[michaelrpeskin]

Most SBIRs are cost-plus, at least anything of meaningful size. It's great to keep a small company going. And since the government pays you to develop your commercial software that you can then sell privately, you can build your margins a bit. I'm with a small contractor we're about 70% government, 30% commercial, but we can't compete with the big boys. The government says what our billing rate needs to be and how much profit we can build in. So we keep missing out on hiring, talent keeps getting sucked away to the big VC backed places because they don't care about burning money until they hit it out of the park.

I'd say it's two incompatible business models: VCs are high variance and SBIRs (and other government contract vehicles) are low variance but will sustain you for a long time (once you get in).