As the Senate put its final touches on a small business tax and jobs bill, Senate Finance Chairman Max Baucus yesterday pushed once again to reignite the debate on the stalled tax extender package by introducing another configuration of that legislation. Not unexpectedly, he kept the carried interest provisions in the bill as one of the revenue sources to offset the measure’s other tax cuts. 

The Senate has an extremely full agenda between now and October 8^th when they recess for elections.  The tight schedule will make it very difficult for this bill to come to the floor again during this Congressional session, unless consensus is reached around several provisions where significant controversy remains.  If the bill does not come to the floor before October 8th, the legislation will remain outstanding until Congress reconvenes after the elections.  Still we are monitoring the situation closely and will communicate here should the dynamics around the legislation or the Senate schedule change. 

International Delegation of Venture Associations Pose with HWS Colleges President Mark Gearan and Student Hosts

Earlier this week, Hobart and William Smith (HWS) Colleges in Geneva, New York hosted twelve venture capital associations from around the globe in an inaugural gathering.  Representatives from the NVCA were joined by peers representing the interests of the venture industries in Europe, Africa, Australia, Latin America, India, China and Israel.  The concept of NVCA Chairman Emeritus and Polaris Venture Partners Co- Founder, Terry McGuire, the Congress offered the associations a unique opportunity to discuss the environment for venture investing in our respective regions and to share perspectives on the global venture capital economy.

During the two full days we were together, topics ranged from the evolving exit market for venture backed companies to the status of the AIFM directive in Europe.  While NVCA has kept apprised of the developments in the ecosystems overseas, we had yet to have an opportunity to sit down in person with our counterparts and discuss challenges and opportunities in great detail.  And while we all are addressing increasing difficult political environments in which to invest, at the same time we are all enthusiastic about the economic growth and innovation that venture capital has brought and will continue to bring to our respective regions.  The group plans to operate in committee form over the next year to further several of our shared objectives including the proper positioning of venture capital as a key contributor to global economic growth and fostering market conditions which support the start-up ecosystem.

Our experience was further enhanced by the hospitality of HWS President  Mark Gearan and the college’s outstanding student leaders, the latter who spent considerable time with the delegation discussing both venture capital issues and their future aspirations.

The meeting’s success was evidenced in the unanimous decision to gather each year as a group going forward and we look forward to joining one another next year in Israel.

Earlier this week the NVCA filed its comment letter with FASB on the draft fair value accounting standard. Our response addressed 8 aspects of this far-ranging standard. As we have previously noted, most of the activity concerning US GAAP accounting rule changes has been redirected from individual topic work to the topic-by-topic "convergence" of FASB (US) and IASB (non-US). This draft is one of three key convergence topics of interest to us.

FASB's stated intent is to create an ongoing standard from the principles and practices already specified in the fair value standard, once known to its friends and detractors alike as "FAS 157" and currently as "Topic 820". Our take is that FASB mostly accomplished that but there are areas of inconsistency and (perhaps unintended) adverse changes.

Many thanks to James Beck of Mayfield who led the NVCA CFO subgroup through a number of complex issues. We had a very involved and engaged committee which diligently worked through the issues and prepared our response. Additional thanks to Denise Marks of SV Lifesciences, Michelle Murray of Prolog, James Stevenson of ABS Capital, Tim Curt of Warburg Pincus, and Bill Hupp of Adams Street -- with Stephen Holmes of InterWest, Mike Maher of USVP, and David Larsen of Duff and Phelps of counsel.

FASB will review these comments, seek further dialogue and comment as it sees fit, and then will likely issue the final standard. Stay tuned.

The world is a big place and although we hear a lot about venture-backed companies outsourcing parts of their operations to China or India, there are countries that are less talked about that are offering benefits that some venture-backed companies (and their investors) should consider.

For example, were you aware that Belfast, Northern Ireland has the lowest operating costs of any comparable region within Western Europe coupled with established ICT, Financial Services and BPO clusters? Or, that Argentina and Brazil are emerging as strong alternatives to India and China for IT investment and BPO outsourcing?

Every global location has its pros and cons and each business is a unique case. Join NVCA on September 17th at 12:00 pm ET for a 60 minute webcast that will look at the factors that all companies (and their investors) should consider before implementing an international expansion strategy. We will highlight some different regions and the unique incentives being offered to emerging growth companies. And, our experienced panel of entrepreneurs and venture capitalists will share lessons learned from their experiences in building companies in a variety of countries. For more information about this program, please visit http://www.nvca.org/index.php?option=com_eventlist&view=details&id=319:webcast-portfolio-companies-going-global&Itemid=156

Today the NVCA announced the formation of the Medical Innovation and Competitiveness (MedIC) Coalition, a group of venture capitalists and their portfolio companies dedicated to preserving and advancing medical innovation in the United States.  You can read about the Coalition in our press release or visit the MedIC website for additional information regarding its leadership, action plan and structure.

MedIC brings together key voices from the life sciences start-up community to collectively assert that the United Statesis in danger of losing its leadership position in the area of medical innovation to overseas competitors.  With the implementation of healthcare reform underway, now is the time to ensure that innovation is not left on the cutting room floor.  The Coalition comprises NVCA members who have been working on these issues for quite some time as well as the entrepreneurs and innovators who have the stories to tell regarding real challenges at the FDA and CMS. If the environment for approving novel technologies and obtaining fair pricing on these innovations does not improve, the funding for medical breakthroughs will dry up and American patients will suffer.

In the coming months, MedIC will engage in research which evidences the issues and offer solutions to our most pressing medical innovation challenges.  We at the NVCA believe the threat is indeed serious enough that it needs a sharp focus – one which a stand alone coalition will bring.

Charter membership in MedIC is now open to all NVCA member firms and all venture-backed life sciences portfolio companies in the United States.  A nominal, tiered dues structure will fund MedIC advocacy efforts.   We encourage all eligible firms and companies to join the cause and help preserve such an important contributor to our quality of life and our economy.  

Questions regarding MedIC should be directed to Kelly Slone at kslone (at) nvca (dot) org or 703-778-9275.