It wasn’t all that long ago that venture capital emerged as a growth industry. Up to that point, the industry was small and most of us knew each other. We were focused on our investments with little thought given to public policy. We were building businesses without pausing to reflect on the emergence of new industries and the policy limitations that impacted their growth. Fortunately, a small group of VC leaders were proactively engaged in public policy advocacy with stunning success. Substantial changes in ERISA regulation and capital gains tax reductions resulted in a VC boom. Suddenly, we were flush with funds and focused on emerging technologies – not the muddling in Washington.
All in all things are going great; and because of that, people are beginning to take notice. This attention, however, can be a double-edged sword. From one perspective, policymakers today appreciate that a healthy VC market is vital to U.S. economic growth. They are fascinated with VC and eager to learn what “magic” we perform to spark the expansive and innovative New Economy. On the other hand, some policy makers lack the understanding of the impact of public policy on capital formation. Indeed, some are skeptical of our mission and goals and may support potentially detrimental policy.
Increasingly, it is in our best interests to identify and then proactively educate key policymakers about our role in the creation and growth of the New Economy, and as a result, the U.S. economy.
The National Venture Capital Association (NVCA) is our strongest voice in public affairs. In the past few months, the NVCA has initiated opportunities to deepen congressional members’ understanding of VC. In April, and again in June, two substantial groups of moderate congressmen from both parties visited Silicon Valley to learn first-hand about high-tech and VC issues.
At a dinner on Sand Hill Road, an intense presentation on basic valuation and industry trends was presented by several VCs. At a subsequent gathering of moderate democrats, an entire panel discussion was devoted to VC and entrepreneurs.
These trips immersed the congressmen into discussions of New Economy issues. The meetings also provided ample opportunity to forge relationships with policymakers and facilitate ongoing policy work in Washington. Participating in these trips also allowed freshman members of Congress to learn about New Economy issues they may not previously have been exposed to – sometimes even becoming nontraditional allies.
Providing policymakers with access to first-hand experiences is an extremely effective way to communicate venture capital and entrepreneurial basics. The Mid-Atlantic Venture Association recently held Capital Connection 2000 in Washington and allowed senior congressional staff members to attend. The congressional staff also attended a quick VC tutorial hosted by NVCA. The sessions were so well received that several staff members expressed a willingness to be helpful on pending policy issues.
At each of these congressional education events,VCs’ participation enhanced the program and was the key draw for congressional member and staff participation. The experience and insight of NVCA members provides policymakers with straightforward answers to common misconceptions about VC, allowing our industry to develop frank relationships with policymakers and secure our long-term public policy goals.
The NVCA is working to expand policymaker education efforts throughout the U.S. Planning has begun for a Northern Virginia bus tour later this month, a program in the Greater Boston area early next year and a traveling education program in conjunction with Springboard 2001. I strongly urge you to participate in these events and help the industry forge stronger policy relationships, enhancing the overall understanding of VC in the policy making community.
Understanding the limitations on your time, however, there are other ways to participate in the political process without even leaving your office. The NVCA has recently released its newest version of on-line grassroots capability. In less than ten minutes armed only with your zip code, you now can log on to the NVCA Web site (www.nvca.org), determine which federal policy issues are of great interest to you and send an email to your congressmen. I cannot stress how important constituent mail can be in supporting our advocates and educating undecided policymakers. In addition, the site provides voting records of Federal policymakers – allowing you to determine who supports the issues of greatest importance to VC.
For many of you, policy and politics is something with you’re already involved. However, a savvy few cannot carry this industry-wide burden alone. With a new administration and freshman class of federal policymakers, we have a substantial responsibility to educate them not only about VC, but also about our unique perspective on issues that will be at the forefront of next year’s policy agenda, including privacy, intellectual property protection, and tax cuts.
With your participation, the VC industry will continue to grow and prosper under a positive policy regime.
Loyal Wilson is managing director at Primus Venture Partners Inc. and a member of the National Venture Capital Association Board of Directors.