Congratulations on being appointed to the NVCA board. Can you tell us a bit about the group, and which of its core policy issues are you most excited to work on?
Sure—the National Venture Capital Association is the VC industry’s flagship trade association, and generally advocates for policies that encourage innovation, entrepreneurship, and long-term investment.
As far as specific policy issues, I would say there are a few things that are interesting to me. One is immigration. The current administration is trying to repeal a new rule designed to allow immigrant entrepreneurs to launch startups in the U.S. It operates similarly to a startup visa. The administration is trying to cancel the program, which is counter-intuitive to me in light of the administration’s focus on developing and retaining key technologies in the U.S. and stimulating the domestic economy. The International Entrepreneur Rule is centered on allowing qualified immigrant entrepreneurs with dedicated funding for their ideas to build and scale their businesses here, which translates into job creation and many other social and economic benefits. NVCA is working to prevent the administration from cancelling the initiative and I’m proud to support the effort.
The other big issue for me is capital formation and regulations around funding young companies. This includes regulations that allow for more venture capital investment in the heartland. The “Volcker Rule”, which was part of the Dodd-Frank package of regulations passed about a decade ago, for example, prohibits banks from making certain kinds of investments that could be seen as speculative. Because this rule fails to make a distinction between patient equity investment and speculative trading, VC firms in the Midwest, Texas, the Mountain West and other non-coastal regions lost one of their primary sources of funding (banks) that they’ve traditionally used to fund innovative new companies. The NVCA is working to ease these regulations to help more VCs raise capital.
Finally I think there can be some further refinement around IPO rules. The JOBS Act was a good, initial step in making it easier for companies to access the public markets, and I look forward to building on this success to stimulate the market and allow more companies to go public.
NVCA President Bobby Franklin recently issued a call to arms to defend the International Entrepreneur Rule. What is the IER and, in your opinion, why is this policy so integral to the startup ecosystem?
This is the startup-visa initiative I mentioned earlier. The International Entrepreneur Rule would allow foreign-born company founders to launch new businesses in the U.S., instead of overseas. The NVCA took the highly unusual step of actually suing the government over this issue last year after the NVCA alleged that the Department of Homeland Security unlawfully delayed implementing the program. But now it looks like the rule is still not being put in place.
The irony of all this is that the current administration seems to want legal immigration—to allow for legal immigrants to come here and be productive citizens and create jobs and economic growth. And that’s exactly what the IER does. In my opinion, there’s no better qualified immigrant than someone who has an idea, has financial backing from a credible investor and can come here to create jobs. We should be embracing these entrepreneurs, not giving them the cold shoulder.
Have you backed many immigrant entrepreneurs as an investor?
Sure. A few years ago I backed a company from the Netherlands called Mendix*, which has since moved its headquarters to Boston. The CEO of my portfolio company RiskIQ*, a cybersecurity startup, is an immigrant from Greece. The two founders of ServiceTitan*, a Los Angeles company that makes software for plumbers and electricians, are both ethnic Armenian immigrants; they both have amazing stories about the sacrifices their parents made to give them a better life. It’s definitely the majority of my companies that are backed by foreign-born entrepreneurs.
Following up on the Volcker rule: Why is it important to stimulate more VC investment in the heartland?
Well, as we know, today you can start a company anywhere—that’s partly due to innovations like cloud computing and mobility, but also because every company is rapidly becoming a technology company. We’d like to see more centers of innovation distributed around the country, instead of fewer. It’s positive for these regional economies, especially in places like the Midwest, that are transitioning away from traditional manufacturing industries. We’ve seen the Midwest potential firsthand with our involvement in ExactTarget and Angie’s List in Indiana for instance.
There are several high-profile initiatives around this theme, like (AOL Founder) Steve Case’s “Rise of the Rest” seed fund that is targeting promising companies away from Silicon Valley, New York City and Boston.
The #MeToo movement has had serious ripple effects throughout Silicon Valley and the tech ecosystem. What role can the NVCA play to be a part of the solution?
I think the NVCA has a big role to play and has already done some very positive things. The group partners with Deloitte each year, for instance, on a Human Capital Survey, which captures data related to the VC-industry workforce, including data about diversity and inclusion. This information is extremely comprehensive and can really serve as a resource for all VC firms to understand how to improve the diversity of their own firms and the workforces of their portfolio companies.
The NVCA also keeps a large number of model legal documents for firms to use as templates, including sample documents about human-resources policies for addressing harassment and discrimination, for attracting and retaining diverse talent and for supporting paid family leave. These documents are especially helpful to smaller firms that may not have developed, internal HR organizations. The NVCA has also spoken out forcefully against some of the instances of sexual harassment in our industry.
What opportunities and/or challenges do you anticipate in the NVCA’s policy work broadly given the current state of partisanship in Washington?
Well, the environment is very partisan right now. But I think the NVCA, by focusing on its goals of fostering innovation and supporting startups and small businesses, can successfully pursue initiatives that cut across party lines. All 535 members of Congress are supportive of increased entrepreneurship.
At the NVCA’s annual meeting in Washington, D.C. earlier this spring, for example, we had speakers from across the political spectrum join us to talk about how our group is important to the country as a whole. These included Republican House Majority Leader Kevin McCarthy from California and Democratic Sen. Mark Warner of Virginia. Both were warmly received.
At the end of your four-year term on the NVCA board, what do you most hope to be able to say you accomplished?
I think part of it is going back to the previous question about cutting through the noise in Washington to make sure the innovation agenda we are espousing has broad-based support and is recognized for the benefit it brings to everyone across the country. I hope to look back and say I helped successfully promote that agenda.