It is super risky and we had this discussion before on HN. SBIR grants are often given for "blue sky" projects. You could say that is the definition of "risk".
A guy who agreed with me: https://news.ycombinator.com/item?id=17997184
Matthew Weinberg, former Special Advisor to the SBA's Office of Investment and Innovation, disagrees with you. With respect to the SBIR program, he said:
"It’s fundamentally astounding that the federal government—not private venture capital firms or banks—is the entity backing these moonshot investments that end up changing the world[1]."
> If your small business focuses on developing scientific or technological breakthroughs, we’ll tell you exactly how to get the SBIR funds you need to change the world.
Given that, I would assume Matthew Weinberg agrees with GP, and means "astounding" with a positive connotation.
If the premise is that inefficient markets and long time horizons inhibit investments that provide a net-return, then why does it need continued taxpayer funding?
Haven't you answered your own question? Or perhaps I'm not understanding your statement.
Inefficient markets and long term horizons _do_ inhibit investments by private sector entities which are more focused on short term plans. This _is_ why it requires taxpayer funding.
Private Capital can’t reap such benefits, which also tend to be longer term investments, and thus is not interested.
Of course it is wonderful in theory. In practice, my own opinion is that it's a really bad idea.
In my experience, venture capitalists are often willing to invest in ideas with a low likelihood of success as well.
- VC funding is a thing only in SV and a few other cities. Most cities do not have a vibrant ecosystem that is accessible to Small Businesses
- VC's only invest in ideas that have both a high likelihood of success and a large payout. SBIR focuses on ideas that have a high likelihood of success without a large payout a.k.a the vast majority of small businesses in America
> I would much rather this money be granted for research that then becomes public domain.
Y not both?
> Why should our taxes be handed out for risky business endeavors with no direct public benefit, when the private sector already has the means to handle this?
- its not risky
- private VC cannot be relied on to fund certain kinds of businesses. American Bank loans are decidedly low-risk too (and can't be swapped for equity)
> "But the government gives tons of handouts to existing companies" isn't a good answer, either. Two wrongs etc.
That is not the answer. If that was, I agree it wouldn't be a good one.
In general, grants of Capital to small ventures that have good foundations is not a "waste of taxpayer money". The success of those businesses creates jobs, that pay taxes, support the local economy etc. They're a waste only if you think giving grants is literally burning a pile of money, which it is not.