Last Thursday, President Obama announced his nomination for the position of Chief Counsel for Advocacy at the Small Business Administration. The nominee,Winslow Sargeant, is a managing director in the technology practice at Wisconsin-based venture firm Venture Investors LLC.
The first thing that comes to mind is, of course, the future of the Small Business Innovation Research (SBIR) program, which is set for Congressional reauthorization before its expiration on July 31st. Venture capitalists are hoping the rules of the SBIR program will change to make venture-backed companies eligible once the program is reauthorized. In 2002, the SBA clarified that venture capital firms, pension funds and corporate entities were not considered “individuals” for purposes of this small business program. SBIR remains popular in Congress, but disputes over the issue of whether venture capital backed-firms can be eligible for SBIR funding have blocked efforts to pass a SBIR reauthorization last March.
Sargeant’s nomination is certainly encouraging for the venture capital industry. Sargeant also has experience with SBIR, having served from 2001 to 2005 as the program manager for the SBIR Program in Electronics at NSF. He was reported to have commented favorably to the change in rules, stating that the majority of SBIR grants would still go to small businesses. If approved, Sargeant will not be sole “fresh blood” at SBA with a VC background. Obama has already appointed Karen Gordon Mills, a founder and managing director of a New York-based VC firm, as SBA director.
This contentious issue aside, Sergeant would add to Mills’ expertise in high growth businesses and innovation commercialization. Let’s hope that while leveraging the role of venture capital in new firm formation, they do not dismiss other funding and growth paths that successful entrepreneurial ventures take.