the Beijing Institute of Collaborative Technology, their focused areas are robotics, optoelectronics, structural and functional materials, energy technology, water treatment, and biomedical engineering. They are giving money in those areas so they are doing it, and the U.S., we have got to get back in the game. I am sorry. My answer 20 years ago was different. Today, they are doing it, we are not. Ms. NEWMAN. Yes. And I agree 100 percent. So I encourage you to put a little data behind that and suggest how we can prioritize a few areas. And certainly green technologies should be one of them but maybe it is robotics and others as well to reassert our competitiveness in the international community. Your initial comments, and I have certainly read it before, but startling. We have got to assert our competitiveness again. I think the best way to do it is to look at a 21st century economy and not look backward, which would include green technologies and renewables and robotics and other such things. So I encourage you to include that in your recommendations. And I appreciate your work on this. And I appreciate all our entrepreneurs today. And I yield back. Ms. HOULAHAN. Thank you. The gentlewoman yields back. The gentleman from Wisconsin, Mr. Scott Fitzgerald is now recognized for 5 minutes. Mr. FITZGERALD. Thank you, Madam Chair. I know at this point there might be some redundancy, so let me apologize for that in the questions. To Mr. Glover, you talked a little bit about streamlining or just fully eliminating specific parts of the process. But so without sacrificing and without putting into play waste, fraud, and abuse protections, the elimination of those, is there other things that, you know, the paperwork burden for small businesses, as we move forward in technology, we should be reviewing that on a regular basis and making changes. Is that right or is this something that most of these small businesses are able to keep up with on their own? Mr. GLOVER. When the SBIR program first started, they limited the proposals to 25 pages. There were virtually no other rules or regulations. Now, the proposal and the solicitations that go out have 100 pages of rules, regulations, and procedures. It has gotten awfully complicated. Our guys do not like it. The small businesses, especially the new companies that come into the program have to spend a lot of time trying to understand it. Having said that, they are willing to do it because that is the only way to do it. But should it be simpler? Should we have an automatic system? Yes. We need to go back to what was there when we first started. You have got an idea. We will give you 25K. You work hard on it. We will give you another quarter million dollars if you come back and it seems like it is working. So yes, the numbers are higher now because of inflation over time but yes, we need simpler. Mr. FITZGERALD. That is great. That is helpful. Thank you very much. And I would yield back, Madam Chair. Ms. HOULAHAN. The gentleman yields back. The gentlewoman, Carolyn Bourdeaux from Georgia is now recognized for 5 minutes. Ms. BOURDEAUX. Thank you very much. Georgia is home to countless innovators and companies that are on the cutting edge of new technologies. Georgia Tech's Enterprise Innovation Institute provides some critical expertise to businesses as they seek to bring technology and research-intensive products to market. And we have many small business incubators and accelerators that work closely with Georgia Tech on a variety of different projects. However, any product that relies on research and development of innovative technology is likely to have significant concerns around protecting intellectual property developed for these projects. So one question for Mr. Glover is how do small businesses go about protecting the IP that is developed through these SBIR and STTR projects? Mr. GLOVER. One of the beauties of the SBIR program in the IP area is that they are given their rights to that technology. And the government cannot disclose that. There are some things that should be done to tighten that up because we run into battles and fights on the fringes but the SBIR data rights is an important provision in there that helps us in many cases. But you are right. In those cases where the government really wants it, they demand to have, you give away your rights or we will not give you the contract. And that happens often, even though it is in the law they cannot do that. But they still do that and they do that frequently. So data rights are critical. Ms. BOURDEAUX. What would you recommend doing to tighten that up? Mr. GLOVER. We will get back to you on that with some specifics. It is becoming more of a problem recently. The Army especially seems to be really tough on that data rights now. But some of the services are better than others but it is critical that you let small business keep their rights so they can go commercialize it. We know the government labs just do not do a real good job of commercializing. And small business, at least if they have got it you have got a chance. Ms. BOURDEAUX. Thank you. Do any of the other witnesses have any thoughts on this matter? Okay. Moving on to another question. Ms. Keady, did you have something? Ms. KEADY. I was just going to say that, again, as an entrepreneur, there is no free time in our lives. And so all of these things