Now that President Barack Obama has signed a $787 billion stimulus package, the question is whether venture firms without existing ties to Washington, D.C., are too late to capitalize on its passage.
The stimulus legislation represents a “huge but competitive opportunity,” says Jack Biddle, co-founder of
Biddle says that he has already recommended to five of Novak’s portfolio CEOs that they “look at hiring lobbyists, because they’re in the path of some of this money.”
The legislation includes massive amounts of money that venture-backed startups can pursue—such as for fostering cleantech innovation, including smart grid investments and R&D for electric car batteries, which could receive tens of billions of dollars when all is said and done—VCs who have favorable views of the government “will be able to get in and get a piece of the action very quickly,” says Mark Heesen, president of the
Last week, 177 venture capitalists joined an NVCA-organized conference call to hear how their portfolio companies might benefit from the stimulus. Heesen says that one takeaway from the call is that the playing field is far from level, even at this early stage.
“We’re urging [venture firms] to make sure their portfolio companies are aware of this money, and to get in front of the U.S. Department of Energy or appropriate agency at the state level where some of this money will flow,” Heesen says.
Firms with relationships in Washington will enjoy a distinct advantage, in his view. West Coast firms that have favorable views of the government “will be at the front of the line,” he says. “The Midwestern and East Coast firm [because of their close ties to federal government] have a leg up on their peers because they’re much more comfortable working with government agencies than most other firms.”
Heesen isn’t alone is suggesting that those that have fostered a relationship with the government in the past stand a better chance of getting its attention now.
“For people who are just waking up to this, in some ways, it’s too late,” says Ira Ehrenpreis, a general partner at cleantech investor
Ehrenpreis, for example, is a member of the American Council on Renewable Energy, an 8-year-old, Washington-based nonprofit. He also sits on the board of the NVCA.
“In both roles, I’m spending a decent amount of my time in Washington, connecting with politicos,” says Ehrenpreis, who adds that the effort has been paying off, too. “Several of our portfolio companies, including [electric car maker] Tesla Motors, are already in the middle of [Department of Energy] loan guarantee programs.”
Technology Partners is among a small number of West Coast firms—including
“For years, Silicon Valley has seen that laissez-faire works when the capital markets are working, but that world has changed,” says Jim Fulton, an attorney with Cooley Godward Kronish, a Palo Alto, Calif.-based law firm that works with many venture-backed startups.
“Washington D.C. is the new financial capital of the world,” Fulton says.