Thu 08 Dec 2011 |
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| Last Monday, FASB Chairman Leslie F. Seidman announced the addition of a FASB agenda item to consider reducing or eliminating certain fair value measurement disclosure requirements for private companies.
"FASB selected this project because of pervasive concerns expressed by nonpublic entity stakeholders regarding existing fair value disclosures, particularly that many of the requirements are irrelevant to their financial statement users and are very costly to prepare," stated Ms. Seidman.
NVCA members have been very active in the ongoing dialogue regarding the appropriate GAAP (generally accepted accounting principles) for private companies and the accompanying disclosures, and have raised the concerns cited by the Chairman. NVCA board members and members of our CFO Task Force, a group comprised of more than 100 member-firm CFOs, have served on FASB committees and task forces, participated in many roundtables and presented in several FASB-SPONSORED education sessions. This has increased FASB'S awareness that private and public companies have stakeholders with very different needs and different levels of reliance on the audited GAAP financial statements.
Recent increases in disclosures and documentation have significantly increased staffing needs at venture capital firms, and increased audit fees the fund must incur, resulting in distraction of the investment professionals and little additional benefit to the financial statement users.
NVCA looks forward to working with Chairman Seidman and the FASB members and staff in the coming months on this important matter. Please refer questions to me at j (at) nvca (dot) org. |
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Thu 01 Dec 2011 |
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Written by Jennifer Connell Dowling
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Today Senators Schumer (D-NY), Toomey (R- PA), Warner (D-VA) and Crapo (R-ID ) introduced legislation that will help smooth the path to IPO for America's emerging growth companies and improve the efficiency and effectiveness of communications between IPO companies and their potential investors. The legislation, entitled "Re-Opening American Capital Markets to Emerging Growth Companies Act of 2011" comes just weeks after the IPO Task Force, a coalition of professionals operating in the capital markets ecosystem and led by former NVCA Chairman Kate Mitchell, issued formal recommendations to re-invigorate the capital markets system. The NVCA worked with the Task Force to educate members of Congress as to the challenges faced by emerging growth companies, as well as the economic implications of leaving the situation unaddressed. As you will see in the summary of the legislation (link), many of the Task Force recommendations are included in the bill including:
- Creating an on-ramp for emerging growth companies during which time scaled regulations would be in effect, easing the compliance burden of requirements such as Sox 404b;
- Eliminating unnecessary quiet periods for company research prepared by an underwriter before a lock-up and after an IPO; and
- Improving the ability for pre-IPO companies to communicate with qualified investors through a "testing the waters" provision.
The NVCA strongly supports this legislation as it mitigates many of the issues venture-backed companies face on the path to IPO without compromising investor protection. In a statement we submitted to today's Senate Banking Hearing on "Spurring Job Growth Through Capital Formation While Protecting Investors" we commend the bipartisan group of Senators for their leadership and support of this important legislation and urge its swift passage so that implementation can begin.
Most importantly, the NVCA would like to recognize the tireless efforts of former chairpersons Kate Mitchell who led the IPO Task Force on which NVCA and others sat, and Dixon Doll who first raised the IPO market as a concern in 2008. After years of patience and quiet diplomacy, it looks as if we might have a legislative solution to these critical concerns. We will keep you informed of progress of this bill which will hopefully be brought to the Senate floor in early 2012. |
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Last Updated on Thursday, 01 December 2011 17:12 |
Wed 23 Nov 2011 |
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Since the passage of Dodd-Frank, we have heard from a number of NVCA members requesting guidance regarding which specific entities are required to register/report under the new law. That is, should the filing be done for the management company, each GP entity, or both? Our members cited a general dearth of guidance on this aspect of the registration/reporting requirements and we wanted to fill the gap. While there are many considerations in determining this pathway, and each situation is different, NVCA asked the team at Proskauer to frame the issues that each member firm might consider as it moves forward.
NVCA is now pleased to provide this white paper to our members and the general public. This document represents the latest of several tools and resources for making the ERA (Exempt Reporting Adviser)/RIA (Registered Investment Adviser) path selection and then navigating it efficiently. Of course, each firm’s strategy should be developed with that member’s own counsel and we encourage you to review this document with them.
If you have any questions, please contact John Taylor at jstaylor (at) nvca (dot) org. |
Tue 22 Nov 2011 |
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In the last few weeks there have been a number of developments in the area of Life sciences public policy. These issues have an impact on the future of life sciences investing in a number of ways:
Mayo Clinic Vs Prometheus: Earlier this month, on November 7th, NVCA submitted comments to the U.S. Supreme Court on the Mayo Clinic vs. Prometheus case. The case called into question the validity of patents covering patterns of biology associated with particular outcomes. An unfavorable ruling could jeopardize the future of the entire personalized medicine industry. NVCA's Amicus Brief supports Prometheus' position and focuses on the impact this case could have on future investment in personalized medicine companies. The case is expected to be heard this Winter.
