Testimony of Austin Strawhacker, MPA, Associate State Director, America's SBDC Iowa — Hearing on the Golden Age of American Innovation

Summary

Written testimony of Austin Strawhacker, Associate State Director of America's SBDC Iowa at Iowa State University, before the U.S. Senate Committee on Small Business and Entrepreneurship at a March 5, 2025 hearing on reforming SBIR-STTR for the 21st Century. The testimony describes the SBDC network and reports that America's SBDC Iowa clients launched 225 new businesses and created 1,795 new jobs in 2024. It is organized around three points: the importance of the SBIR and STTR programs, the importance of localized support such as Senator Ernst's Entrepreneur Expo, and challenges and opportunities. Its suggestions include a smaller Phase 1 award amount, more structured feedback on declined proposals, and measures addressing the finding that just 5 states account for 46% of awards.

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                                        Testimony of
                                 Austin Strawhacker, MPA
                      Associate State Director, America’s SBDC Iowa
                        Iowa State University Ivy College of Business
        Before the U.S. Senate Committee on Small Business and Entrepreneurship
   Hearing on the Golden Age of American Innovation: Reforming SBIR-STTR for the 21st
                                       Century
                                       March 5, 2025
                                          2:30 P.M.
Chair Ernst, Ranking Member Markey, and Distinguished Members of the Committee,
Thank you for the opportunity to testify on the reauthorization of the Small Business
Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. As
the Associate State Director of America’s SBDC Iowa, it is my privilege to work directly with
our team that empowers entrepreneurs and small businesses across Iowa, helping them
navigate the challenges of starting, growing, and sustaining their ventures. Specifically, I
provide oversight of our Technology and Commercialization Center, which provides
guidance to innovators and often includes the exploration of SBIR/STTR funding.
I am proud to work for an organization that is vital to the success of many businesses. The
Small Business Development Center (SBDC) network was established in 1980 as a
nationwide initiative to provide small businesses with the necessary guidance and
resources to thrive. With nearly 1,000 centers across the country, SBDCs have been
instrumental in fostering entrepreneurship, delivering technical assistance, and connecting
small businesses to critical funding opportunities. For over 45 years, SBDCs have helped
millions of entrepreneurs start and expand their businesses, leading to job creation and
economic growth in every state.
Many SBDCs also leverage the Federal and State Technology (FAST) Partnership Program
grant to further support innovation. The FAST grant enables SBDCs to provide specialized
training, proposal development assistance, and mentorship to small businesses seeking
SBIR and STTR funding. By increasing awareness and helping applicants successfully
navigate the complexity of these programs, the FAST grant recipients can act as a
complimentary resource in helping more small businesses, particularly in rural areas,
access federal research funding.
America’s SBDC Iowa plays a crucial role in fostering innovation, strengthening local
economies, and driving small business success across the state. We annually engage with
approximately 5,000 clients. Last year, in 2024, our clients launched 225 new businesses,
creating 1,795 new jobs, generating $174 million in sales, and, in the process, acquiring
$57 million in new capital. Taken together, these results translate a return on investment
(ROI) of 3.7.
These results are achieved because America’s SBDC Iowa operates as a statewide
network. Fifteen regional centers strategically hosted by eleven community colleges and
our three public universities in the state provide direct business consulting, education, and
technical assistance to entrepreneurs. Hosted by Iowa State University, the network
collaborates with local economic development organizations, universities, community
colleges, and government agencies to deliver customized support to small businesses. It is
an effective and well-proven structure. It allows the Iowa SBDC to provide tailored services
based on local and regional needs, ensuring that businesses in both urban and rural areas
receive the support to succeed.
In our state, the regional SBDC centers serve as a pipeline to identify and support
technology-driven businesses and to lead them to our Technology and Commercialization
Center. This center specializes in assisting high-tech entrepreneurs with SBIR and STTR
proposal development, intellectual property strategies, and commercialization planning.
By leveraging the expertise of both regional advisors and state-level specialists, America’s
SBDC Iowa ensures that innovative businesses receive comprehensive guidance from
ideation to market entry. A key part of that pathway is to enhance their competitiveness in
securing federal research funding.
Today, my goal is to communicate three main points:
   1. The Importance of SBIR/STTR
   2. The Importance of Localized Support
   3. Challenges and Opportunities


