Thomas Friedman says we should invest in innovation (NYTimes Op-ed). The venture economy doesn’t need more money– there is already too much there (Fred Wilson/AVC). The key question: where is the bottleneck? In a very good and thoughtful post, Jeff Bussgang says the bottleneck is with exits (Seeing Both Sides) and that we need to repeal SOx, increase H1-B visas, and keep cap gains tax low.
While I agree with Jeff that these things are good for the venture economy, I’m not so sure that that’s where the bottleneck lies. For the Sarbanes Oxley point to hold up, do we have evidence that there are a backlog of companies that would IPO in a heartbeat if SOx was repealed? I know there is an argument that we see a lot more early exits now due to SOx but even picking through the companies that have been acquired, would any fit the mold of an IPO caliber company? H1-B is a resource issue dealing with inputs, not outputs, and cap gains again related to capital inputs.
So that all said, I’m beginning to think that the bottleneck is more situational– we need to fertilize the grounds for innovation because the current landscape is depleted. I’m just thinking out loud at this point but wouldn’t something like opening up white space do more to enable innovation? Or removing the regulatory hurdles that stand in the way of smart metering?
EDIT: Another post worth linking to– from SAI that says since IPO market is shut, new VC money could help bridge finance companies until the mezzanine debt markets come back.