take time and effort. And IP is extremely important. We have patents pending right now. Again, it is helpful to have TABA money to help support some of that funding but that is just one more thing on our plate that we want to do right. And so any help we can get is much appreciated. Thank you. Ms. BOURDEAUX. Got it. I appreciate it. I just want to follow up on one other issue that came up earlier which was that after the venture capital phase launching to a larger business often proves very challenging. But I know that there are programs. There are tax credits. There are Federal programs out there to help move into that next sort of midsized business phase. And I wanted to check with you, Mr. Glover. Do you have any thoughts about those kinds of programs and whether there is anything more we can do to enhance and help women-owned businesses, minority-owned businesses, but just businesses in general make that next leap? Mr. GLOVER. The problem with R&D credits is that you have to have a profit to be able to use it. To be honest, our guys do not make profits for a long time. Sometimes never. And so those R&D credits really do not help you. And the R&D credit, if you could sell it or transfer it to somebody who has money and you get some cash for it, some of the states have programs like that that work. But, look, we have done so little to help entrepreneurs in the innovation space. There is a whole bunch of things that we should have done and we certainly can do. And right now in the competitive world we are in, we need to rethink everything we are doing. We need to come up with brand new ideas knowing why are we still giving less than 10 percent of Federal R&D dollars to the most innovative sector of small business? Why is SBIR primarily the only program that really focuses on helping small business? It is outdated thinking. We are now in a situation where the world has passed us and that is happening over and over again and we have got to come up with new ideas and a new approach. Ms. BOURDEAUX. Thank you very much. I agree. I yield back the balance of my time. Ms. HOULAHAN. The gentleman yields back. The gentleman, Pete Stauber from Minnesota, is now recognized for 5 minutes. Mr. STAUBER. Thank you, Madam Chair. As with every government program, finding success is not always easy. When I first got to Congress, I assisted a small business obtain feedback from the Air Force regarding an SBIR application denial. They were never able to get a straight answer before my involvement but I was certainly happy to get things cleared up. I think this leads me to a question that any of our panelists can feel free to answer. Do some agencies provide better feedback to their applicants than others? Or more generally, do you feel that certain agencies make it easier for participation than others? Any of the panelists. Ms. KEADY. I just want to say in particular I am thinking about some of the NIH reviews. It is really a bit of a crap shoot as to who your reviewers are as to what kind of scoring or feedback you get. And so while I think it is really good to have outside experts reviewing these proposals, sometimes we get faulty information. I can say one time where we submitted a proposal, it was not quite in the pay line, and so we resubmitted addressing all of the reviewers' concerns and we got a worse score the next time. So that was a little bit frustrating. Mr. STAUBER. To that point, tell me what we can do to eliminate that issue. What is your solution? Ms. KEADY. That is a great question and I will have to think about that. Mr. STAUBER. Okay. Ms. KEADY. I do not have an innovative answer. Mr. STAUBER. No, that is fine. It was not a trick question. Those are some things that are important for us to hear to be able to change the regulations or rules to have the ability to accommodate more so. And then I also have the question, do you think standardization of paperwork requirements across agencies would help or increase population of small businesses and make them more likely to succeed? So the standardization of paperwork and maybe the vast majority of the process? And this is for any of the panelists. Mr. GLOVER. It would definitely help. The challenge for new companies, to make a short, simple claim, you will get more people participating in the program and you will have them spend more time on the science and less time on the paperwork. So the more you can standardize and simplify everything in the SBIR process, go back to the way it was early on, you are right. Yes. It is critical. It would be very helpful. Mr. STAUBER. Okay. Any other panelists? Ms. KEADY. Again, I am going to bring up a challenge, not necessarily a solution, but I think the success in winning grants is very much in a person's ability, or a team's ability to tell a good story. And so there is a certain amount of skill in just writing the grants. And this does not necessarily, you know, what about the company who has a great idea but is not as skilled at writing or telling the story? I would hope that there is a way for those companies to also get to participate. Mr. STAUBER. That is an excellent point. We are seeing some of the bigger companies hire grant writers and people that specialize in that which would give them obviously a better opportunity, and we are looking for that small business who may not have the capital to hire an