I was in DC late last week for the National Venture Capital Association (NVCA) board meeting and had a courtside seat to the current budget battles underway. We had the good – and entertaining – fortune of meeting with some of the most senior members of the House the day the Tea Party was seeking to cut $60 billion from the proposed 2011 federal budget. It certainly appeared that the House is more aggressively going after expenditure cuts as compared to the Senate. Quite a scene.
Later in the day I was visiting senior advisors at the National Economic Council in the White House to discuss current policies in place to support innovation, which in DC is code for new jobs. In fact everything in DC these days is code for job creation.
Over the course of the visit we touched on a number of issues such as:
- Tax reform: the ever-present specter of changes to the carried interest tax rate (does not seem to be of real concern to anyone right now)
- Fiscal reform: while each and every politician mentioned it, I was never quite clear what they were talking about – maybe they didn’t know what they were talking about either. But clearly the IPO process is still broken.
- SEC changes: apparently Dodd-Frank is calling for an additional 100+ new rules to be enforced in the face of significantly reduced operating budgets. Yeah, good luck with that.
- Patent reform: Long overdue and apparently rising to the top of the agenda given a new bill introduced by Senator Leahy.
- SBIR: a compromise seems to finally be in sight as to the thresholds of how many recipients of SBIR funds could be VC-backed (if you ask me, whatever number they settle on will be too low). Interestingly, apparently university presidents are now up in arms as increased funding to private enterprise will most likely reduce funding to the academics.
- VC issues: there is active debate on how to define what is a VC firm and how should they be regulated. The definition of a VC needs to be set such that hedge fund regulations do not inadvertently apply to VC firms.
- Secondary markets: there seems to be an expectation of increased scrutiny on the role of these new private exchanges. Stay tuned.
Mr. Congressman, did I tell you yet how VC’s help create jobs? True story. While I have not yet done the math, I shared with the staff at the National Economic Council that I thought probably 70% of funds provided by VC’s go directly to pay salaries. We also directed them to a great website called StartUpHire (www.startuphire.com) which posts open positions at VC-backed companies. There are currently 9,469 jobs posted with approximately 2,800 new jobs added each month.
Interestingly there are 53 available jobs at Flybridge Capital Partners portfolio companies – we need to do a better job creating more jobs. There are 484 VC’s listing jobs on this web site so it is a nice representation of the industry.