Congress Continues to Kill the Golden Goose of Innovation

Fred Wilson of Union Square Ventures points out two unnecessary clauses in Dodd’s banking bill which continues to pluck the golden goose of venture capital towards a dead duck: to raise the threshold for a qualified investor to be an angel, and to remove the simplified Federal safe harbor for venture investing. He wonders why such clauses matter in a financial reform bill dealing with large commercial banks, since angel investing does not rely on these banks. Then he asks why have these thresholds at all: why make it hard for friends & family to invest in a friend’s start up?

First Sarbanes-Oxley, then demonization of options, modification of option accounting, changes in tax laws, etc etc. The VC industry is waiting for the next big shoe to drop, a change in tax treatment of carried interest. What’s the point, other than the Politics of Envy? VC had nothing to do with the credit crunch, and everything to do with keeping the US competitive.

The industry is now voicing their concerns, so maybe they can short circuit this. Hold the cynicism for the moment.

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About Duncan Davidson 228 Articles

Affiliation: NetService Ventures

Duncan is an advisor to NetService Ventures, where he focuses on digital media and the mobile Internet.

Previously he was at four start-ups: Xumii, a mobile social service based on a Social Addressbook; SkyPilot Networks, the performance leader of wireless mesh systems for last-mile access, where he was the founding CEO; Covad Communications (Amex: DVW, $9B market cap at the peak), the leading independent DSL access provider, where he was the founding Chairman; InterTrust Technologies ($9B market cap at the peak), the pioneer in digital rights management technologies, now owned by Sony and Philips, where he was SVP Business Development and the pitchman for the IPO.

Before these ventures, Duncan was a partner at Cambridge Venture Partners, an early-stage venture firm, and managing partner of Gemini McKenna, a joint venture between Regis McKenna's marketing firm and Gemini Consulting, the global management consulting arm of Cap Gemini.

He serves on the board or is an adviser to Aggregate Knowledge (content discovery), Livescribe (digital pen), AllVoices (citizen journalism), Xumii (mobile social addressbook), Verismo (Internet settop box), and Widevine (DRM for IPTV).

Visit: Duncan Davidson's Blogs

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