The plunge into American entrepreneurship is anything but easy. Just ask Daniel Spokoyny, who took the leap this month after leaving academia to start BeeSafe AI, a San Diego-based startup aimed at combatting cyber criminals that use social engineering methods to scam consumers. If you have a phone and have ever received an SMS message inviting you to apply for a job, or maybe suggesting that you won the lottery, then you’ve likely encountered one of these schemes.
Spokoyny and his co-founder, Nikolai Vogler, are gathering intel on scammers, building out so-called “honeypot” chatbots, which will mimic real-life victims. This will help map out the networks of these cybercriminals in real-time.
To pay their salaries, build infrastructure and purchase software services, the co-founders applied for and received $305,000 worth of funding from The Small Business Innovation Research (SBIR) program. Without that program, Spokoyny says, BeeSafe wouldn’t be in business.
“The fact that these ventures are high-risk for academics is particularly what drives innovation because we tried to go out and raise money last year, and our technology was too high-risk for investors,” Spokoyny says. “That’s why we applied to the Small Business Innovation Research.”
SBIR and its peer, the Small Business Technology Transfer (STTR) are decades-old programs that have doled out more than $70 billion in funding to entrepreneurial research projects that show promise for innovation and mass commercialization. More than 30,000 companies owe their success in part to SBIR and STTR.
The main difference between the two is that SBIR, which started in 1982, has mainly focused on small businesses conducting their own R&D efforts while STTR, which started in 1992, often involves a partnership between a university or research lab and an entrepreneur. The three phases of the program are broken down into research, prototyping, and commercialization, respectively.
Notable beneficiaries of SBIR include Qualcomm, which received $1.5 million in funding in the 1980s to build the technology underpinning our modern cellular networks.
But as of this month, both SBIR and SBTT are on ice.
Funding for the programs ran out on Oct. 1 and was the subject of heated debate in the Senate Committee on Small Business & Entrepreneurship between the committee’s top lawmakers: Sen. Joni Ernst (R-IA), committee chair, and Sen. Ed Markey (D-MA), ranking member.
“The SBIR & STTR programs fuel America’s innovation engine,” Markey, who has sought to make the program permanent, said last week. “Cutting successful small businesses out would be like cutting your top scorer before a big game.”
Sen. Ernst introduced her own bill as well, arguing that the programs are vulnerable to abuse from foreign adversaries like China. She pointed to a report she released that found 835 applications were flagged for having foreign risks between 2023 and 2024. (Of those applications, 303 were denied.)
“Even one case is too many,” Ernst said.
To the benefit of thousands of small companies, the government sought to obligate $4.7 billion across the two programs during fiscal year 2024.
And for as much funding as SBIR and SBTT have given out, they’ve also helped save the government money as well. A total of $4.5 million in SBIR awards allowed the Scottsdale, Arizona-based W5 Technologies, a mobile communication company, to come in and enhance a global communication network used by the government. In doing so, they helped the Department of Defense save $30 million, according to company CEO Jason Ferguson.
How did they do it? In essence, by taking a cell tower and extending the antenna out by 20,000 miles with unique satellite technology.
W5’s system uses what’s known as geosynchronous satellites. No bigger than two shoeboxes glued together, these satellites orbit the moon more closely than they do Earth. What’s special about them is that they rotate around the equator at the same speed as that of the Earth’s rotation. So from our perspective from Earth, the satellite is stationary. Because of this, W5 uses these satellites as cell towers to bounce signals off of. The technology helps American warfighters communicate in real-time (For security reasons, the military doesn’t use commercial networks like Verizon or Comcast for their comms.)
“The SBIR program allowed us to make the transition from only supporting large primes to us being a prime ourselves and really taking an idea, turning it into a working product, marketing it, and then selling it back into the Department of Defense,” Ferguson says.
In fostering American innovation, the programs have not just heightened national security, but strengthened economic security in the commercialization efforts of some of these projects. (More successful ventures allow for their expansion, which injects more jobs in a local ecosystem.)
So what happens to American innovation and to the small entities that might flounder without the benefits derived from SBIR and STTR? Just ask BeeSafe’s Spokoyny. “There’s a very good chance that without [SBIR funding], I wouldn’t have started the company with my co-founder.”
Melissa Angell
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