As we await President Obama’s post-Labor Day jobs speech, one can only hope his plan puts adequate and effective emphasis on growing the innovation economy. We have all heard small businesses create a disproportionate share of new jobs. Yet, not enough has been done on a federal level to catalyze growth in this sector. As venture capitalists know well, there is no lack of entrepreneurial spirit or exciting young businesses looking for money. The problem is a lack of equity capital to fund growth, enable R&D, create new products and of course, hire new employees.
This lack of capital can be traced to a shift away from venture capital as an asset class by the traditional L.P. investor base. As a result, many venture firms now struggle to raise new funds thus leaving our innovation economy short of cash. In response, maybe the U.S. should adopt a model which has successfully spurred venture investment in the United Kingdom and elsewhere—venture capital trusts (VCTs).
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Author:
Charles Rothstein
