The National Association of Seed and Venture Funds and the non-profit Innovation America are proposing a new $1-$2 billion public/private partnership for seed investment. The proposal is their bid to get federal economic stimulus money flowing into new company formation.
Rich Bendis, founder of Innovation America, told Ebb & Flow the group had proposed a $1 billion program and said the Office of Management and Budget responded that $2 billion might be a more appropriate funding level. These federal funds would then be matched by state investment groups, angel investors and early stage VCs.
Bendis envisions the program as managed by the best-performing and mostexperienced early stage investors, as defined and chosen by the private/public partnership. He anticipates that the program might commit $500,000 of a $5 million round.
He hopes to get a pilot program off the ground this year, but noted that a program this size would likely need congressional approval.
Last year, life sciences companies comprised the largest segment of companies funded by angel investments-18% of the more than 55,000 such deals. Although the number of angel investments remaind stable from 2007, the total money put to work fell 26% to $19.2 billion, according to a survey by Jeffery Sohl of the Center for Venture Research at the Univeristy of New Hampshire.
[Article first appeared in: BioCentury, The Bernstein Report on BioBusines - April 20, 2009 - Reused with permission]