“The lack of SBIR funding has a very significant influence on the entrepreneurial ecosystem in Dayton,” said Scott Koorndyk, president of The Entrepreneurs Center downtown. “But it’s really a national story, as much as any anything.”
The federal funding program annually awards more than $4 billion to startups and small businesses focused on technical problems and solutions for the federal government. About half of that is awarded by the Department of Defense.
Some of the biggest organizations making awards through the programs include the Air Force Research Laboratory (AFRL) and the Air Force Life Cycle Management Center, both based at Wright-Patterson Air Force Base. AFWERX, the Air Force innovation arm, also with ties to Wright-Patterson, has actively awarded SBIR/STTR dollars.
Depending on the year, 40% to 45% of funds awarded to Ohio go to Dayton-area companies. Last year, more than half of those dollars came to this region, said Mike McCann, chief operating officer of The Entrepreneurs Center.
In 2024 alone, there were 230 awards for a total $156 million to Ohio companies. Out of those, 122 of the awards — and north of $89 million — went to Dayton-area firms, McCann said.
“Congress needs to take action, no question,” Koorndyk said. “It needs to be reauthorized.”
The House passed a one-year extension of the funding in September.
“At this point, it is on the senators as they consider the next steps,” said a spokeswoman for U.S. Rep. Mike Turner, R-Dayton, who is a senior member of the House Armed Services Committee and one of Wright-Patt’s most vocal advocates.
Messages seeking comment were sent to the offices of Ohio Sens. Jon Husted and Bernie Moreno.
While new SBIR funding is on pause, previous funding awards remain valid, AFWERX says on its web site. Firms that have been awarded funding are encouraged to contact their technical points of contact and contracting officers if they have questions.
A proposed restructuring of the program —proposed changes that worried some in the Dayton area — went nowhere. One proposed change would have seen the awards capped at $75 million for total competitive awards per recipient, as a lifetime limit on SBIR funding, steering funds over time toward newer firms.
Some established companies with a record of success attracting SBIR funding opposed that change.
“We’re surprised by how few people, just a small number of people, even know what’s going on,” Chris Hemmelgarn, chief technology officer for Miami Twp.-based CRG Defense, told the Dayton Daily News in August. “It’s not as broadly known as we would have expected.”
“There are large defense contracting firms like that, but that ends up trickling down to the types of companies we support every day,” said McCann, who was recently named chief operating officer of the Entrepreneurs Center.
SBIR can bridge capital gaps for smaller, younger companies that may be on to promising technologies.
“That SBIR program is a nice stopgap for some of those companies to get started,” McCann said.
An AFRL representative released a statement saying in part: “Each year, AFWERX awards approximately 1,400 SBIR/STTR contracts worth more than $1.4 billion through America’s Seed Fund, a federal initiative that supports startups and small businesses developing technologies with commercial and defense applications. The program is administered in partnership with the Small Business Administration, which oversees implementation and reports progress to Congress.”
The statement added: “All SBIR/STTR functions are currently paused until reauthorization occurs.”
Since 2021, AFWERX has awarded more than 410 SBIR/STTR contracts worth more than $243 million to Ohio small businesses.
Andrea Kunk, president and chief executive of Fairborn’s Peerless Technologies, said the SBIR issue can be polarizing. Peerless does have a contract supporting the SBIR office, she noted.
“The SBIR program historically has had a mission of funding technology development with the goal of getting it to the warfighters,” she said. “And I think that now more than ever there’s a critical need to get new technology into the hands of the warfighters as quickly as possible. Whatever mechanism that the government uses to do that is critical to the future fight.”
“If SBIR is the best program for that, then that’s fine,” she added. “But I think if the government re-looks at acquisition and looks to do things more rapidly, looks for more commercial solutions, I think it’s imperative that they look at what is the very best way to fund real technology with meaningful capabilities that are going impact on the warfighters.”
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