Apr 7, 2009 7:36 pm US/Pacific
South Bay Venture Capitalists Plot Economic Fix
Al Waxman of Psilos and Bob Ackerman of Allegis Capital Give Thoughts on How to Create Jobs
SAN FRANCISCO (CBS 5) ―
Silicon Valley venture capitalists are known for growing companies and creating jobs. So, why not give them economic stimulus money and let them work their magic? They don't want it. But, they have other ideas for leading the nation out of the recession.
While the federal government is pumping billions into the US auto manufacturing industry to save jobs, DriverSide, a small San Francisco startup that helps car owners keep track of their vehicle's service history is creating jobs. It's doing this with its own cash infusion of $5 million from Bob Ackerman and Allegis Capital.
"The impact is to immediately create new jobs around that new idea. If they are successful more capital will become available and new jobs will be created," said Ackerman
Web Extra: Interview With Bob Ackerman, Allegis Capital
The venture capitalist said President Obama's economic stimulus plan should focus more on creating and supporting "new" businesses.
"If I were speaking with the President, I wouldn't ask him to write checks to VCs. That's been discussed and that's a bad idea. Good ideas attract capital. We don't need the government to infuse capital into our process artificially," Ackerman said.
He said the Obama administration must reduce regulations and taxes that push entrepreneurs elsewhere and stifle innovation in Silicon Valley.
Ackerman said last year $8-billion in VC money went to startups in India and China instead of in the US.
"We have created an environment where many engineers are going back to China or going back to India almost as conquering heros where success is cheered and capital has gone with them," said Ackerman. "If we are not effective in reversing the trend we run the risk of not killing the golden goose but chasing it out of own."
Another concern in this recession, VCs are raising less money and giving less out. Last year, VCs raised about $28 billion, 21% less than the previous year where they raised $35.5 billion, according to the National Venture Capital Association. Dr. Al Waxman with Psilos investment firm said there's a lot at stake for US innovation.
"We were worried about a credit freeze. If we have an innovation freeze, we won't stay on track," said Waxman.
He said entrepreneurs should focus on products and services that solve some of our nation's biggest problems like high energy and healthcare costs. His firm raised $300 million in 2006 and has invested almost all of it in healthcare related startups.
"We see opportunities for companies to do more effective procedures at lower cost. That'll generate enourmous change and opportunity and growth," Waxman
Psilos invested in Fremont's AngioScore. The company manufactures a relatively inexpensive device that unclogs arteries. It has doubled its revenue and is on pace to double in size, adding another 120 jobs in the next couple years. That's an example of how VC investment can lead the nation out of recession with new technology and new jobs.
In the economic stimulus package, the federal government has earmarked about $30-billion to spend in health care IT, broadband, and energy grids. That could create 1-million new jobs within a year. Both investors agree, Silicon Valley will benefit.
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