The Big Story: R&D funding, universal broadband on congressional fall to-do list
Congress returns to Capitol Hill in early September with a long to-do list, and several startup priorities are on the to-do list. High on that list is reauthorizing the Small Business Innovation Research (SBIR) program, which is set to expire at the end of September. Without immediate action, policymakers risk leaving startups without one of the few, reliable, non-dilutive sources of funding for expensive research and development (R&D).
With just over a month until the expiration deadline, Congress must act quickly to reauthorize SBIR. For decades, SBIR and its companion program, the Small Business Technology Transfer Program has been a lifeline for startups, providing funding that helps all founders pursue costly R&D with a path to bring new products and ideas to market. Throughout the year, Congress has held hearings, and lawmakers have introduced legislation to reauthorize the program, including some bills that contain provisions to permanents reauthorize the program, create a pilot program to accelerate the evaluation of some SBIR awards, and direct the Small Business Administration to help small businesses prepare to apply for the federal grants. While any of these would help startups by making SBIR more accessible and easier to navigate, given the fast-approaching deadline, Congress should prioritize getting a reauthorization bill across the finish line so the federal grant program remains available to those looking to enter the startup ecosystem.
Another item on the congressional to-do list this fall is policymakers’ push to re-visit the Universal Service Fund (USF), a federal program that supports a series of broadband expansion projects for rural and low-income communities, as well as connectivity in schools and libraries. Earlier this summer, the Supreme Court ruled that USF could continue to collect fees from telecommunications companies to fund the broadband projects. Now, lawmakers are renewing their efforts to assess and reform USF, and they’re collecting public input until mid-September. With a packed year-end agenda and a looming government funding deadline, it’s unclear how much progress Congress can make to advance these startup priorities and others—including progress on a federal privacy framework and resuming efforts to prevent a state patchwork on AI—but lawmakers should work toward strengthening the U.S. innovation ecosystem when they return from recess next month.
Policy Roundup:
California agency underscores problems with proposed state AI legislation. This week, the California Senate Appropriations Committee considered AB 1018, a bill to regulate how AI is used in areas like education, employment, finance, health, housing, and more. As part of analyzing the bill, the committee considered input from state agencies, including the State Water Board, who highlighted concerns—many shared by startups—that the bill’s definitions are “vague, ambiguous, and could encompass many current tools used, like excel workbooks,” and the obligations, “if feasible at all,” would create millions in annual costs.
Trump continues to tease exorbitant tariff rates, Democrats highlight costs. Last Friday, President Donald Trump again indicated he would soon set tariffs on semiconductors, though this time he said the tariffs could be as high as “200 percent, 300 percent.” Semiconductors are key components in nearly all electronics and tariffs will increase costs, especially for hardware startups and the data infrastructure that all startups rely upon. This week, Democrats on the Joint Economic Committee released a report underlining the economic costs, uncertainty, and job losses associated with the Trump Administration’s tariffs.
Judge says Google is not a common carrier, win for content moderation. An Ohio judge ruled last Friday that Google is not a common carrier and can sort search results as it sees fit. Ohio Attorney General Dave Yost (R) had sued in hopes of using common carrier status to regulate Internet platforms and restrict their ability to remove harmful content. The ability to moderate content is essential for all Internet platforms—especially startups—to curate unique products tailored to their communities of users.
U.S., EU release details of trade framework. On Thursday, the U.S. and EU published a joint statement outlining the terms of the deal they reached last month. They agreed to address digital trade barriers, including not adopting network usage fees, not imposing customs duties on electronic transmissions, and supporting making the moratorium on customs duties on electronic transmissions at the World Trade Organization permanent. The deal doesn’t address or enumerate all digital trade barriers faced by U.S. startups—and leaves out burdensome tech rules—but commitments to address barriers are a positive step forward, especially as tariffs on digital goods would undermine startup competitiveness globally.
Startup Roundup:
#StartupsEverywhere: Portland, Oregon. Scott Kveton is a five-time startup founder working to save lawyers and paralegals precious time in case work with his new AI software, CaseMark. We sat down with Scott to discuss his company, his stance on the state-level approach to AI legislation, and his decades-long experience with raising capital.
