The Future of Funding for Innovation, Entrepreneurship, and Small Businesses – Insights from InBIA
- Nicole Muise-Kielkucki
- May 8
- 5 min read
Fourth Economy learned about the federal funding outlook for innovation, entrepreneurship, and small businesses in light of the current federal funding disruptions at ICBI39, the 39th International Conference on Business Incubation, hosted by the International Business Innovation Association (InBIA). ICBI39 was held in Philadelphia, Pennsylvania, from April 6-9, 2025. It brought together entrepreneur support professionals from around the world.
Why do we care about funding for innovation and entrepreneurship?
ICBI39’s keynote speaker, Jen Gilburg – Deputy Secretary Technology and Entrepreneurship at Pennsylvania’s Department of Community and Economic Development – started her talk with an important reminder: Innovation is a critical driving force of economic growth and development in every community. Innovation and technology help reduce costs (important despite this period of decreasing inflation we are experiencing), increase output (key as we face continued supply chain disruptions), and expand productivity nationwide (to continue to create economic opportunity for all in our communities). And with one job created in the tech sector generating many more in the service sector, this type of economic growth has an economic multiplier that proves its wide reaching impact.
What’s at stake?
Gilburg also reminded us that innovation is at the heart of progress. No country can grow doing the same things the same way forever, and therefore our global competitiveness is on the line as we consider how to fund innovation and entrepreneurship in this country over the next four years.
At the same time, daily announcements from the federal government about the latest funding cut, program dismantling, or agency de-staffing are alarming. This is likely, at least in part, completely intentional. Creating an environment of loud chaos makes it hard for any one of us to launch a decisive response, let alone know what rises to a level of importance that we should be paying attention to.
Most entrepreneurship support organizations (ESOs)—whether based in universities, academic settings, or private non-profits—are facing uncertainty. This makes it difficult to plan future programming, hiring, and partnerships. ESOs are justifiably concerned that their program funding may be in jeopardy if word-searches of internal and external communications (by seemingly dumb-algorithms, nothing as smart as our pal Gemini!) turn up the ever-growing list of disappeared-words, which include:
Equity - imagine trying to talk about building home equity or taking an equity stake in a startup without this word!
Diversity - we will need to find another way to talk about the importance of having a diverse, resilient industry mix to better weather economic downturns!
Minority - despite an ESO’s ability to take a minority stake in a company investment!
Many ESOs have vowed to continue to “do-the-work,” even if it means changing the language they are using. And while some of this preemptive self-censoring is unfortunate, much of it is a necessary action to preserve the ability of organizations to continue to advance their mission.
The current state of affairs
Still, one key lesson from this year’s ICBI conference was that it is important to separate fact from fiction, to avoid spiraling while imagining a future that has not yet occurred, and to focus on the real impacts that are being felt today/will be felt tomorrow if critical programs go away. In an effort to do this, while recognizing that the status of many of these issues may have changed by the time you are reading this (or even once this piece is published!), here are a few facts shared by industry leaders at the conference:
Funding from the Economic Development Administration (EDA) has been frozen, including grant awards announced in January of this year. Anticipated FY24 Build to Scale (B2S) program awards totalling $50 million have not been announced. The B2S program was designed to strengthen entrepreneurial ecosystems and support technology-based businesses as they grow to create high-skill, high-wage jobs.
The Small Business Administration (SBA) fired hundreds of workers involved in critical functions like disaster assistance and loan oversight in February 2025. The SBA announced in March 2025 an agency-wide reorganization and a 43% staff reduction that will likely result in a reduction in the agency’s ability to provide direct services to the tens of thousands of entrepreneurs and small businesses it assists every year.
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are currently active through September 2025. In March 2025 the Senate Committee on Small Business & Entrepreneurship introduced the INNOVATE Act, which proposes to reauthorize SBIR and STTR (administered through the SBA) for an additional three years through 2028. These programs stimulate technological innovation and commercialization in the private sector with non-dilutive, private, and match funding.
Though the CDFI Fund had been slated for reduction by Executive Order, the Treasury Department affirmed in April 2025 that all 11 programs the CDFI Fund administers have statutory backing, which override executive directive. CDFIs have broad bi-partisan support, as they advance economic development in economically distressed and rural communities by enabling targeted investments in eligible areas.
The CHIPS Act program faces potential disruptions due to staff layoffs within the office overseeing its implementation, despite enabling over 100 semiconductor projects totaling more than $500 billion in private investments across 25 states since 2020. However, calls to dismantle the CHIPS Act have faced pushback from lawmakers on both sides of the aisle, and in March 2025 the Senate Commerce Committee advanced a bipartisan bill aimed at further strengthening the semiconductor supply chain and attracting foreign investment.
The current administration cancelled funding to 10 of the nation’s 51 Manufacturing Extension Partnership (MEP) program centers in April 2025, stoking bipartisan and industry concerns about funding renewal deadlines for additional centers arriving later in 2025. MEP plays a critical role in supporting small and medium-sized manufacturers, creating jobs, and boosting economic growth in manufacturing communities.
So, while some of the stated objectives of this administration align with goals of entrepreneurship, innovation, and tech-based economic development, attacks on fundamental programs like these that invest in entrepreneurs and businesses across the country warrants attention.
It is important to know that you can advocate for these and similar programs by communicating directly with your elected representatives. Lawmakers are by nature generalists, and rely on hearing from constituents directly affected by issues at hand.
It is also important to acknowledge state actions filling in the gaps. For example, Pennsylvania Governor Josh Shapiro’s Administration introduced a $50 million innovation fund in the state’s 2025-2026 budget proposal to support innovation and broader economic development, echoing the state’s tagline, “innovating to win.”
In conclusion, it is critical for ESOs to build awareness about the funding outlook for crucial federal programs that bolster innovation, entrepreneurship, and economic development, actively communicate about their importance, and build a diverse funding base that can sustain funding cuts and weather uncertainty.
At Fourth Economy we have a 15-year history of partnering with entrepreneurial ecosystem builders to create a unifying vision, develop data-informed goals, and put forward implementation plans to guide action and spur innovation. If you’d like to strategize about what this might look like in your community, please get in touch.
