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This paper integrates the Kauffman Firm Survey with the Small Business Innovation Research (SBIR) recipient dataset to examine in more depth the characteristics of small business start-ups that received R&D subsidy from SBIR. Our selection analysis first shows that SBIR program funds are distributed disproportionately to start-ups whose owner has a post-graduate education. The odds of being granted SBIR R&D subsidies are also higher for those who had prior R&D experience and owned patents at the start of their business operations. Start-ups that are operating in the high-technology sector are also more likely to receive SBIR funds than start-ups in traditional sectors. Surprisingly, start-ups that did not sell goods and services are more likely to receive SBIR grants. Interestingly, location matters but at a different direction: start-ups located in states that are not known for their R&D performance are more likely to receive SBIR funding.

What Types of Start-ups Receive Funding from the Small Business Innovation Research (SBIR) Program?: Evidence from the Kauffman Firm Survey