WASHINGTON, Sept. 6 /PRNewswire-USNewswire/ -- Bob More, a member of the National Venture Capital Association (NVCA), offered support today for the Small Business Expansion Act of 2007 before the House of Representatives Small Business Committee. Mr. More, who is a partner at Domain Associates in San Diego, California testified that the legislation would be a positive step towards fostering the types of public / private partnerships that support small businesses and allow the United States to sustain its economic leadership for years to come.
"We think it is important to take a step back and for the Congress to ask what can be done to best support the creation and development of small businesses," said Mr. More. "We believe partnerships between the government and the venture capital community have and will continue to be one of these winning strategies."
As part of his testimony, Mr. More described recent challenges that venture-backed companies have faced in securing small business determinations from the Small Business Administration. In an ongoing predicament, the SBA has refused to define one of his firm's portfolio companies as a small business because it has venture capital backers. This particular company currently has eight employees and is in a pre-revenue stage. While this employee count is well below the 500 employee threshold to qualify as a small business, the SBA is considering including the employees at the venture capital firm and at all of that firm's portfolio companies in the formula. Without the small business classification, the company is responsible for a $900,000 FDA filing fee. These funds would otherwise go towards the company's future growth.
"It appears that the SBA has the gross misperception that small businesses that receive venture backing should not be considered 'small businesses'," said Mr. More. "But our industry is focused on building companies that will commercialize a product or service. Therefore, a small business must leverage other sources of financing to bring research to the stage where it can be commercialized by a venture capitalist. Without this SBA support, many technologies would linger 'on the shelf' because they would not reach the stage where they could be brought to a venture capitalist."
The Small Business Investment Expansion Act will provide incentives for venture capital firms to invest in small businesses nationwide and promote entrepreneurship. Title V of the legislation will clarify SBA's affiliation rules by ensuring that businesses with venture capital investment are not penalized for a venture capital firm's additional investment in other portfolio companies that have no relationship to one another.
"It is intuitive that the SBA and the venture capital community should be working together to support the most promising small businesses our country has to offer," said Mark Heesen, president of the NVCA. "We applaud the Congress for taking the right steps to help foster this type of symbiotic relationship that will help the United States maintain its competitive edge."
To view Bob More's full testimony, please visit: http://www.nvca.org/pdf/BMore_testimony_9-6-07.pdf
The National Venture Capital Association (NVCA) represents approximately 480 venture capital and private equity firms. 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 http://www.nvca.org/.
National Venture Capital Association
