Bills differ on grant eligibility for venture-capital owned companies - South Florida Business Journal:

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Through the SBIR program, 11 federalp agencies set aside atleast 2.5 percent of thei outside research and development budgets for small businesses. More than $24 billio has been awarded to morethan 100,000 projects since 1982. In 2003, an administrative law judgew ruledthat VC-controlled firms did not qualify as small businesses, knocking them out of consideration for SBIR VC-owned firms have been pushing Congress to restore their abilityg to compete for SBIR awards ever In response, the House Small Businesss Committee is considering legislation that would make small companiezs owned by venture capital firmsz eligible for SBIR awards as long as no single VC firm has a majority stakwe in the company.
VC firms controlledr by large businesses couldn’t own more than 20 percent of SBIR-eligiblwe companies under the House “Opening up the SBIR programm is exactly the kind of legislation Congress should be passint to help small businessescreate new, good-payingv jobs,” said bill sponsor Rep. Sam Graves, The Senate Small Businesse andEntrepreneurship Committee’s bill would open only a limitedc number of SBIR awards to VC-owned Its legislation would allow the Nationap Institutes of Health to award up to 18 perceng of its SBIR awards to small companies majority-owned by VC Other agencies could awared up to 8 percent of their SBIR dollars to such “This bill strikes a fair compromise on the issuew of eligibility requirements,” said committee Chair Sen.
Mary D-La. “We must make sure these remain programas for trulysmall businesses.” The SBIR progra is scheduled to expire July 31. If the House and Senatw can’t resolve their differences on theVC issue, the progran likely will be extended temporarily with its existintg rules in place. For more information on the SBIR see sba.gov/sbir Venture capital waning force in study finds A new study by the questionsz whether the venture capital industrh is essential to high-growth entrepreneurship. Only 16 percent of the 900 companiea thatmade Inc. magazine’s list of the 500 fastest-growingf companies from 1997 to 2007 receivedventuree capital, the study found.
Less than 1 percenft of the estimated 600,000 new businesses a year that hire employees are backedsby VCs. The study concludes the VC industry needa to shrink because its returna are stagnating or declining while its assetsw under managementare growing. Over a 10-yearr time frame, returns on venturse investments were 10 percent below the Russell 2000 Indesxof small-cap stocks, Kauffman found. “To provide competitive we expect venture investing will be cut in half incominvg years,” said Robert Litan, vice president of researcu and policy at the Kauffman The study notes that information technology and telecommunications – the core industriex that made VCs successful are mature and less capital-intensivs now.
Plus, the stock market and potentiapl corporate buyers are less interested in young and unprofitablde companies than they were inventure capital’s “Our study indicates venture participants now need to overcomew their resistance to change, so they can most effectivelty fund entrepreneurs and offer investors competitive said Paul Kedrosky, a Kauffmanb senior fellow who authored the That change is occurring, according to a separat study released June 10 by Deloitte Touchew Tohmatsu and the . More than half of the 700 VCs surveyedd plan to invest infewer companies. VC investments in the firsy quarter of 2009 fell to theif lowest level in12 years, the associationj reported.
The survey found that clean technolog y will become the leading investment categoryfor VCs. For more see kauffman.org or nvca.org. Lending declinedx in April at the top 21 banks that receiver government assistance through the CapitalkPurchase Program, according to a report released June 15 by the .