There are quite a few entrepreneurs who write business plans and come up with great inventions and innovations and are determined to find a venture capitalist to finance them. Other entrepreneurs who have followed that path, or perhaps have looked at it closely, have no intention of giving up such a large percentage of the company from the start to venture capitalists, they don’t find the deal a good deal. a good one, or in its favor. Now, I have been an outspoken critic of venture capitalism, especially since I have competed against startups financed by these groups, but they have a clear advantage.
Most venture capital firms are highly connected and can literally move mountains. They have friends in high places who are willing to do them deals and favors, and they can literally open doors. They have been known to pressure Congress, as well as local and regional politicians to prevent new regulations from being formed that allow the startup to fund a bit of room to race to the finish line. Many believe this is a good thing, because it allows for more innovation in the marketplace, fewer regulations, and a better opportunity for startups to compete with large established companies.
In fact, all of that is true, but what about all the other smaller startups that don’t have that edge? They can’t compete against the well-funded start-up funded by venture capitalists who have friends in high places and can run for them. So I would like to ask the question that is also the title of this article; Do venture capital firms have too much political clout? I think so, and I would also like to point out some of the partnerships between the government and the private sector with companies that were financed with venture capital.
Venture capitalists tend to exit early as the company becomes widely successful and gains some influence in the market from additional government funding, making the company appear worth more and that the venture capital stocks are worth. more. We have seen a number of large start-ups in this place that have failed in the alternative energy sector. It turns out that it is the taxpayer who gets the bag in many cases. Meanwhile, many of these startups fail, but in the meantime, they take a significant amount of market share away from really viable large established corporations, pay a dividend, and employ tens of thousands of people.
Why don’t we reduce regulations for all small businesses and startups from who they are or who funded them? In fact, why don’t we reduce regulations for large corporations as well? And then why don’t we allow everyone to compete in the free market the way it was intended to be without any crony capitalism, favoritism, or behind-the-scenes play? In fact, I hope you think about all of this, and if you have a contrary point of view, I would love to hear it.