U.S. Department of Health & Human Services

The U.S. Department of Health & Human Services (HHS) operates as the principal agency of the U.S. government responsible for protecting the health of all Americans and providing essential human services. Unlike a traditional venture capital firm, HHS does not engage in equity investments in private companies. Instead, its "investments" primarily take the form of grants, cooperative agreements, and contracts awarded to a diverse range of entities, including academic institutions, non-profit organizations, state and local governments, and small businesses. These funding mechanisms are designed to support biomedical research, public health initiatives, healthcare service delivery, and the development of innovative health technologies.

A significant avenue through which HHS supports private sector innovation is via its participation in the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. These highly competitive, non-dilutive funding programs are managed by various HHS agencies, most notably the National Institutes of Health (NIH), which had an estimated budget of approximately $47.5 billion in fiscal year 2023. The SBIR/STTR programs specifically target small businesses engaged in research and development with the potential for commercialization. They provide critical early-stage capital, enabling startups to de-risk technologies and advance promising solutions in areas like therapeutics, diagnostics, medical devices, and digital health.

For small businesses, typical initial funding through the SBIR/STTR programs often comes in the form of a Phase I grant, which can provide up to approximately $299,000 for proof-of-concept research over a period of 6 to 12 months. Successful Phase I awardees are then eligible to apply for larger Phase II grants, which can extend funding up to around $2,000,000 over two years to further develop and commercialize their innovations. While these are not "cheques" in the venture capital sense, they represent substantial non-dilutive capital injections that can be instrumental for early-stage health and life science companies. HHS's funding is therefore a crucial component of the innovation ecosystem, fostering advancements that might otherwise struggle to attract traditional private investment due to their early stage or high-risk nature.