Raising Money for a Startup? Why Washington Matters More Than You Think

As a venture investor, I’m often asked what insights or advice I have for entrepreneurs starting to build new companies. These days, it’s simple: What happens in Washington matters. For many young CEOs, it’s a tough sell. Consumed each day with improving their products, building management teams and developing market strategies, I understand the aversion they may have to following the partisan bickering and old-school politicking – let alone dirtying their own hands with it. The reality, however, is that government policies have a profound impact – both positive and negative – on a young company’s prospects for growth. In recent years, the trend has tilted toward the negative. A perfect storm of market developments and regulatory reactions have coalesced to restrict emerging growth companies’ access to the public capital they need to innovate, hire employees and grow revenue. At the same time, restrictions on financial communications have made it more difficult for these companies to tell their stories to investors, and more difficult for investors who are interested in emerging growth IPOs to get the information they need to make sound investment decisions. These developments are directly impacting how entrepreneurs build their companies, and they are steering many of them way from initial public offerings...

This is especially true here in New England, where the synergies between our academic, software, medical and financial communities have transformed our region into a hub for research- and innovation-driven startup companies and venture capital investing. Our economic future is deeply invested in the success of this sector. That’s why I am excited for innovative young companies like Imprivata, a healthcare IT company, QD Vision, a nanomaterials products company, and SCVNGR, a social gaming and payments company – just to name a few. They are creating the industries of the future – the development of which will generate jobs and economic growth.