Just Say No to a VC Bailout
A few weeks back, a friend mentioned an idea he had heard suggesting that the government consider entering the VC (venture capital) business as part of the overall stimulus plan. Specifically, the argument was made for the government to provide excess venture capital funding to the green sector. At first, I assumed this was just one individual’s idea, but the noise level has risen to the point where it is reasonable to assume there is a group pushing or lobbying for this outcome. Last week, Thomas Friedman jumped on the bandwagon in a New York Times article titled Open Door Bailout. Friedman noted: “I would have loved to have seen the stimulus package include a government-funded venture capital bank to help finance all the start-ups that are clearly not starting up today — in the clean-energy space they’re dying like flies — because of a lack of liquidity from traditional lending sources.” Clearly, there is a group of individuals that believes the government should enter the venture business. With all due respect to Mr. Friedman – and by the way I am a huge fan of The World Is Flat – this is a remarkably flawed idea. Startups and VCs simply do NOT need bailout dollars. Allow me to provide more detail:
