Venture Capital Industry Pushes Legislation to Hijack Federal Small Business Programs, According to the American Small Business League

PETALUMA, Calif.--(Business Wire)--
The following is a statement by the American Small Business League:

The National Venture Capital Association (NVCA) has been showering Congress with
millions of dollars in campaign contributions in hopes of changing the
55-year-old federal definition of a small business. The latest bill focuses on
the Small Business Innovative Research (SBIR) program. Wealthy investors are
hoping to ultimately gain access to all federal small business programs.
(http://maplight.org/map/us/interest/F2500/view/all,
http://www.opensecrets.org/industries/indus.php?ind=F2500,
http://www.opensecrets.org/pacs/lookup2.php?strID=C00150367&cycle=2008)

Federal law currently defines a small business as a firm that is "independently
owned." The NVCA is hoping to change that definition to include firms that are
not only not "independently owned," but are owned and controlled by wealthy
investors. If the NVCA is successful, millions of legitimate small businesses
could be forced to close their doors.

For over two years, the NVCA has hired some of the most powerful lobbying firms
in Washington in an effort to quietly pass legislation that will allow its
members to dominate federal contracting programs for small businesses, and firms
owned by women and minorities.

NVCA lobbying efforts have focused on President Barack Obama, Speaker of the
House Nancy Pelosi (D - CA) and both the House and Senate Small Business
Committees. In an April 2008 article in AllBusiness.com, House Small Business
Committee Chair Nydia Velázquez (D - NY) was described as "quarterbacking" the
legislation for the venture capital industry.
(http://www.allbusiness.com/company-activities-management/business-climate-conditions/9077284-1.html)

Congresswoman Velázquez has received significant contributions from the venture
capital industry. Velázquez was able to pass two pro-venture capital bills
through her committee in 2008, which were opposed by every major small business
advocacy group in the country. (http://www.asbl.com/showmedia.php?id=624,
http://www.whitehouse.gov/omb/legislative/sap/110-1/hr3567sap-r.pdf)

The latest bill to allow venture capitalists to participate in small business
programs was introduced by Congressman Sam Graves (R - MO) on June 9. The bill,
H.R. 2767, the "Investing in Tomorrow's Technology Act," amends Sec. 9 (e) of
the Small Business Act and will allow a firm to be considered "independently
owned" if it is owned in majority part by one or more individuals or venture
capital firms, and as long as no single venture capital firm owns 50 percent or
more of the business. As a result, H.R. 2767 will allow a business to be owned
up to nearly 100 percent by a venture capital syndicate and maintain small
business status. (http://www.govtrack.us/congress/billtext.xpd?bill=h111-2767)

The sudden appearance of H.R. 2767 is seen as a response to another bill, H.R.
2568, the "Fairness and Transparency in Contracting Act," which will strengthen
the definition of "independently owned" to halt the diversion of federal small
business contracts to Fortune 500 firms and firms controlled by venture
capitalists.

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

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