The support which the venture capital industry has received for our position on carried interest has been strong and heartfelt.  In addition to the venture community itself, CEO and entrepreneur founders weighed in last week on our behalf with a letter to Congress.  Today, more than two dozen researchers and professors from academia sent a letter to the President of the United States warning of the harm to innovation if venture capital investment is compromised as a result of a carried interest tax increase.  Signed by highly respected academics from MIT, Harvard, Dartmouth, Stanford, Tufts, The Scripps Research Institute, University of Washington, University of Michigan, UCSD, UCLA and University of Chicago, the letter made the following points:

As members of the U.S. academic and research community, we would like to express our gratitude for your support of federal funding for basic research and development…. Yet research funding alone will not bring the best innovations from laboratory benches to the average American home.  Without venture capital, many of our most promising breakthroughs will remain in the lab. 

Doubling the tax rate on our venture partners will only discourage the very type of long term, high risk investment and commitment required to take our best discoveries to the next level.  At a time when the nation is in desperate need of innovation in the life sciences and clean technology industries, how could we possibly consider penalizing those professionals who are committed to bringing these breakthroughs to market?

If this tax hike goes through, venture investment will decline. No other group of investors will take the place of venture investors.  This work is too risky for traditional lenders, too long term for buyout or hedge fund professionals, and too capital intensive for angel investors.   Jobs will be lost and our country’s innovations will wither on the vine.

We hope that your support in our nation’s research and development work will not be for naught.  Please support a continued capital gains tax rate for venture capitalists who invest for the long term.  The future of our innovation economy depends upon it.

The full letter and list of signers is here.  On behalf of the venture capital industry, we continue to thank all of those supporters who have offered their voices on this important issue.