May 6, 2013
There is a serious lack of venture capital available today for companies seeking in excess of $375,000 and up to $5 million. The number of high tech venture capital firms that are active with available capital to invest is now estimated to be 86. This is less than when I entered the businss at Allstate Venture Capital in 1982. It has also been estimated that in 2012 80% of all capital invested with venture capital firms went to 6 major firms. As a particpant in these markets for over thirty years, it is clear this is true. Those entreprenurs looking for seed capital can often find it, and those looking for later stage capital who have made good progress can generally find it, but those who are in the middle find capital scare. Under the Jobs Act significant additional capital would be available for these orphan companies if experienced venture capitalists were permited under the SEC rules to form venture capital investment firms investing and soliciting online in password protected sites accredited investor capital without the need to be a broker/dealer. These firms should be permitted to participate in a carried interest as well as charge fees to accredited investors. Having invested in venture capital funds, managed instutional venture capital, and worked with high net worth investors, this approach would be similar to permitting venture capital firms who manage institutional
capital to charge both a carried interest and fees without the need to be a broker/dealer.