Pelosi-Backed Loophole for Venture Capitalists Will Damage Middle Class Economy

PETALUMA, Calif., Jan. 12 /PRNewswire-USNewswire/ -- House Speaker Nancy
Pelosi (D - CA) is leading congressional support for a new loophole in federal
contracting law that will allow some of the wealthiest venture capitalists in
America to receive federal contracts set-aside for small businesses.

The new loophole could divert billions of dollars in federal small business
contracts away from middle class firms and into the hands of wealthy
investors. If Congress does adopt legislation that allows venture capitalists
to participate in federal small business contracting programs, thousands of
middle class jobs could be lost as legitimate small businesses struggle to
compete head-to-head with firms owned and controlled by billionaire investors.

In 2008, Speaker Pelosi backed H.R. 3567 and H.R. 5819, both of which would
have allowed individual venture capitalists and even some of the nation's
largest venture capital firms to take contracts meant for small businesses.

After leading the opposition against H.R. 3567, the American Small Business
League (ASBL) was joined by the Small Business Administration (SBA), the U.S.
Chamber of Commerce, the National Association of Government Contractors, the
National Small Businesses Association, and the Bush White House.

The key element of the Pelosi-backed legislation is a change in the
longstanding definition of a small business, which is defined in the Small
Business Act as a firm that is "independently owned." Pelosi would like to
see the definition changed to include firms that are not "independently owned"
but actually owned and controlled by well-heeled venture capitalists.

Many of the top venture capital firms in America are located in or near
Speaker Pelosi's 8th congressional district and according to MAPLight.org,
from January 2005 to May 2008, Speaker Pelosi received a combined $108,400
from venture capital giant, Kleiner Perkins Caufield & Byers; pharmaceutical
giant, Amgen Inc; and lobbyist, Akin Gump Strauss Hauer & Feld LLP.

The ASBL predicts that Speaker Pelosi may try to include a loophole for
venture capitalists in any up-and-coming economic stimulus plan coming out of
the House of Representatives, under the guise of "increasing access to
capital" for small businesses.

In the past, the National Venture Capital Association (NVCA) has used the term
"increasing access to capital" for small business to disguise legislation and
policies designed to allow its members to take federal contracts earmarked for
legitimate small businesses.

President-elect Barack Obama has also received significant contributions from
the venture capital industry. His appointment of Karen Mills, a venture
capitalist, as Administrator of the SBA is seen as a clear signal he will
support legislation that will likely divert billions of dollars in federal
infrastructure funds away from middle class firms, and into the hands of some
of the nation's wealthiest investors.

SOURCE American Small Business League

Christopher Gunn, Communications Director of American Small Business League,
+1-707-789-9575, cgunn@asbl.com