Representative Glenn Nye (D-VA) has introduced H.R. 3738, the "Small Business Early-Stage Investment Act of 2009," to create an early-state investment program to provide financing to support small businesses in targeted industries, e.g., energy technology, clean technology and environmental technology.
The bill would authorize $250 million to create a program within the Small Business Administration, with grants to be distributed through the existing venture capital network. Qualifying for a grant under the program requires:
- Having access to more outside capital than the value of the grant;
- Making all their investments in small businesses; and
- Having at least 50 percent of their investments in early-stage companies.
The House Small Business Committee held a hearing on the bill last week. In her opening remarks, Chairwoman Nydia Velazquez (D-NY) observed, "The small business startup stage is especially critical to our economy. That's because new firms generate jobs and revenue where there once were none. Unfortunately, however, funding to these firms is declining. In the last quarter of 2008, it plunged $5.4 million. The legislation we're discussing today will stem those drop-offs by providing critical, early-stage capital."
Witnesses from organization such as the Biotechnology Industry Organization, American Osteopathic Association, National Association of Development Companies and National Venture Capital Association spoke in support of the legislation.
To read the bill, go to http://thomas.loc.gov and search by bill number
The written testimony of each witness is available at http://www.house.gov/smbiz/hearings/hearing-10-14-09-access-to-capital/hearing-witnesses-access-to-capital.htm