After we read that venture capitalists, angel investors, and the like want the federal government to give venture-backed businesses the ability to tap small business-specific seed-money funds, tax credits, R&D dollars, and even loans (presumably the Small Business Administration's 7(a) program?), our first instinct was to check Lloyd Chapman's stomping grounds at his American Small Business League and the Huffington Post to see if he'd responded with a furious denunciation of venture capital's nefarious lobbying efforts. Surprisingly, he has not--yet (nor is he quoted in the article). But we won't be shocked if we see an angry retort from him in the coming days. The prospect of venture capital-backed companies taking money away from other small businesses is practically designed to push his buttons.

The piece does quote small-business advocates saying what we suspect Chapman would: that expanding these programs to equity-backed companies would, in the article's words, "divert attention from those that really need help." And it does mention a tense dynamic that Chapman has not been shy about raising: the fact that Obama's pick to head the SBA, Karen G. Mills, who was confirmed at the beginning of the month, has a background in venture capital.

In fact, we can almost picture Chapman's veins bulging upon reading the quote the article gets from an SBA spokesperson: "I think certainly [Mills is] going to look and make sure the SBA is working as effectively as possible to help small businesses, and that includes high-impact small businesses," he told the Journal, using what appears to be a euphemism for equity-backed small companies.

We're going to be more open-minded on this one than Chapman would be (it is Chapman's job to be closed-minded when it comes to this sort of thing). We wouldn't necessarily be averse to governmental aid for venture-backed small businesses; every other industry is getting a bailout, so why shouldn't they, too? However, any such efforts need to happen in a way that does not deny small, non-equity-backed businesses one cent of money they should get. Should any proposal mess with that, we will join Chapman in his inevitable crusade against it.

Source:  http://bizbox.slate.com/blog/2009/04/help_on_the_way_for_venturebac.php