SOURCE: National Venture Capital Association

National Venture Capital Association

February 03, 2009 12:31 ET

Venture Capital Industry Asks Congress to Focus on Job Creation and Economic Growth in Reauthorizing SBIR Program

WASHINGTON, DC--(Marketwire - February 3, 2009) - With the country in dire need of strong economic stimulus and the expiration of Small Business Innovative Research (SBIR) grant program looming, the National Venture Capital Association (NVCA) today asked Congress to reauthorize the SBIR program and allow small venture-backed companies to compete for such grants. This program is but one of many public policies which the NVCA is supporting in the spirit of entrepreneurship and innovation. For the last several years, small venture-backed companies have been unfairly excluded from participating in the SBIR program, causing the discontinuation of many promising basic research projects and jeopardizing future scientific advances and job growth.

"These young, venture-backed companies are the epitome of small businesses poised for growth," said Mark Heesen, president of the NVCA. "These entities are often comprised of less than 25 employees and are hoping to bring to market very exciting innovations in life sciences, information technology and clean technology. Companies that were once this size now account for more than 10.4 million US jobs. By allowing venture-backed companies to compete for grants, the government is investing in the future -- future jobs and future economic growth."

In recent weeks, certain organizations have been falsely characterizing small venture-backed companies as shells for larger organizations. NVCA strongly agrees that large corporations should not have access to small business grants and supports language to restrict grants to only the smallest businesses. Heesen went on to explain how venture-backed companies operate:

"Let me be perfectly clear. A tiny company that receives venture-capital financing is not flush with cash nor is its success guaranteed," said Heesen. "Venture capital financing is restricted to very specific areas of company growth -- not basic research. SBIR grant money, if earned, would be channeled directly into early stage discovery projects which include everything from new cancer drugs to renewable energy sources, all which fuel that tiny company's pipeline. Venture capitalists do not fund basic research, so without government support, these meaningful projects have been postponed or abandoned."

According to research on the SBIR program conducted by the National Academies of Sciences (NAS), there is no evidence that other small businesses have ever been crowded out by the participation of venture-backed businesses. Additionally, the NAS report found that there are useful synergies between venture capital investment and SBIR funding in terms of selecting the most promising companies.

"The NVCA is fully supportive of the SBIR program as it has proven to be an important mechanism to fund our future," said Heesen. "We are extremely appreciative of the lawmakers who understand the synergies between the government and the venture community and have supported the reinstitution of venture-backed businesses in the SBIR program. By working together, we can growth our most promising businesses and innovative breakthrough for the good of our economy and the American people."

The National Venture Capital Association (NVCA) represents approximately 450 venture capital firms in the United States. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy and support entrepreneurial activity and innovation. According to a 2007 Global Insight study, venture-backed companies accounted for 10.4 million jobs and $2.3 trillion in revenue in the United States in 2006. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit www.nvca.org.

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