Sunday, February 22, 2009

Bailing out VCs? Fred Wilson on Thomas Friedman NYT Article

My comments on Fred's blog....

"Agreed. The government shouldn't pay the VCs to be VCs.

However, perhaps the government should BECOME a VC. Really they already are but the program could be expanded.

A creative expansion of the SBIR/STTR grant model ( . Right now ~$2B a year is available through SBIR/STTR. The money is distributed using a solicitation model where government agencies publish solicitations for proposal and small businesses submit plans as application for the grants.

Now since "stimulus-class" "real money" these days starts at the $100B mark, why not figure out a way to make $100B available through SBIR/STTR using that model. With SBIR/STTR money is offered in phases based on results delivered.

SBIR awards are divided into three phases: Phase I awards are funded up to six months and $100,000. Phase II awards are funded up to two years and $750,000. Phase III awardees do not receive SBIR funding. However, Federal agencies may award non-SBIR follow-on funding for products/processes developed in Phases I and II that prove to be commercially viable.

If the Government decides not to continue funding at phase 3(Series B), for whatever reason, VC's could choose to step in.


1 comment:

  1. Government should try to encourage startups thou angle type grants but I would be against funding VC's directly. Public money to VC's will be a way for the general public to provide VC's a free no risk capital channel where the VC's would ge the reward and teh public the risk. Worse, teh govenment is now using our money to fund its friends. If VC's made bad investments they should sink like the rest of the world.


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