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05

Jun

2012

FAF Seeks Nominations for Private Company Council PDF Print E-mail

John Taylor

Written by John Taylor   
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As you have read here at NVCAccess, the Financial Accounting Foundation (FAF) recently approved the formation of a Private Company Council (PCC) which will be tasked with setting accounting standards for private companies. The PCC, which you can read about here, was formed in response to recommendations made by an FAF Blue Ribbon Panel upon which NVCA Board member Jason Mendelson participated. Subsequently, many NVCA members spoke up in support of the PCC formation.

The FAF is now seeking nominations for individuals to serve on the PCC. As they explain in their communications:

Members of the PCC will include users of private company financial statements, including bank lenders, equity investors, and/or sureties; preparers of private company financial statements from a variety of industries and companies of various sizes; and CPA practitioners from national, regional, and local firms.

The NVCA will be participating in the nomination process and encourage our members and all stakeholders of the start-up ecosystem to do the same. The nomination form can be found here. If you have questions, please contact me at Jstaylor@nvca.org. it is important that the venture capital and start-up communities are represented on this important process and standard setting body. We look forward to the work they will do an progress that will be made. The deadline for nominations is June 30, 2012.

 

25

May

2012

Senate Passes FDA Safety and Innovation Act of 2012 PDF Print E-mail

Kelly Sloane

Written by Kelly Slone   
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Yesterday, the Senate passed S. 3187, the FDA Safety and Innovation Act of 2012, by a vote of 96-1. Senator Sanders (D-VT) was the only no vote. The House is expected to vote on H.R. 5651, the FDA Reform Act of 201, next week. This bill is also expected to pass with few amendments. Both bills are similar and will raise $6.4 billion in user fees for the FDA over five years. House and Senate leaders have stated their goal is to finish and deliver a final package to the President before the July 4th Congress recess.

NVCA/MedIC believes that overall both bills are positive step forward in improving the FDA's regulatory process and include several of MedIC's priorities specifically:

  • Expanding the accelerated approval process to new medical treatments;
  • Providing a new pathway for breakthrough therapies;
  • Providing incentives for antibiotic development;Improving the FDA's advisory committee conflict of interest rules;
  • Clarifying the least burdensome standards for medical devices;
  • Modifying the De Novo application process; and
  • Accelerating the appeals process for medical devices.

NVCA/MedIC is also encouraged that S. 3187 includes a risk-benefit framework for the drug approval process that will provide a consistent and balanced approach to FDA's decision making regarding the benefit and risks of new drugs. However, we are continuing our efforts to include language in the bills that would define what variables should be considered within the structured framework and are asking for similar language for medical devices.

We will keep you apprised of all developments here at NVCAccess in the coming weeks.

 

23

May

2012

FAF Approves Formation of Private Company Council PDF Print E-mail

John Taylor

Written by John Taylor   
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Earlier today, the Financial Accounting Foundation voted to approve the establishment of a new body ―the Private Company Council (PCC)―to improve the standard-setting process for private companies.

Representatives from FAF and FASB have been reaching out and engaging with NVCA at a number of levels on this issue.  Several NVCA board members were instrumental in our efforts to support the creation of the PCC.  NVCA director Jason Mendelson of Foundry Group was invited and served on FAF's Blue Ribbon Panel which took a hard look at the state of private company accounting and determined that a different approach needed to be taken. Other board members active in the process include 2011-12 board chair Paul Maeder of Highland Capital Partners, Diana Frazier of FLAG Capital, Management, Mike Elliott of Noro-Moseley Partners, Trevor Loy of Flywheel Ventures, Stephen Holmes of InterWest Partners, and Anne Rockhold of Accel. More than a dozen members of the NVCA CFO Task Force were actively engaged in FAF and FASB efforts including James Stevenson of ABS Capital Partners, Mike Maher of USVP, and James Beck of Mayfield. 

While there will be more complete information forthcoming next week, and the devil is often in the details, it appears that the venture capital and start-up communities have been heard and the changes we felt needed to be made to an already solid plan to establish the Council (issued for comment 10/2011) have been mostly made. These changes range from the "veto-proofness" and independence of the Council, to the importance of the PCC being chaired by someone other than FASB member.

We'll keep you apprised as the remaining details on the PCC come forward, and we have all had a chance to digest the plan in detail. For now, we are strongly encouraged by the formation of this entity and the promise it holds for private company accounting standards. 

 

17

May

2012

SEC Seeks Input on JOBS Act PDF Print E-mail

Jennifer Dowling

Written by Jennifer Connell Dowling   
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As many may be aware, the JOBS Act required the SEC to engage in rulemaking across a number of provisions including those involving crowdfunding, Regulation A, general solicitation and the 500 shareholder rule. Although it has not yet put out formal rule-making proposals, the SEC has invited the public to comment on any and all aspects of the new law.

