The Role of Innovation and Startups in the Bipartisan Infrastructure Framework 

Equal Innovation has been advising the White House and several Members of Congress about the Bipartisan Infrastructure Framework. Equal Innovation, through surveys of its network of 4,500+ innovation centers and startup accelerators, has identified hundreds of technologies and startups that could directly have an impact on the next-generation infrastructure mandated by this legislation.  We have spoken to the makers of sustainable cement, and telecom technology for autonomous highway driving, as well as those developing new models for providing broadband access to rural America.  In short, our scan of the nation shows great promise for the next generation of infrastructure to be smart, sustainable and engage with thousands of American small businesses.  

Introduction

The Bipartisan Infrastructure Framework, valued at nearly $1 trillion, presents a generational opportunity for the United States to boost small businesses in America, including small businesses led by women, persons of color and other underrepresented communities. It can also support thousands of early-stage American startup companies with innovative technologies relevant to the goals of the infrastructure legislation. The bill makes forward-looking investments in our infrastructure. In addition to solutions aimed at restoring roads, bridges, and water systems, the legislation also tackles new projects like widespread broadband access, electric vehicle charging stations, climate mitigation, and others. 

Why do we need this legislation in the first place? Here are some of the specifics behind America’s infrastructure needs. For roads and bridges, the bipartisan infrastructure plan to modernize 20,000 miles of highway and repair the worst 10,000 smaller bridges is a step in the right direction. Recent data shows that more than 35,000 of the country’s smallest bridges were rated as in need of repair.  On water systems, the federal government’s spending has dropped from 63% of total capital spending in the water sector in 1977 to 9% in 2017. As drinking water services fall to local and state governments, we see disproportionate consequences for low-income and majority nonwhite communities. The water crises in Flint, Michigan and recently in Jacksonville, Mississippi are examples of a nationwide trend. A recent survey found that 47% of maintenance work was reactionary to a system failure; we need proactive measures that preempt problems. The importance of water infrastructure is reflected in the American Jobs Plan, which pledges to eliminate all lead pipes and service lines in our drinking water systems. Beyond resolving problems from the past, our infrastructure needs to anticipate the future. Expanding broadband access is one such future need. In the age of work from home, a solid internet connection is often a prerequisite for doing your job. The Jobs Plan specifically calls out the importance of reaching the 35 percent of rural Americans who lack access to broadband at minimally acceptable speed. Climate change, in addition to its larger existential danger, also poses everyday threats to our infrastructure. From catastrophic floods to the widespread power outages in Texas to wildfires raging in California, weather advertised as “one in a hundred years” is a weekly occurrence thanks to climate change. Climate resilience, the bolstering of our infrastructure to prepare for extremes becoming the new normal, will be a key focus in years to come. 

The spending distribution for the recent bipartisan agreement reflects these priorities:

• $109 billion for Roads and bridges 
• $66 billion for Passenger and freight rail 
• $11 billion for Safety
• $39.2 billion for Public Transit 
• $65 billion for Broadband
• $17.3 billion for Ports and Waterways
• $25 billion for Airports 
• $55 billion for Water infrastructure 
• $73 billion for Power and Grid
• $46 billion for ‘Resilience’ (climate mitigation) 
• $7.5 billion for Low Carbon and Zero-Emission School Buses and Ferries
• $7.5 billion for Electric Vehicle and Low-Carbon School Buses and Ferries

The Role of Innovation and Small Business

Historically, via the Small Business Administration, the United States government has tried to provide around 20% of its contracts to small businesses. Some agencies, such as the Dept of Agriculture, set aside nearly 50% for small businesses for certain programs. These programs generally take two forms – as direct set asides of federal contracts to be awarded only to approved small businesses, and as subcontracts by prime contractors receiving major US government grants and contracts. For example, the Dept. of Transportation may provide a multi-billion dollar contract to a large construction firm to develop a new deep-water port. That company will then turn around and try to provide 20% of the contract to small businesses to do segments of the work – from manual labor to complex innovation, depending on the opportunity. In recent years, the US government has met its mandate for small business set aside contracts, but the private sector has not. With the infrastructure legislation already confirmed at 550 billion dollars, there is the potential for 110 billion in government contracts to be available to American small businesses. This is an opportunity for the Biden Administration to connect thousands of small American businesses to contracting opportunities that will ultimately lead to high quality jobs, greater localized revenue, and the expertise required for scale and job creation.

