socialmedian: How To Break Venture Capital

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Top Investors and Entrepreneurs Don't Want or Need Bailout says Wilson By sarahcrisman

Feb 24, 2009

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How To Break Venture Capital

Source: Silicon Alley Insider

Feb 23, 2009

Summary

Over the weekend, Tom Friedman published an op-ed piece in the NY Times arguing that the US government should take the bailout money it is considering handing over to the auto industry and instead give it to the top venture capital firms. It's a typical Friedman piece: boldly urging new economy innovation while getting almost everything that matters wrong.

Here's Friedman's proposal:

You want to spend $20 billion of taxpayer money creating jobs? Fine. Call up the top 20 venture capital firms in America, which are short of cash today because their partners — university endowments and pension funds — are tapped out, and make them this offer: The U.S. Treasury will give you each up to $1 billion to fund the best venture capital ideas that have come your way. If they go bust, we all lose. If any of them turns out to be the next Microsoft or Intel, taxpayers will give you 20 percent of the investors’ upside and keep 80 percent for themselves.

You'd think that Friedman's idea would be universally applauded by the venture capital industry. After all, who wouldn't like

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