FOR IMMEDIATE RELEASE
June 11, 2009
Petaluma, Calif. - 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.