John Kerry’s Venture Capital Policy…
So just a little background. I work for a technology startup called kozoru. We took on venture money (commonly known as VC or Venture Capital) about two years ago…along with angel investment (private investors). Needless to say, these are highly speculative investments that may very well fail. However, if they do pay off, they pay off BIG. And for more background, this type of money is what fueled the boom and bust of the 90s.
I hardly know where to start with this John Kerry letter to the Small Business Administration. In it he calls for an increase in the amount of SBIC money (i.e., state venture capital) going to minority-owned and women-owned businesses. While I would love to see more businesses run by women and/or minorities — and everyone else, for that matter — Kerry’s arguments are awry.
For starters, greed is blind, so the whole idea that any remotely rational venture investor cares about gender, color, creed, or tracing skills is dubious at best. They want financial returns, and if it’s five-handed, blue-skinned hermaphrodites from Alpha Centauri who have the best deals, then, damn it all, five-handed, blue-skinned hermaphrodites from Alpha Centauri will get the preponderance of the venture money.
Second, the period is absurd. Comparing what happened in 2000 in venture capital to any other period is a recipe for nonsensical results. Take out 2000 and you see that the percentage of SBIC money to women-owned businesses has increased from 1.4% (2001) to 2.2% (in 2004), and the percentage of money to minority-owned business has increased from 3.3% (2001) to 5.2% (2004). Those are significant increases, even if the overall percentages are not huge as a percentage of the overall risk capital pie. Nevertheless, a) they are increases (contrary to Kerry’s assertion), and b) the numbers are representative of the number of VC-centric minority-owned and women-owned startups out there.
I can tell you for certain that this is reality. It’s not about race in the VC community. To Kedrosky’s point, we’d have “five-handed, blue-skinned hermaphrodites from Alpha Centauri” getting the money if they were coming up with the best ideas. Trust me, it’s true. Money talks and BS walks in this world.
John Kerry obviously doesn’t understand this even though the investments in minority and female owned startups have been going up in the past five years.