The Importance of SBIR and STTR
For over four decades, the SBIR and STTR programs have been instrumental in ensuring
that American small businesses have a significant role to play in federal research and
development. These initiatives enable small firms to develop groundbreaking technologies,
create high-quality jobs, and compete globally. In Iowa, we see firsthand how SBIR and
STTR funding empowers companies to bridge the gap between research and market
deployment, particularly in sectors prioritized in our state, such as advanced
manufacturing, agricultural technology, and biosciences.
The impact of these programs extends beyond direct recipients. SBIR/STTR funding attracts
follow-on investment, strengthens university partnerships, and catalyzes
commercialization pathways that might not otherwise exist. Many of the innovative
businesses we work with at America’s SBDC Iowa have leveraged these programs to
transform ideas into viable businesses, generating economic benefits that ripple through
our local communities. This follow-on investment has led to job creation, expansion of
local supply chains, and increased private-sector capital flow into high-growth small
businesses. Companies that receive SBIR/STTR funding often experience accelerated
growth, hiring highly skilled workers and boosting local economies. Demonstrated early
success with federal funding makes these businesses more attractive to venture capitalists
and private investors. It becomes an important part of how they secure the additional
resources necessary to scale and bring cutting-edge innovations to market.
Iowa, like many states, provides direct follow-on investments upon a successful proposal.
Iowa’s investment, distributed through the Iowa Economic Development Authority, equates
to a $50,000 investment for a successful Phase 1 award and $25,000 for a successful
Phase 2. Furthermore, over 50% of successful SBIR/STTR applications we have helped with
have leveraged their awards to generate follow-on funding that has more than doubled the
total investment into these companies. The initial awards often allow other investors to feel
more comfortable with these companies because of the solid research base they are able
to achieve through an SBIR/STTR award.
Rural entrepreneurs, in particular, embody the grit, determination, and resourcefulness
that define the American small business spirit. Despite facing unique challenges such as
limited access to capital, workforce shortages, and geographic barriers, rural
entrepreneurs demonstrate their drive and commitment to innovate, develop cutting-edge
solutions, and create sustainable businesses that strengthen local economies. The SBIR
and STTR programs provide them with the vital support needed to take calculated risks,
push the boundaries of innovation, and contribute to the technological advancement of
our nation.
The Importance of Localized Support
The success of small businesses, particularly those in rural communities, is often tied
directly to the accessibility of localized support. America’s SBDC Iowa and other SBDCs
across the country play a key role in providing hands-on, local assistance to entrepreneurs,
ensuring they have the resources, knowledge, and mentorship necessary for success. That
includes support to navigate funding opportunities like SBIR and STTR. Our SBDC advisors
work closely with local businesses to guide them through the proposal process, help refine
their commercialization strategies, and connect them with the broader innovation
ecosystem.
An example of a newly created impactful initiative supporting entrepreneurs in Iowa is
Senator Ernst’s Entrepreneur Expo, an annual event hosted by the Senator in collaboration
with America’s SBDC Iowa and the Iowa State University Center for Industrial Research and
Service (CIRAS). The Entrepreneur Expo, which has been held at Iowa State University in
Ames, IA, during its first two years, provides an important opportunity for small businesses,
startups, and innovators to connect with industry experts, government resources, and
potential investors. The expo fosters collaboration, provides hands-on technical
assistance, and showcases the immense talent and ingenuity present in our state.
The success of Senator Ernst’s Entrepreneur Expo demonstrates the value of convening
local stakeholders to support small business innovation and commercialization. It is a
worthy model for other states to consider replicating, as it strengthens local
entrepreneurial ecosystems, bridges gaps between researchers and business leaders, and
helps small businesses navigate federal funding opportunities like SBIR and STTR. By
exploring similar initiatives nationwide, the impact of federal programs on local
communities can amplify and drive the potential for greater economic development across
the country.
To further strengthen the local support and collaboration, the Iowa SBDC, along with our
partners in Kansas, Nebraska, and Oklahoma, have established a “Great Plains SBIR”
working group. This working group meets with a monthly cadence and is a chance for first-
hand technical providers to share best practices, collectively work on solutions, and
strengthen the regional support network.
Challenges and Opportunities for Improvement
While the SBIR and STTR programs have been highly effective and transformative for over
40 years, there are opportunities to enhance their accessibility and impact.
First, streamlining the application process and creating a smaller Phase 1 award amount
would lower barriers for first-time applicants, particularly those in rural areas. Specifically,
this step would allow for very early-stage research, the kind of research that is so important
to small businesses, to be able to explore and describe the commercialization potential of
their idea before they are truly ready to begin feasibility and commercialization work. This
would allow a far greater number of firms the opportunity to develop critical technologies,
roadmap their path to commercialization, and present a significantly stronger Phase 2
proposal that could eventually lead to more globally impactful technologies.
Second, many companies, especially those seeking Phase I awards, receive very little
feedback if their proposal is not accepted. Some proposals are declined due to minor
issues that the SBDCs could resolve if we were informed of them or knew of commonly
made mistakes. Increasing transparency in the review process and enhancing structured
feedback would greatly improve the ability of small businesses to refine their applications
and submit stronger proposals, ultimately increasing participation and success rates.
Third, there should be recognition that innovation exists everywhere across our nation.
Many companies in Iowa and in the heartland struggle to gain the same competitive
advantage as firms located in other parts of the country. According to public data from
SBIR.gov, just 5 states account for 46% of both the number of awards and total award
dollars. While organizations like SBDCs and other FAST recipients help bridge this gap,
additional measures could ensure that innovative companies receive full consideration, no
matter where they are geographically. Addressing this disparity through targeted outreach,
regional training, and improved evaluation transparency could ensure a level playing field
for all entrepreneurs, regardless of geography.
Conclusion
For over 40 years, SBIR and STTR programs have played a transformative role in fostering
innovation, supporting small businesses, and driving economic growth across the country.
These programs not only help entrepreneurs bring groundbreaking technologies to market
but also stimulate local economies by attracting follow-on investment and creating high-
quality jobs. The impact of these initiatives is amplified through the work of America’s
SBDC Iowa and other SBDC networks nationwide, which serve as resource partners
providing vital support to small businesses at every stage of development.
By leveraging the support of the SBDCs, small businesses gain access to expertise in
commercialization, funding strategies, and technical assistance, ensuring they can fully
capitalize on the opportunities provided by the SBIR/STTR program. As these programs
continue to evolve, the collaboration between federal agencies, local resource providers,
and entrepreneurs will be essential in maintaining the United States' leadership in
innovation. Ensuring that small businesses have the tools, knowledge, and support they
need will drive continued technological advancement and economic success for
communities across the country.
Thank you for your time and consideration. I welcome any questions you may have.


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