individual like that. So that is a great point and we cannot forget that. These grants, we have to really have them open and available for our small businesses. Thank you for bringing that up. Thank you to all the witnesses. And Madam Chair, I yield back. Ms. HOULAHAN. The gentleman yields back. And I now recognize myself for 5 minutes. My community is just outside of the city of Philadelphia. I, as well, am an entrepreneur with a technical background. And my first question is for Ms. Keady. With your testimony, and actually also with many of the other folks' testimony, you have spoken about hiring an outside investor to help with the cost of commercialization for your business. In your experience, does the SBA offer resources for business owners who seek commercialization? Did the SBA offer your business any assistance on how to ensure commercialization on your aerosol devices? Ms. KEADY. I know that NIH and NSF have had programs where they have a meet the investor kind of thing. But again, you know, it takes time to write the executive summaries, the pitch deck, to create the videos. And we have had no real strong connections. It is helpful in just honing our message and thinking about what we would want to say to an investor. So I know they are trying. One of the things that we have found, and maybe it is our industry, is that investors do not necessarily value grants. What they want is traction in the market. And so it is that getting to market and having real customers and having real success is what attracts investors. Just having grants, you know, yay, good for us, but it is not the magic bullet for getting an investor. Ms. HOULAHAN. Yeah. And if I could follow up on that, largely what my role has been in all the entrepreneurial ventures that I have participated in has been the operator, the person who does operationalize the idea. And so I do recognize how important it is. And in fact, that is why I introduced a bill with Mr. Balderson, Rhett Balderson, and it is called the RAMP for Innovators Act. And it takes exactly about all of the things that we have been talking about this time around. Whether it is help with commercialization, whether it is help with IP and patents, it is those things that are the things that bog us down as entrepreneurs, that make us struggle with the next level of investment. And so I would love if I could ask you guys to share your experience. What worked and what did not? What would you share in terms of legislative ways to ensure that the SBIR and STTR investments are leading to commercially-viable products or services and that next level of investment? So if I could, I would turn that back to you, Ms. Keady, and then to anybody else who might have input in that. Ms. KEADY. Well, I would have to say that we are early in our journey in seeking an investor. And so I do not have a success story yet. But I am very interested in learning what other people have done. Ms. HOULAHAN. Could I ask Dr. Tung if she might be able to give us some ideas of what has worked and what has not worked in the commercialization area and how we could be more helpful here in this body? Ms. TUNG. I think for us, to some of the comments earlier, biomedical research takes a long time. A lot of these grants have a term of like a year, year and a half, and it is very easy for a research project to last 3, 5 years. And so that is one of the reasons why you do have to kind of look at trying to get grant funding over a long period of time. And I think that was critical. It took us a long time and a lot of proof of concept of what we were doing was high quality before we got to a point where there were outside groups who were willing to either pay us for our services or our products or invest in that part of the business. Ms. HOULAHAN. And Ms. Todd, do you have anything that you would like to contribute here? Ms. TODD. I would just say as a support organization for these innovative small businesses, we always encourage scientists to be able to articulate the value proposition of what they are bringing to the marketplace as early as possible rather than focusing so much on the technical aspects that maybe they are naturally more comfortable with. So we definitely help them to think through those processes, through our consulting services. Also, as part of that we have market research that allows us to dig pretty deep into potential in terms of long-term market potential, what the competition is looking like, demographics of their customers. I think all that feeds into helping them tell a good story about the commercialization opportunity when they fill out these applications. Ms. HOULAHAN. I only have 15 seconds and I appreciate all of your time. I guess my struggle is it is not about just the story; it is actually about the execution on the story and actually operationalizing things and actually getting patents and IP protected our hard processes. And that is indeed what the RAMP Act that we are trying to push forward is addressing. I appreciate your time and I yield back. And I think I am supposed to be recognizing Mr. Schneider. And so the gentleman from Illinois, Mr. Schneider, is now recognized for 5 minutes. Mr. SCHNEIDER. Thank you, Madam Chair. And I want to thank the witnesses for sharing your perspectives today on this critically important issue. Small businesses are the engine of our