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Venture Funding and the NIH SBIR Program
TABLE 2-1 Firms Funded by the NIH SBIR Program (1992-2002)
Top 200 Winners
SOURCE: U.S. Small Business Administration Tech-Net Database, VentureSource.
NOTE: Table 2-1 refers only to majority venture-funded firms that meet the two core venture capital investment criteria for control—namely more than $5 million in investment or more than one round of venture control funding. The Top 200 winners accounted for 42.3 percent of Phase II awards during 1992-2002.
Majority venture-funded firms were clustered among the top 200 winners. They accounted for a higher percentage of the top 200 winners (17.5 percent) than they did of all NIH winners. Table 2-1 shows that overall, about 12 percent of firms that won SBIR Phase II awards from 1992-2002 inclusive were also venture capital-funded.
In addition, firms that were more prolific in winning SBIR awards were also more successful in attracting significant venture capital funding: 35 (17.5 percent) of the top 200 award winners were majority venture-funded, as against 11.2 percent of the remaining 1,336 SBIR award winners.16
2.2 METHODOLOGY FOR MEASURING THEIMPACT OF THE SBA RULING
The primary objective of this part of the assessment is to compare outcomes for SBIR projects implemented by venture-funded and non-venture-funded firms respectively.
Two kinds of outcomes are utilized:
Project-level outcomes identified by the NRC and NIH surveys. These include sales and the attraction of additional funding as the two key metrics.17
Firm-level outcomes, generated by cross-referencing firms with Phase II awards against revenue and employment data extracted from the Hoover’s database of small firms.
It is important to note, as well, that while SBIR enhances the success of venture-backed firms, the obverse is also true. It is also possible that the top 200 SBIR award winners had topics that were more advanced in their development.
Additional funding as used in the NRC and NIH surveys means funding from all sources, including VCs, angel funding, and additional non-SBIR federal funding (a major component).