TABLE 3-2 Exclusion of Venture-funded Firms



SBIR Phase II Winners Receiving VC Funding


>$5 Million


>1 Round


>$5 Million or >1 Round


SOURCE: Thomson VentureSource.

The 183 firms meeting one or both of the criteria constitute our pool of potentially excluded companies. They constitute 11.9 percent of all the 1,536 NIH Phase II winners 1992-2002 reported by SBA.

For the remainder of this report, we define “Venture-funded firms” as those 183 firms that would, based on the criteria above, have been excluded from the SBIR program.


However, these firms have not all in practice been excluded from eligibility by the SBA ruling. Some have gone out of business. Others have been acquired, still others have gone public (see below for a more detailed discussion of the last).

We performed an individual review of each of the 183 firms identified above, using the individual company pages of the Hoover’s database of small firms, data from the SEC, and web searches for firms that appear to be out of business or otherwise no longer operating. The results of this analysis are shown in Table 3-3.

As a result of this analysis, we can identify three groups of firms:

  • Those that are definitely excluded from the program on grounds other than venture ownership (out of business, acquired, or foreign-owned).8

  • Those apparently still eligible aside from venture ownership (privately held).

  • Those possibly excluded on other grounds (publicly traded companies).


The four foreign owned firms were not affected because they were always ineligible. Including the 21 firms that went out of business is preferable to excluding them. They were, after all, affected even if the net result was close to zero given that they went out of business.

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