FDA Funding: On November 15, House and Senate conferees working on FDA’s FY 2012 appropriations agreed to increase FDA’s FY 2012 appropriation to $2.5 billion which is a $50 million increase. While the additional funds are directed to be spent on implementing the new food safety law and continuing FDA’s efforts to advance medical countermeasures against bioterror attacks, we are glad to see the increase as most federal agencies are facing budget cuts. The NVCA continues to assert that a well-funded FDA is in the best position to improve the drug and medical device approval processes and better support innovation.
SBIR Reauthorization Extension: On November 17, Congress passed yet another extension to reauthorize the Small Business Innovative Research (SBIR) Program through December 16. House and Senate conferees continue to struggle to reach a compromise over a number of outstanding issues but continue to express their interest in getting a SBIR Reauthorization bill passed this Congress. However, time is certainly running out. As a reminder, the NVCA has strongly advocated for an SBIR program that permits venture-backed companies to apply for grants on par with other companies. Our hope is that this issue will be resolved shortly as many basic research projects that at one time were government-funded - particularly within the life sciences sector -- have been shelved as uncertainty looms over the program.
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Mon 21 Nov 2011 |
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This evening, the bipartisan Congressional Supercommittee which was tasked with presenting a plan to reduce the national deficit, announced that it has failed to meet its deadline, triggering $1.2 trillion in automatic discretionary defense and non-defense spending cuts effective January 1, 2013. While many will say that this failure was certainly not in the country's best interest, it leaves the venture capital and start-up communities unscathed for the time being. A change to carried interest tax policy was discussed during super committee meetings, but the issue never rose to the level where the industry was threatened. In this regard, we are relieved that the issue is off the table for 2011. Thus, for tax year 2012 it is unlikely we will see a change in the current carried interest tax provisions which would impact tax year 2012 rates.
It needs to be noted that the mandatory spending cuts now set to take place may, in practice, not be "mandatory" at all as they are not scheduled to go into effect until January of 2013. Much can happen in the next 13 months to change this path, including Congress engaging in full scale tax reform which could result in raising revenues. Under this scenario, larger issues such as capital gains tax policy and partnership tax law will likely be addressed.
Additionally, the failure of the Supercommittee continues to create a strong amount of uncertainty regarding the US economy and that uncertainty could impact the capital markets. At a time when companies are beginning to go public again -- after a difficult few months -- the last thing we need is a slamming shut of the IPO window, leaving a large number of companies in registration limbo. At 49 IPOs for the year, we are well below the IPO levels needed to declare the market healthy.
So while we are thankful that there will be no carried interest tax change this year, challenges still loom large for the venture industry on Capitol Hill and in the overall market. The NVCA remains vigilant on these and other issues as Congress continues to struggle with consensus and progress.
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Mon 21 Nov 2011 |
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This morning the NVCA and Dow Jones VentureSource released the results from the 2011 Venture Census survey which measured the demographics of nearly 600 professionals working in the venture capital industry. This census is the second we have done with the last one completed in 2008. The results have not changed in any dramatic way. The industry is still dominated by white males, although the younger, newer professionals are trending to be a more diverse group. And non-investing positions such as the CFO and Marketing/Communications Directors are comprised by a majority of women. Still, the numbers show a industry that remains relatively homogeneous in nature.
Much has been said, analyzed, conjectured and reported about the low percentage of women in the venture capital industry. NVCA members universally recognize that increasing this percentage over time is good for the industry, good for entrepreneurs, and good for business. Yet, the venture industry remains challenged to move the dial quickly due to a number of structural factors at play including the smaller pool of women in the science and technology fields from which many venture capitalists enter the asset class. Our hope continues to be that, over time, we will see more women and minority investors to better reflect the influencers and customers with whom we partner to grow companies. But, like the venture capital process itself, progress will likely be over the long term.
The 2011 Venture Census shows an asset class that is comprised of extremely bright and motivated professionals who exhibit a great deal of commitment to their jobs. The NVCA feels it is important to track these demographic trends ongoing as the industry continues to contract so we can monitor the changes that result. As the industry gets smaller, tiny shifts can have large impacts. We would like to thank all those who took the time to complete the survey and help us deliver accurate and timely statistics on the industry.
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Last Updated on Monday, 21 November 2011 09:06 |
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