economy. As you said a moment ago, Mr. Glover, they are what drive innovation in our economy and it is critical that we support them. And that is why having this hearing is so important. While the programs we talked about today have always been critical, they have special significance as we focus on the economic recovery post COVID-19. This has undoubtedly been a difficult year for small businesses and for all Americans. With vaccines being distributed throughout the country and restrictions being lifted, it is time to look towards the future. Small business innovation will be a key driver of economic recovery as we seek to tackle new economic challenges, get people back into the workforce, and adapt to the changes brought on by the crisis. I have heard from businesses all over my district about the lengths they have gone to just to stay afloat. These programs are instrumental in giving small businesses necessary R&D capital to innovate which they often lack prior to the pandemic but which for many is totally out of reach now. Knowing how important SBIR and STTR, I have advocated in the past for allowing firms more flexibility in spending and for continued funding of these programs. Ms. Keady, you talked about your recent experience as a business owner, developing new technology using SBIR/STTR funds and the limitations in using funds to launch the program. Can you talk more about what you could do with a more flexible spending structure, as well as how challenging the road to profitability was under the current restrictions? Ms. KEADY. Well, we were in the fortunate position of having a product, albeit in a prototype stage, but having a product that was immediately useful for addressing the COVID pandemic for researchers in trying to determine whether or not the virus was airborne transmitted. And so we benefitted this past year in selling to researchers. So for us the challenge in terms of flexibility of spending is the SBIR programs by and large just fund R&D. And so I think for us, having more flexibility, and especially some of the phase one grants having higher overhead rates so that we could hire help to do some of these other things. As entrepreneurs, we end up doing everything ourselves most of the time because we just do not have the staff. And so having more flexibility in how the money is spent would be helpful. Mr. SCHNEIDER. Great. Thank you. I do not know if any of the other witnesses want to share your perspective on that? With the time that is left, and maybe I will start with Mr. Glover, from experience, if you were to pick one, two, maybe three things that we can do to have the biggest impact as we begin this recovery and get to the other side of the pandemic, what would you have us do? Mr. GLOVER. I think I would first set a goal for small business R&D of the Federal R&D dollars. We are spending a lot of our R&D dollars and have historically with other institutions, large firms, labs, and universities, and small business is the innovator and we send such a small share there. SBIR is primarily the majority of that money. So that would be the first thing. I think when we talk about paperwork, we could set a rate of return for small business of say 15 percent. We go in and fight on what the profit level is going to be on contracts and that wastes time, 7, 8, 9 percent. But the regs say you can go up to 15. Just automatically set that at 15. Eliminate some paperwork there. I think that governing the SBIR program would mean twice as many companies would be able to participate and fund their technology and make it move forward. I think the STTR program, the universities are challenged. Seventy percent of their technology is licensed to small business. Less than 1 percent does over a million bucks. STTR should work. Make the STTR program as big as the SBIR program so that you get universities and have the labs participate and have a path to get their technology out of the universities, out of the laboratories. Team them up with a small business with a business plan that goes forward. I think those things would all be helpful. I am quite frankly concerned with the elimination of capital gains. Taxes will remove an incentive for entrepreneurship. I would focus it just on small business, just on businesses in commerce, but capital gains for small business, especially technology businesses should stay. So those are some things off the top of my head that would be meaningful. Mr. SCHNEEIDER. I have gone over my time. Thank you. I am sorry I could not get to the other witnesses. But to everybody, thank you for sharing your time today. I very much appreciate it. I yield back. Ms. HOULAHAN. The gentleman's time is expired and the gentleman yields back. Thank you again to our witnesses for joining us today. Your testimony is proof positive of what small businesses can create when they receive investment and support. Our country has a long way to go when it comes to reclaiming our title as the world's most innovative Nation. We must examine the programs that have driven innovation in the past and work to empower them. The SBIR and STTR program has decades of demonstrated positive return on investment and funding of groundbreaking technology. And if there is no further business to come before the Committee, we are adjourned. [Whereupon, at 12:56 p. 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