Time for Washington to Get to Work on Job Creation

As long-time advocates for innovative, emerging growth companies and the jobs they create, my colleagues at the National Venture Capital Association and I were in a unique position to watch another group lead the charge in recent weeks.

I’m referring to the IPO Task Force, whose report, “Rebuilding the IPO On-Ramp,” provides a clear and compelling roadmap for policymakers to help reconnect emerging growth companies with the public capital they need to grow their businesses and generate new U.S. jobs. (You can find more information online at www.nvca.org.)

Granted, the IPO Task Force features some familiar VC faces. Kate Mitchell, our former NVCA chairman and current managing director at Scale Venture Partners, chaired the task force, with support from Mark Gorenberg of Hummer Winblad Partners and Tom Crotty of Battery Ventures. NVCA also lent logistical support to the release of the task force’s report.

This VC flavor notwithstanding, the IPO Task Force effort arose organically from the entire emerging growth company ecosystem, not just the venture community. Experienced CEOs, public investors, securities lawyers, academicians and investment bankers all came together to analyze the root causes of the IPO crisis and develop the report’s recommendations.

This breadth of participation (and the credibility it lends) is just one of many significant and distinguishing elements of the task force’s work. To my knowledge, it is the first group to provide a clear and practical definition of what constitutes an emerging growth company today. The report defines such companies as being in IPO registration or within five years of their IPOs, having less than $1 billion in revenue at time of registration, and not recognized by the SEC as “well known seasoned issuers.”

From there, the task force zeroed in on the role of such companies in fueling U.S. job creation and economic growth, compiling and synthesizing research from multiple industry sectors. While others—including the NVCA—have analyzed and discussed these issues and trends in broader terms, the “On-Ramp” report crystallizes the connection between them and job growth within the context of our present economic situation.

In addition, the task force is the first to understand that emerging growth companies in need of regulatory relief is actually quite small. In fact, the report estimates that no more than 15% of public companies will qualify for relief in a given year.

Furthermore, the scalable and temporary nature of the recommended relief outlined in the report deftly sidesteps the larger ideological argument over the impact and efficacy of government regulations and the more tactical partisan sniping over specific pieces of legislation, such as SOX and Dodd-Frank. The result is a middle road in which Democrats and Republicans can act immediately to spur job creation without giving ground in the larger discussion.

The fact that implementation of the IPO Task Force’s recommendations can jumpstart the U.S. job market without adding billions of dollars to the deficit—now or later—should also pique the interest of policymakers on the left and the right. That’s something that neither of the competing stimulus ideas—infrastructure spending or large tax cuts—can claim.

For these reasons, Washington must now get to work on getting the IPO Task Force’s On-Ramp recommendations into law. With the U.S. economic recovery stalled and the European debt crisis roiling, global markets almost daily, the time to re-ignite American job creation and economic growth is now.

Fortunately, the IPO Task Force’s On-Ramp report provides a clear and direct roadmap for doing just that. If policymakers follow it, they can put the U.S. economy back on the road to growth and preserve America’s global economic strength for decades to come. If they ignore it, America’s unemployed will likely remain on a road to nowhere.

Mark Heesen is the president of the NVCA and can be reached at mheesen@nvca.org.