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26

Jul

2013

NVCA Weighs In with U.S. Senate on Tax Reform PDF Print E-mail

Jennifer Dowling

Written by Jennifer Connell Dowling   
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In late June, Senate Finance Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) proposed jump-starting tax reform by starting with a “blank slate” that eliminates all tax expenditures - both corporate and individual – in the code.  They then asked their Senate colleagues to formally weigh in on which expenditures or credits should be added back into the code, based on which provisions would help grow the economy or make the tax code fairer.

Under this process, formal responses to Chairman Baucus and Ranking Member Hatch were to come from individual Senators, not outside organizations.  But, because we believe getting the right tax structure for the entrepreneurial ecosystem is critical, the NVCA sent a letter to all Senate members outlining our views, and emphasizing the contribution of the venture-backed entrepreneurs to job creation and economic growth.  You can view the letter here.

This exercise is just one component of what is expected to be a long, comprehensive debate over the next year – and quite possibly beyond.  There will be other forums, hearings and opportunities for the venture industry to weigh in – and we intend to do so – as tax reform discussions continue.

 

 

23

Jul

2013

Brand Matters in Venture Capital PDF Print E-mail

Emily Mendell

Written by Emily Mendell   
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Today the NVCA in partnership with DeSantis Breindel and Rooney & Associates released a study that, for the first time, looks at the influence of brand in the venture capital industry.  The topic is one that is near and dear to my heart – and to the hearts of more than 100 members of the NVCA Strategic Communications (StratCom) Group, many who gathered last week in Santa Clara to talk about brand management, investor relations, public relations and other marketing and communications topics.  The group previewed the results of the study – which is aptly called the Brand Influence Guide for the Venture Capital Industry or BIG: VC -- and immediately understood the implications for their respective firms.

The fact that “brand matters” came as no surprise. Since the technology bubble of 2000, venture capital firms have comprehended the importance of differentiation when it comes to attracting deal flow.  In the last decade, a shrinking industry and challenging fundraising environment has made the practice of brand management that much more critical.  When we began the StratCom group in 2003, NVCA could identity about 20 firms that had a full time marketing professional on staff or under contract.  Today that number has quadrupled and hiring is on the upswing.

The BIG: VC study – which surveyed more than 370 venture capitalists, CEOs of startup companies and, to a lesser extent, limited partners from the NVCA and Dow Jones VentureSource data base -- offers a strategic road map for brand marketers in our industry. You can view the data deck here and get more information about the study here where you will read about some very interesting findings beyond the fact that brand is important.  Specifically:
  • There is a gap between what VCs say about their firms and what company founders want to hear.  Both like the term "entrepreneur friendly" but opinions diverge after that.  CEOs prefer "trustworthy" and "collaborative", while VCs are communicating “experienced” and “hands-on.”  This latter term scored extremely low with CEOs, suggesting a fear of micro management.
  • Individual partner brands resonate more with CEOs than firm brands. Yet, many LPs want to see strength in the firm and not rely on a few individual partners. The results suggest a need to strike a careful balance – promote the partners without having any single person replace the identity of the firm.
  • Word of mouth trumps anything written.  CEOs get their information and form perceptions more from what they hear than from what they read. This is particularly true when talking amongst themselves.  No blog or news article or conference speech can outweigh what entrepreneurs and trusted third parties are saying about a firm.  BIG takeaway - VCs have to walk the talk.

Of course, all of these perspectives depend upon where you sit.  Life Sciences VCs and CEOs think differently about brand than those operating in Information Technology.  And the BIG: VC study covers those differences as well.

We encourage you to review the full results and we plan to share more on this topic in the coming months.  In the meantime, you can contact me with any questions at emendell@nva.org.

 

22

Jul

2013

Corporate Venture Capital on the Upswing in 2013 PDF Print E-mail

John Taylor

Written by John Taylor   
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It’s pretty clear from the most recent data that corporate venture capital (CVC) activity is on the upswing. The trend is no surprise given the visible engagement of this constituency in the industry and with NVCA.  In 1H 2013, corporate VCs invested an estimated $1.38B in 303 deals. This activity is attributed to 107 corporate VC groups and represents a participation level of 16.7% of the deals done by the industry and 10.9% of the dollars. This percent of dollars is a post-bubble record.

You can view a full corporate venture capital analysis here.

More than a quarter of the corporate dollars (27.7%) went to the software sector; 17.7% to biotech sector, and 11.6% to the industry/energy sector, where many but not all of the clean tech companies reside. Sectors where CVC was a significant player based on percentage of deals engaged in are telecom, networking and biotech.

For energy and clean tech, 15.8% of all CVC dollars went to this sector and corporate groups were involved in 19.7% of all the energy and clean tech deals.

It’s important to note that 2Q saw the implementation of our considerably stepped up efforts to capture CVC activity through surveys. Some of this increase seems to be related to that – but not all of it. However, implementation of Step 2 which will cause a bigger spike (counting certain solo CVC transactions which are currently excluded from the calculations) has not yet taken place. When Step 2 happens, the revised criteria will apply to historical as well as new data.