The IPO on-ramp, which was the focus of NVCA's efforts, does not require any rulemaking – that provision of the legislation was self-executing and is immediately effective. For this reason, the Association does not plan to submit additional comments to the SEC at this time, unless there is clarification needed specifically on the on-ramp details. We are monitoring the comments submitted and if any submissions require a response from the venture capital community, we will certainly engage.

All this being said, we do encourage those venture firms and other stakeholders who feel strongly about the areas open for comment to submit their statements to the SEC, working with their counsel to do so. Information on submissions can be found here. We recognize that venture firms may have differing opinions on a number of provisions, but that should not be a deterrent to submitting comments.

We will certainly keep you up to date on any SEC developments that impact the venture capital industry or our portfolio companies as the comment period comes to an end and implementation commences.

 

26

Apr

2012

Senate Markup of FDA Legislation Moves the Needle PDF Print E-mail

Kelly Sloane

Written by Kelly Slone   
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Yesterday the Senate Health, Education, Labor and Pensions (HELP) Committee passed a Manager's Amendment called the "FDA Safety and Innovation Act" which 1) reauthorizes Prescription Drug User Fee Authorization (PDUFA) and Medical Device User Fee Authorization (MDUFA), 2) creates new user fees for generic drugs and biosimilars and, 3) includes several broad FDA reforms.

We were pleased to see a number of NVCA and MedIC priorities included the marked up bill:

  • A patient centered benefit-risk assessment for drugs;
  • Expansion of the accelerated approval process for new medical treatments;
  • Creation of a new pathway for breakthrough therapies;
  • Change to the conflict of interests rules for advisory committees;
  • Incentives for the development of new antibiotics;
  • Improvements to the DeNovo application process;
  • Lift to the profit cap for humanitarian use device exemptions;
  • Request to CDRH to withdraw the recent 510(k) submissions guidance

Given the current political environment on the Capitol Hill, we view the markup positively despite the fact that some of these provisions make marginal changes to the FDA law.

We will continue to work hard on our other priorities including a patient centered benefit-risk assessment for medical devices that codifies CDRH's Risk-Benefit guidance, formal time lines for appeals at CDRH, and allowance for the use of foreign data in regulatory decisions. All of these provisions are still on the table and could indeed be included in a final package.

It is likely that the "FDA Safety and Innovation Act" will be debated on the Senate floor sometime in May. The House Energy and Commerce Health Subcommittee is scheduled to mark up its bill on May 8 and the full Committee plans to mark up the Subcommittee draft shortly thereafter. We are hopeful Congress will stay on this fast paced schedule and get a final package to the President this quarter. This will avoid the possibility of using the bill as a vehicle to to repeal provisions of the new healthcare law on which the Supreme Court likely will render its decision this summer. We will keep you informed here at NVCAccess.

 

24

Apr

2012

Clean Tech: A View from All Sides PDF Print E-mail

Emily Baker

Written by Emily Baker   
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Few topics divide our business and political leaders more sharply than the role government should play in our free market system. And no sector of our economy embodies the stakes for getting that role right than clean technology. That’s why NVCA invited three thought leaders with deep experience and diverse expertise in clean tech to discuss the issues and opportunities surrounding the sector in depth at our annual meeting in Santa Clara today. Predictably, our speakers did not agree on everything. But each stressed that public policy will continue to play an outsized role in the U.S. energy sector.

The session began with remarks by Theodore F. Craver, CEO and chairman of Edison International, the parent company of one of the country’s largest investor-owned electric utilities. Mr. Craver described the energy industry as going through a period of transformative change – driven in part by clean tech innovation. He cautioned, however, that the speed of this innovation conflicts with the current business model at electric utilities. Specifically, the capital-intensive nature of investments in legacy energy generation and delivery and the extent of the regulatory apparatus require that utility companies be conservative investors. They are not free to take the same risks as VCs. Mr. Craver, however, did provide VCs with a set of questions that they and their portfolio companies can ask themselves to help them see new technology opportunities through a utility’s eyes: 1) Is it more or less expensive than what it will replace? 2) Is it truly experimental or has it demonstrated success in some form? 3) Does it raise or lower costs the costs of the end product? 4) How does it affect the economic and socio-political environment? If the answers to these questions aren’t largely positive, Mr. Craver suggested that the conversation will probably be a short one. For this reason, the adoption and success of nascent clean energy technologies – and the willingness of utilities to invest in them – will continue to depend on tax breaks and subsidies, of which Mr. Craver questioned the fairness.

