The new congressional caucus pairs a Republican from South Carolina with a Democrat from Virginia to tackle funding gaps and regulatory headaches facing smaller AI companies.
Two House members from opposite sides of the aisle are betting that America’s AI future won’t be built exclusively inside the campuses of trillion-dollar tech giants. Reps. Russell Fry (R-SC) and Suhas Subramanyam (D-VA) are launching the Innovators Caucus, a bipartisan congressional group designed to champion small and medium-sized businesses working in artificial intelligence.
What the caucus actually does #
In this case, the Innovators Caucus will focus on the structural disadvantages that smaller AI companies face when competing against deep-pocketed incumbents. Those disadvantages are well-documented: limited access to federal and non-federal funding, difficulty securing early-stage or seed capital, a convoluted R&D tax credit system, fierce competition for technical talent, and a regulatory environment that changes faster than most small firms can adapt to.
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. Subramanyam contributes a legislative track record on the issue that goes beyond caucus formation.
The legislation behind the launch #
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.
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That study would cover the full obstacle course: access to capital at various stages, the effectiveness of existing R&D tax incentives, talent pipeline challenges, and the cumulative impact of regulatory uncertainty. 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.
Why small AI firms are struggling #
The R&D tax credit issue adds another layer of friction. 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.
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