A Federal VC Fund-of-Funds?
Earlier this year, Tom Friedman got knocked around for suggesting that some of the stimulus cash be redirected to venture capital firms. Now, a version of that idea might actually be gaining some traction. Innovation America, a nonprofit public/private partnership, and The National Association of Seed and Venture Funds (NASVF) are lobbying for a $2 billion fund-of-funds that would be used to shore up state investment programs and angel groups. Richard Bendis of Innovation America says that the groups had initial talks with the Obama transition team back in December, at which point the proposed program stood at just $1 billion. Bendis says that the government reps requested additional information, at which point Innovation America and NAVSF conducted a survey to demonstrate the difficulty young companies face in raising venture capital. Even though the survey was unscientific, the feds responded that $2 billion sounded like a more appropriate figure (insert jaded sadness here). Bendis says that the first $1 billion would come out of the stimulus package, perhaps from an organization like the Small Business Administration. It would then be allocated to various groups under the auspices of Innovation America, with third-party investors being asked to match the federal contributions on a dollar for dollar basis (bring us to the $2b figure). Kind of like PPIP for the entrepreneurial set.
