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Venture capitalists have said that despite the dour economy and the belt-tightening, smart entrepreneurs and good ideas will continue to get funded. It's been borne out somewhat in some sectors, but that doesn't mean there aren't darker clouds looming.
That's the message imparted by Pascal Levensohn, founder and managing partner of Levensohn Venture Partners. In a speech given Wednesday to the Cybersecurity Applications and Technologies Conference for Homeland Security (so cumbersomely named, no doubt, to enable the acronym Catch), the VC warned that corporate R&D spending and university endowments to venture capital are declining and the systemic failure of financial institutions is decimating the availability of risk capital. Coupled with the overall reduction in VC investing, the effects on innovation and the United States' prosperity could be disastrous, Levensohn warned.
"The negative ripple effect from this collectively reduced pool of risk
capital is not yet evident in our economic statistics," he told the
Washington audience, "but will have a profound and negative
impact on the ecosystem that has traditionally nurtured entrepreneurs
in the small business ventures that drive new job creation in America."
One solution, he suggested, is a government policy to attract, educate and retain talented scientists to the U.S. And while Levensohn praised the Obama administration's stimulus package, he said the problems facing innovation are structural. "Our political and business leadership must develop a comprehensive plan in the form of an effective public-private partnership to renew America's focus on long-term risk taking in order to nurture the entrepreneurs who represent the genetic material of progress in this country," he said. - Olaf de Senerpont Domis CategoriesComments
From: Paul K. Smith,
There is one and only one reason for business failure -- including the failure to grasp the breakthrough opportunity, and innovate -- that reason for failure is bad management. All else is excuse.
Posted on:
March 4, 2009 5:36 PM
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Rather dire analysis of the situation. But the implications for innovation policy are interesting.