SoCal's defense startups secure vital funding boost

A bill restoring crucial federal funding to defense startups in Southern California is on its way to the president's desk after making it through Congress on Tuesday.

The Small Business Innovation and Economic Security Act was passed following a months-long impasse over funding the Small Business Innovation Research (SBIR), the Small Business Technology Transfer (STTR) and related programs.

The dispute imperiled funding that was deemed essential for Southern California's resurgent defense and aerospace sectors.

The bipartisan bill, which extends the programs through 2031, was passed by the Senate this month and, after delays due to the Iran war, was approved by the House on Tuesday.

President Trump has vowed to not sign any legislation until Congress approves the SAVE America Act, which would require proof of citizenship to vote — a measure strongly opposed by Democrats.

Read more: L.A.'s defense industry is booming. Federal funding crunch could change that

However, the SBIR reauthorization bill can become law before the end of the month without his signature. The White House did not respond to a request for comment.

The SBA programs provide more than $4 billion in seed funding to private startups across various industries that provide valuable services to the government and public, stimulate the economy and help maintain the country's competitive edge.

The money is awarded by multiple agencies, including the Health and Human Services and Energy departments and NASA, with the military distributing the largest portion. The SBA funding ran out Sept. 30 as lawmakers clashed over proposed reforms.

The money has helped launch defense and aerospace startups across Southern California founded by SpaceX alumni and other entrepreneurs.

In 2024, 71 California companies received $173 million of the SBA funding awarded by SpaceWERX, an El Segundo-based arm of the U.S. Space Force that supports defense startups, as well as aerospace startups that also have defense businesses.

Local SBA funding recipients include Costa Mesa autonomous weapons maker Anduril Industries, now valued at more than $30 billion, and satellite platform manufacturers K2 Space in Torrance and Apex Space in Los Angeles.

Sen. Joni Ernst (R-Iowa), chair of the Senate Committee on Small Business and Entrepreneurship, held up reauthorizing the program over concerns that some startups had become too reliant on the money instead of developing viable commercial businesses. She proposed a bill with a $75-million lifetime funding cap for individual companies.