[modest aren't we -ed]
*Compare with last Wednesday's "Federal Funding May Be First And Last Resort For Cleantech. And: Milken on Capital Structure":
There has been much discussion over whether the government's bailout money was well spent. Of particular interest to the venture capital community is the idea that—rather than spending billions of dollars on such banks as Citigroup (C) and Bank of America (BAC) and on automakers, including General Motors (GM)—Uncle Sam should invest in Silicon Valley-style innovation. The argument goes that the government could give a chunk of cash to venture capital firms to invest in the most promising startups. If those companies make it big, everyone wins.
It's a seductive idea on the face of it. And yes, funding entrepreneurship and innovation is a great way to create jobs. That said, injecting billions of dollars more into early-stage investments is not the way to go, in our humble opinion......Not a Venture Capital Bailout
In return, the government would benefit from any future success of those companies, just as investors in venture capital funds do. We propose that the government be given preference over existing investors when it comes to the fund's future returns. We also recommend that the individual companies taking advantage of the program offer the government warrants equal to 10% of the original loan amount—or, to put this another way, offer it the opportunity to buy a future additional equity stake at an agreed price. This ensures that a win for any of those companies also translates into a win for the government, whose loan guarantee will have made their success possible....MORE
...I personally believe that any assistance to VC's is repugnant. If there is to be such assistance the American taxpayer should participate in any upside to the same extent that other investors do, or perhaps more so, if the govvy guarantee is what makes the whole thing happen....