The "Investing in National Next-Generation Opportunities for Venture Acceleration and Technological Excellence" or "INNOVATE Act" aims to significantly improve the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. It focuses on enhancing the transition of battle-ready technologies, encouraging broader participation, streamlining administrative processes, and bolstering national security against foreign influence. The bill also extends the authorization for both the SBIR and STTR programs until fiscal year 2028. To promote the transition of battle-ready technologies, the bill enhances small business success in the STTR program by increasing its budget allocation. A key provision is the establishment of a Strategic Breakthrough Allocation within the Department of Defense (DoD) SBIR program, allowing for awards of up to $30,000,000 for Phase II projects. These awards are for small businesses with prior Phase II experience, requiring matching funds, and targeting technologies with high readiness levels and clear military requirements. The bill also mandates fixed-price contracts as the default for SBIR and STTR funding agreements, unless otherwise determined. The legislation seeks to encourage new SBIR and STTR entrants by imposing limits on experienced firms, such as a $75,000,000 cap on prior SBIR/STTR funding for new Phase I or Phase II applications. It introduces a new Phase 1A program specifically for new entrants, offering small awards of up to $40,000 based on simplified, two-page proposals for open topic announcements. Agencies must allocate at least 2.5 percent of their SBIR funds to this new phase. Furthermore, the bill redefines certain program benefits to focus on small businesses in emerging States or rural areas , rather than specific demographic groups, and explicitly prohibits agencies from considering race, gender, or ethnicity in award decisions or requiring diversity plans. To streamline participation, the bill defines open topic announcements as generalized problem statements without specific technological requirements. It also reduces administrative burden by limiting the number of proposals a small business can submit to a single solicitation (3) or to a single agency per fiscal year (25). A significant focus is placed on protecting American innovation from adversarial influence by defining "foreign risk" broadly to include various affiliations with foreign countries of concern. The bill mandates that agencies evaluate national security risks, including foreign risks, and deny awards if a small business has connections to entities on specific prohibited government lists. It also strengthens agency recovery authority, allowing for the recoupment of funds if intellectual property developed with SBIR/STTR awards is sold to certain foreign entities (non-NATO/major non-NATO ally) within 5 years, or to a foreign country of concern within 10 years. The Administrator, in coordination with other agencies, must develop best practices on investor informational rights to protect proprietary technology and intellectual property from unintentional sharing with foreign individuals and entities. Finally, the bill streamlines transition and commercialization rate benchmarks , adjusting performance standards for small businesses receiving multiple awards to ensure effective commercialization. It improves Direct to Phase II authorities , allowing agencies to award Phase II funding without a prior Phase I, with specific funding limits (e.g., 30% for DoD and NIH). The legislation also enhances SBIR-STTR data collection by requiring new data fields in federal databases to track various award types and improve the visibility of follow-on contracts.