The INNOVATE Act proposes revamping the SBIR/STTR process. In this guide, we explore what it could change and how it could impact your business.
A significant piece of legislation is on the horizon that could reshape the federal funding landscape for small businesses and nontraditional contractors. The Investing in National Next-Generation Opportunities for Venture Acceleration and Technological Excellence (INNOVATE) Act, introduced by Senator Joni Ernst (R-IA), aims to reform the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.
Ernst’s goal is simple: cut red tape, focus on real-world application, protect American innovation, and bring new companies into the fold. For the innovative businesses Vertx Partners works with, this bill could represent a significant opportunity. Here’s Vertx’s breakdown of what the INNOVATE Act proposes and why it matters to you.
Simplified Entry for First-Time Innovators
One of the most exciting changes is the creation of a new, more accessible on-ramp for companies new to the SBIR/STTR ecosystem.
The Act proposes a new “Phase IA” with smaller, one-time awards of around $40,000. These will feature a much shorter, streamlined application process focused on an idea’s commercial potential.
This change dramatically lowers the barrier to entry. For researchers or small startups without extensive grant-writing experience, it provides a crucial first step to gain entry and establish a track record. The Vertx Partners team is specially equipped to help you capitalize on this new entry point. Reach out today to position your initial concept for success from day one!
Focusing on Commercialization, Not Just Awards
The legislation takes direct aim at “SBIR mills” – firms that perpetually win awards without successfully transitioning technology into practical use. The new focus is on tangible outcomes.
The bill requires businesses with dozens of awards to prove they are commercially viable and not solely reliant on SBIR funding. It also introduces a lifetime cap on awards (totaling $75 million) to encourage graduation from the program.
This shift is great news for companies serious about bridging the “Valley of Death.” It levels the playing field, ensuring that merit-based, commercially-promising technologies are the ones that get funded. Vertx specializes in helping companies navigate this exact challenge, turning groundbreaking research into real-world solutions.
Scaling Defense & Warfighter-Relevant Tech
For companies developing technology critical to national security, the INNOVATE Act creates a new pathway to scale by empowering the Department of War (DoW) to create targeted, larger-dollar “strategic breakthrough awards” of up to $30 million. These awards are designed to accelerate the most promising technologies into long-term contracts and get them into the hands of the warfighter.
This is a direct pipeline from R&D to commercial deployment. If your technology has a clear DoW end-user, this provision creates an unprecedented opportunity to move beyond the prototype stage and secure major contracts. This initiative aligns precisely with Vertx’s mission to support the defense industrial base.
Strengthened IP & Foreign Risk Protection
In an era of global competition, protecting taxpayer-funded intellectual property (IP) is a central issue. The INNOVATE Act introduces stricter safeguards, establishing a clear, government-wide definition of “foreign risk” and creating a list of ties to countries of concern that would make a business ineligible for an award. It also gives federal agencies the authority to claw back funds if a company exposes its SBIR-funded IP to adversarial influence.
For any company working on dual-use or defense-related technology, compliance and security are non-negotiable. These new rules underscore the importance of having robust IP protection and due diligence plans in place.
More Efficiency, Less Bureaucracy
Small businesses need to focus their limited resources on innovation, not administrative hurdles. The INNOVATE Act aims to streamline the entire SBIR/STTR process.
The legislation proposes eliminating underperforming pilot programs, restricting the number of proposals a single company can submit annually, and generally cutting bureaucratic red tape.
This change matters because a more efficient process means a faster path from proposal to funding. By reducing administrative friction, the INNOVATE Act will help small companies stay nimble and focused on their core mission.
“A Golden Age of American Innovation”
Senator Ernst calls the INNOVATE Act a way of ushering in a “Golden Age of American Innovation.” Vertx Partners believes the Act signals a clear commitment to fostering a more dynamic, secure, and results-oriented contracting ecosystem. It prioritizes new entrants, rewards commercial success, and strengthens the U.S. defense industrial base.
For nontraditional contractors and forward-thinking small businesses, these reforms represent policy change worth celebrating. WIN and Vertx believe they may be a gateway to new opportunities.
Ready to navigate the new SBIR/STTR landscape and secure your next federal contract? Contact Vertx Partners today to learn how we can position your company for success.