Whereas Ted Craver expressed concerns about those instances where public policy conflicted with economics, former Pennsylvania Governor Ed Rendell embraced the need for such conflicts to overcome market barriers to clean technology deployment – especially when those technologies are young and expensive. “Everybody needs to accept that they’re going to take a hit in the short run,” he admitted. But he argued that the long-term benefits to businesses and society would be worth it. Gov. Rendell then asserted that the U.S. could reduce its energy imports to zero if U.S. politicians had the political will to develop a comprehensive energy policy with that as its goal. He said that the development of that policy must be led by the president – whether it is ultimately Barack Obama or Mitt Romney. Gov. Rendell also stressed that there is plenty of room for innovation to help reduce demand and increase energy efficiency, but also plenty of opportunity for flexibility within the current regulatory regime for incumbents that are willing to invest in change.

The presentations concluded with a presentation by Andrew Shapiro, chairman of GO ventures and the founder of GreenOrder. Mr. Shapiro focuses on the opportunity to solve major global consumption problems that clean tech innovation presents. The proliferation of innovative new solutions and the steady stream of funding they are garnering are causes for optimism. But, he said, we are not scaling up these technologies fast enough. Echoing Mr. Craver, he pointed to public policy failures and the prevailing economics in the energy sector – particularly the emergence of cheap and plentiful natural gas. In a nod to the entrenched business-regulatory axis, Mr. Shapiro lamented that, “Two guys in a garage can’t disrupt today’s energy industries,” the way innovators in the IT space can. Here, however, he suggested that more collaboration between corporate venture sources and startups (through "open innovation") could help bridge the “valley of death” – citing the recent efforts of GE's Ecomagination effort (with VCs) and other efforts as an example. In this way, startups, corporations and policymakers could overcome the hurdles posed by market inefficiency and develop new strategies and platforms to accelerate deployment of market-ready solutions - creating a win for all parties and society as a whole.

Throughout their remarks and the panel discussion that followed, Mr. Craver, Mr. Shapiro and Gov. Rendell seemed to agree that the lack of a comprehensive U.S. energy policy is impeding the adoption and deployment of innovative clean technologies They also agreed that continued funding of basic research by the U.S. government through agencies like ARPA-E will be crucial to the development of the clean tech sector.

 

24

Apr

2012

Election Will Frame NVCA Agenda for the Coming Year PDF Print E-mail

Mark Heesen

Written by Mark Heesen   
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Whether you work in business or politics, it’s always the same: Success brings no rest. Indeed, it appears that our reward for a productive 12 months of venture capital engagement in Washington D.C. is merely a new set of challenges to tackle – including a presidential election in November. I had the opportunity to discuss these challenges and the implications of the successes that preceded them with NVCA Chair Paul Maeder at the opening general session of our NVCA Annual Meeting in Santa Clara, Calif., earlier today.

I expect the election to play a large role in framing and driving our agenda in the coming year – beginning with the campaign. When Mitt Romney wins the Republican nomination, for example, we will face the age-old challenge of educating the media and the public about the differences between venture capital, private equity (where Mr. Romney mostly made his name) and hedge funds. Fortunately, we now have a definition of venture capital straight from the SEC to aid us with this effort.

 The campaign will also throw a spotlight on critical issues like tax fairness and reform. Some are already calling into question the value of the capital gains rate, and we expect conversation to intensify. Tax law regarding partnerships may also get a closer look. These conversations will require us to redouble our efforts in communicating the benefits of smart tax policy in encouraging investment, capital formation, and the jobs that both generate. Again, we’re fortunate that these messages should be fresh in the wake of our successful effort to get the JOBS Act passed.

We also expect the Obama and Romney campaigns to spar continuously over the role government should play in our economy. This will unfold across a number of fronts. For example, policymakers on both sides will continue to wrangle over government’s role in upholding citizens’ online privacy. This pas t year, we were able to help defeat the SOPA and PIPA bills because of the negative effects they would have on innovation, but the underlying issues are far from dead. That’s why the growth of the coalition we’re building among of technology members couldn’t come at a better time.

In life sciences, we’ve made significant progress in our dialogue with the FDA regarding more efficient and predictable approval processes for new drugs and medical devices. We’ll need to build on that progress as we push for renewed PDUFA and MDUFA funding. And in clean tech, where we saw Congress renew funding for ARPA-E in the past year, we’ll have to work hard to ensure that funding for basic research remains strong while our portfolio companies, industry incumbents and regulators work on how best to bridge the “valley of death” between inspiration and commercialization.

Across all of these priorities, one thing is clear: NVCA and the venture community we support must retain the role of positive, proactive problem solvers. Being “for” something specific always seems to open more doors on Capitol Hill than being “against” things in general. We learned that with so many of our accomplishments in the past year – from JOBS to our SEC exemption to the FDA. Armed with that perspective, we set to work on a fresh set of challenges. Success never brings rest.

 
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