Fry and Subramanyam launch bipartisan Innovators Caucus for small AI businesses
In brief
- Innovators Caucus launched by Reps. Fry and Subramanyam to support small AI companies competing against larger incumbents.
- Small AI firms face funding gaps, talent competition, R&D tax complexity, and regulatory uncertainty addressed by the caucus.
- Small AI Innovators Empowerment Act directs formal study of barriers to AI startup growth and competitiveness.
The barriers facing small AI innovators
The Innovators Caucus focused on structural disadvantages that smaller AI companies face, including fierce competition for technical talent and a regulatory environment that changes faster than most small firms can adapt to. These obstacles compound for startups operating on tight cash flow and limited balance sheets.
Fry brings his membership in the Congressional Robotics Caucus to the table—a group that was relaunched and expanded in 2025 to address the growing overlap between robotics, AI research and development, and workforce policy. This background positions him to bridge technical and legislative concerns.
The Small AI Innovators Empowerment Act
Subramanyam, alongside Rep. Jay Obernolte (R-CA), introduced the Small AI Innovators Empowerment Act on March 17, 2026. The bill directs the Department of Commerce, working with the National Institute of Standards and Technology (NIST) and the Small Business Administration (SBA), to conduct a formal study of the barriers that small AI companies encounter.
Why this matters
Subramanyam has argued that the nation's AI leadership depends on innovation happening inside small businesses and startups, not just within the research labs of established tech corporations. The timing is acute. Changes to Section 174 of the tax code now require companies to amortize research expenses over five years rather than deducting them immediately. For a cash-strapped AI startup, that shift can be the difference between hiring a key engineer and not.
A formal study into these barriers is a first step toward legislative remedies that could level the playing field.
Frequently asked questions
What barriers do small AI companies face?
Small AI firms struggle with limited access to capital at early stages, convoluted R&D tax credit systems, fierce competition for technical talent, and regulatory uncertainty that changes faster than they can adapt. These structural disadvantages make it hard to compete against well-funded tech incumbents.
What does the Small AI Innovators Empowerment Act do?
The bill directs the Department of Commerce, NIST, and the SBA to conduct a formal study of barriers facing small AI companies. The study covers capital access at various stages, R&D tax incentive effectiveness, talent pipeline challenges, and the cumulative impact of regulatory uncertainty.
How did Section 174 tax changes affect AI startups?
Changes to Section 174 now require companies to amortize research expenses over five years instead of deducting them immediately. For cash-strapped startups, this can determine whether they can afford to hire key engineers.