The small business opportunity presented by the American Jobs Plan should be thought about in two ways. The first is as a means of engaging, and ultimately providing contracts to, thousands of qualified small American businesses from underserved communities, including women, people of color, those with disabilities and veterans. Even though federal agencies do a good job reaching out to small businesses through programs like the SBA’s 8A and HUBZone programs, the infrastructure bill is so large that a broader outreach effort will be needed. In addition to engaging more underrepresented small businesses directly in infrastructure, there will be new opportunities here in consulting, clean energy, broadband, and other industries where entrepreneurs have not traditionally pursued government contracts. The Biden Administration should support outreach efforts to identify and engage these underrepresented entrepreneurs to apply to the big projects when they are funded by the American Jobs Plan. 

The second strategy should be to identify emerging technologies that overlap with the goals of the infrastructure bill. Across the United States, there are over 3000 startup accelerators, including those at universities and federal labs, that are producing technologies relevant to infrastructure, clean energy, broadband, and other areas covered by the American Jobs Plan. Instead of relying predominantly on large companies who may or may not have better technology, the Administration can create pathways for startups and large companies to partner – similar to the mentorship program for small business managed by the Dept of Defense. 

Here are three examples of how partnerships between startups and established businesses could promote infrastructure needs. The bill’s Middle Mile Broadband Deployment Act promotes the construction of middle mile infrastructure by companies and utilities. Middle mile refers to the segment of broadband cable that connects national providers to a local access point. The last mile, on the other hand, refers to the line from the local point to actual households and businesses. TRAXyL, a startup focused on improving last mile infrastructure, invented a way to lay optical fiber directly onto roads without cutting into the surface, improving rural broadband connectivity. Their fiber installation method costs 30-90% less per foot of cable and completes in faster time. The technology is especially useful for short distances and pathing around underground hazards. The companies and utilities who are funded by the Middle Mile Act can partner with TRAXyL to succeed at maximum potential. 

The AJP invests 36.735 billion dollars in a competitive grant program that promotes the repair and replacement of deficient and outdated bridges. Resensys is a startup that uses highly efficient wireless monitoring sensors to monitor aging highway bridges for deterioration. They produce several wireless sensor products, including a displacement/crack meter, tilt/inclination sensor, strain gauge, humidity/temperature measure, and more. In addition to being efficient, sensor technology can also be more reliable than human inspections. The major crack in the Arkansas bridge back in May was missed by an inspector two years in a row. Failures by one individual resulted in the major Interstate 40 bridge closing for over two months, $9.5 million in repairs so far, and an estimated $70 million in costs to the trucking industry. The startup’s tech offers a proactive method for bridge maintenance that does not only kick in when things have already gone wrong.

BlueConduit, a machine learning startup that uses predictive modeling to efficiently replace lead services lines, offers a capable solution for the water infrastructure component of the plan. They first used their modeling techniques in Flint, Michigan in 2016, when they helped respond to the water crisis by generating accurate estimates of which homes were likely to have lead service lines. The model was correct approximately 80% of the time, far better than the performance of an outside consulting firm which found lead service lines on 15% of excavation attempts. After using the predictive model for 2 years, Flint’s city government hired the firm in 2018, choosing a conventional business over the tech startup. It took a court order settlement in March of 2019 to force the city to re-adopt the predictive modeling. By identifying at-risk service lines, BlueConduit allows utility departments to allocate their resources efficiently. The city-hired contractors carried out 3,774 pipe excavations between January and August of 2018, at low success rates. With each excavation costing thousands of dollars, the use of predictive modeling could save tens of millions of dollars in unnecessary excavations.

These kinds of startups, often funded by US government SBIR grants, are far ahead of market leaders in terms of their advanced, sustainable technology. An outreach program to underrepresented small businesses and cutting-edge entrepreneurs that is broader than current USG efforts will increase the size of the pie that is the American Jobs Plan while exposing large companies to new technologies and points of view.

Examples of Relevant Startups

Our organization, Equal Innovation, Scouts innovative technologies, startups, research breakthroughs and promising small businesses across 4,500+ innovation, entrepreneurship, and accelerator programs worldwide, including over 3,500 in the United States. These include America’s leading research universities, economic development agencies, academic hospitals, and startup accelerators. We interview a representative from each institution and ask them to nominate their three most exciting startups from the last year. Then we connect with startup founders and complete an in-depth profile for each company. 

Of the companies profiled last year, we found about 40 that are directly relevant to goals of the infrastructure bill. Some of the most promising are highlighted below.

Conclusion

This is just a snapshot of the startups discovered by the Equal Innovation team across America’s innovation centers and startup accelerators.  The technology being developed by our innovators is very relevant for new highways, ports and bridges. Many of the infrastructure goals in the American Jobs Plan — roads & bridges, water systems, climate change, and broadband — are best achieved by utilizing high-tech startups in the relevant fields.

With at least 110 billion dollars available in contracts for small businesses, the US government should support outreach to identify and engage underrepresented entrepreneurs with useful companies.