Venture capitalists, facing the industry's worst slump since the dotcom bubble burst, on Wednesday called for lower U.S. taxes and loosened listing rules to propel initial public offerings when the economy improves.
The National Venture Capital Association, the country's leading industry body, plans to lobby the government for lower taxes on capital gains. It will also urge the U.S. Securities and Exchange Commission to ease compliance requirements under Sarbanes-Oxley, to aid start-ups hoping to float shares.
Some investors at the NVCA's annual gathering in Boston on Wednesday said they don't see a full recovery in venture capital investment until 2010.
"I don't think we'll start seeing a true recovery until 2010," said Tom Crotty of Battery Ventures.
Venture capital investment crashed nearly 50 percent to $3 billion in the first quarter from the 2008 fourth quarter, according to the NVCA, amid a nationwide liquidity crunch.
U.S. initial public offerings virtually vanished in the same period and now represent just 13 percent of "exits" -- where venture capitalists cash out of firms they invest in -- versus about 56 percent in the 1990s.
Since "the 2000s, the IPOs have fallen off the cliff here, and now represent something like 13 percent of the exits," said Dixon Doll, outgoing chief executive of the NVCA.
He said venture capitalists have lost leverage with the corporations that buy out start-ups because they face no competition from IPOs. That has helped depress selling prices and hurt venture capitalists' bottom line....MORE