The Big Story: Startup priorities remain as congressional calendar winds down
Congress returned to Capitol Hill this month with a long to-do list after ending the longest government shutdown in U.S. history, and several startup priorities are back on the agenda. High on that list is the recently expired authorization for the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which serve as a critical source of non-dilutive startup funding. Startups are also watching as lawmakers continue conversations to reform federal programs that support broadband expansion in rural and low-income communities as well as connectivity in schools and libraries.
For decades, the SBIR and STTR programs have been a lifeline for startups, providing funding that supports founders pursuing costly R&D innovations with a path to bring their new products and ideas to market. Throughout the year, Congress held hearings and introduced multiple bills to reauthorize the program, including proposals that would have made the SBIR program permanent, created a pilot to expedite award evaluations, and directed the Small Business Administration to assist small businesses in preparing stronger grant applications. While the House passed a clean, one-year extension of the programs, the Senate was unable to pass the legislation before the programs expired at the end of September. Congress needs to quickly reauthorize the program to avoid continued disruption to these crucial funding pipelines for startups.
Another policy debate impacting the startup ecosystem is lawmakers’ work to reform federal broadband programs. The Universal Service Fund (USF) is a Federal Communications Commission (FCC) initiative to promote universal Internet access by supporting rural and remote communities, low-income households, libraries and schools, and rural healthcare providers. Across the country, too many communities still lack affordable, reliable Internet access, keeping would-be startup founders, early employees, and users from participating in the innovation ecosystem. Between a shrinking funding base, an unsuccessful challenge at the Supreme Court, and rollbacks at the FCC, the future of USF remains uncertain. Earlier this fall, lawmakers relaunched a bipartisan working group to reform USF to make the programs more sustainable and efficient. As we explain in a new blog post this week, policymakers should ensure that these critical programs are successful and sufficiently funded without raising the cost of doing business for U.S. startups.
With the shrinking congressional calendar for the remainder of the year, policymakers should prioritize policy work that supports U.S. innovation and competitiveness, including advancing constructive USF reforms and reauthorizing SBIR and STTR.
Policy Roundup:
Trump Administration considers executive order to challenge state AI laws. In an effort to reduce the growing patchwork of rules across states, the White House is considering an executive order that would have the Justice Department challenge state-level AI laws, and condition certain federal grants on whether states align with a national AI standard. The White House effort comes as House Republicans are rumored to resurrect the proposed 10-year moratorium by inserting it into a year-end must-pass defense bill. A state-by-state patchwork of state AI laws raises costs for startups and harms innovation, and Congress should pass a thoughtful federal framework that creates uniform obligations and protections across the country.
How a patent tax would harm startup innovation. In a new blog post this week, we examine how a reported proposal to tax patent holders based on the value of their patents would fundamentally reshape the U.S. patent system and harm startup innovation by creating significant uncertainty.
House panel advances bills on AI resources for small businesses. The House Small Business Committee advanced the AI for Mainstreet Act and the AI Wisdom for Innovative Small Enterprises Act, two bipartisan proposals directing the Small Business Administration to expand AI training, guidance, and educational tools for small businesses. The bills would help small companies better understand how to adopt AI, assess risks, protect IP, improve cybersecurity, and use AI responsibly in everyday operations.
Engine urges governments to protect strong encryption. Engine joined a global coalition in a letter urging governments worldwide to advance policies that preserve strong encryption, an instrumental tool for safeguarding user privacy, protecting sensitive data, and enabling trust within innovation. The coalition warned that efforts to weaken encryption—through backdoors, key escrow systems, or other technical mandates—create systemic vulnerabilities that bad actors can exploit, erode consumer confidence, and drive users and businesses toward platforms that aren't secure. The statement comes as governments around the world—including the U.K., EU, and others—are pressuring companies or considering legislation requiring companies to undermine the integrity of their encrypted services.
Startup Roundup:
#StartupsEverywhere: New York, New York. Born to immigrant parents, Aidan Chau grew up around restaurants and saw firsthand the operational challenges they face. He built Maple, an Al phone answering service that handles orders and reservations so restaurant teams can stop missing phone calls and operate with greater efficiency. We sat down with Aidan to discuss building Maple, the potential implications of the New York RAISE Act, and how the right Al tools create jobs rather than replace them.
