Do Venture Capital Firms Have Too Much Political Influence?

There are quite a few entrepreneurs who write business plans and come up with cool new inventions and innovations and are hell-bent on finding a venture capitalist to fund them. Other entrepreneurs who have walked that path, or perhaps have looked at it closely, have no intention of giving away such a large percentage of the company early on to venture capitalists, do not find the deal to be a good one, or in their favor. . Now, I have been an outspoken critic of venture capitalism, mainly because I have competed against startups funded 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 lobby Congress as well as local and regional politicians to prevent new regulations from being formed to allow the startup they funded some room to run to the finish line. Many believe this is a good thing, because it allows for more innovation in the marketplace, less regulation, and a better opportunity for startups to compete against large, established corporations.

In fact, all of that is true, but what about all the other smaller startups that don’t have that advantage? They cannot compete against the well-funded startup company funded by venture capitalists who have friends in high places and can run for them. So I would like to ask the question which is also the title of this article; Do Venture Capital Firms Have Too Much Political Influence? I think so, and I would also like to point out some of the government/private sector partnerships with companies that were financed by venture capital.

VCs tend to exit early as the company becomes widely successful and gains some market clout from additional government funding, thus making the company appear worth more and thus the stock of VC are worth more. We’ve seen a number of big startups here that have failed in the alternative energy sector. It turns out that it is the taxpayer who keeps the bag in many cases. Meanwhile, many of these startups fail, but in the process they take a significant amount of market share from the large established corporations that are truly viable, pay dividends, and employ tens of thousands of people.

Why don’t we reduce regulations for all small businesses and startups, regardless of who they are or who funds 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 games? In fact, I hope you’ll think about all of this, and if you have a contrary point of view, I’d love to hear it.

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