 

22

Jul

2013

Will Coleman Testifies Before Senate on Clean Energy Finance PDF Print E-mail

Emily Baker

Written by Emily Baker   
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The Senate Energy and Natural Resources Committee held a hearing last week on the current state of investment in clean energy finance and discussed federal programs aimed at the development and deployment of new energy technologies.  Chairman Ron Wyden (D-OR) and ranking member Lisa Murkowski (R-AK) both discussed the importance of ARPA-E, as well as the role of federal programs like Section 1703, the DOE loan guarantee program for “new or significantly improved” technologies and the ATVM program that provides direct loans to automakers.  The successful early repayment of the Tesla loan was heralded as an example of how such a program can assist with the deployment of a new and groundbreaking energy technology.

In his opening statement Chairman Wyden said, “The government can level the playing field so that clean energy technologies have the same benefits fossil energy has enjoyed, and to make sure that the government itself doesn’t stand in the way of clean energy being deployed.”

Will Coleman, partner at OnRamp Capital provided the venture capital investor perspective and testified about NVCA’s energy innovation tax credit proposal. This "technology-neutral" approach has been met with bipartisan support and piqued the interest of the chairman, who asked Will to provide him additional information and feedback on our initiative.

Other witnesses testifying at the hearing included Peter W. Davidson, the new Executive Director of the DOE Loan Program Office, Richard Kauffman, Chairman, Energy and Finance for New York, Ethan Zindler, Head of Policy Analysis, Bloomberg New Energy Finance, Nicolas Loris, Herbert and Joyce Morgan Fellow, The Heritage Foundation.

You can read Will Coleman's testimony here.

 

 

10

Jul

2013

NVCA Board Member Ray Leach Testifies on Capital Formation PDF Print E-mail

Jennifer Dowling

Written by Jennifer Connell Dowling   
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Today, NVCA Board Member and JumpStart Inc CEO Ray Leach testified before the House of Representatives Subcommittee on Capital Markets and Government Sponsored Enterprises at a Hearing on “Reducing Barriers to Capital Formation, Part II” Following the passage of the JOBS Act, the Subcommittee continues to identify additional legal, regulatory,  and market impediments that are impacting capital formation, particularly for small and medium capitalized companies.  The venture capital community was invited to give a perspective on the existing state of the capital markets for our companies.

You can review  Ray’s written testimony here.  As you will read, we offered a current state of play of the venture-backed IPO market and progress since the JOBS Act was passed in April of 2012.  However, we recognize there is still analysis to be done and work to do particularly for small cap companies to achieve visibility and liquidity after they go public.  Ray encouraged the committee to involve all market participants in exploring challenges and solutions in this area and committed to be part of the process.

At the hearing, Ray reiterated the broad economic impact that flows – both in terms of job creation and in terms of fostering further entrepreneurial activity - from the existence of a strong and liquid capital market.  He also encouraged the Committee to continue its discussion around pilot programs that the SEC could undertake to test further market reforms. In turn, NVCA plans to remain engaged on this issue going forward.

 

28

Jun

2013

Senate Passes Immigration Reform; Long Road Remains PDF Print E-mail

Jennifer Dowling

Written by Jennifer Connell Dowling   
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Late yesterday the Senate passed a comprehensive immigration proposal by a margin of 68 to 32, with 14 Republicans joining all of the Chamber’s Democrats in favor of the measure.  For the venture industry and our entrepreneurs, as well as the broader high-tech and life science communities, the bill represents a critical recognition of the linkage between high-skilled immigration and broader U.S. economic competitiveness and job creation.

NVCA worked closely with Senators Bennet (D-CO), Shaheen (D-NH), Warner (D-VA) and Udall (D-CO) to clarify portions of the newly created INVEST visa for entrepreneurs as the Senate debated the broader bill.  We’ll be reviewing the final details of the bill as passed by the Senate and will share further analysis in the coming days.  But, we’re hopeful that the combination of increased access to green cards for those graduating from U.S. universities, the INVEST visa for entrepreneurs that want to start a company, and the increased number of H-1B visas available will create a smoother pathway for entrepreneurs than has been possible.

Of course, for these reforms to come to fruition, we need more than passage of a bill by the Senate.  We must have passage of a bill in the House, and ultimately a compromise measure put before the President to sign.  And, while the Senate passage is a tremendous step forward, there’s still a long road ahead.

The House has begun consideration of a number of bills designed to address discreet portions of the immigration system, rather than tackling a comprehensive proposal.  This week the House Judiciary Committee began a mark-up of the SKILLS Visa Act introduced by Rep. Issa that deals with many of the high-skilled immigration reform concerns.  Unfortunately, if that session is any indication of the sentiment around immigration reform, the road ahead will be a very tough slog as there was a substantive amount of partisanship exhibited in the mark-up.  High-skilled immigration, while not free of controversy, generally is an area where more bipartisan agreement has been possible. If there is disagreement in this area, the chance of a contentious process is certainly high in other areas.

Also unclear at this juncture is whether the House will try to finalize its consideration of immigration reform proposals over the next few weeks – before its scheduled August recess – or whether the debate will carry over into September.  Both strategies carry political risks for Representatives who will return home in August to face their constituents.  Certainly delaying consideration of a final proposal until September will squeeze the timeline for any conference with the Senate, given the number of critical issues like funding the government for the next fiscal year, that still need to be addressed by both Chambers.

Please stay tuned for further updates.

 
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