Krumm, Brian --- "State Legislative Efforts to Improve Access to Venture Capital" [2012] ELECD 543; in Carpenter, M. Megan (ed), "Entrepreneurship and Innovation in Evolving Economies" (Edward Elgar Publishing, 2012)

Book Title: Entrepreneurship and Innovation in Evolving Economies

Editor(s): Carpenter, M. Megan

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9780857934697

Section: Chapter 2

Section Title: State Legislative Efforts to Improve Access to Venture Capital

Author(s): Krumm, Brian

Number of pages: 21

Extract:

2. State legislative efforts to improve
access to venture capital
Brian Krumm1

The 1983 cover article in TIME magazine entitled "The New Economy"
was one of the first to discuss the transition from heavy industry to a new,
technology-based economy in the United States. That article described
a massive complex of aged, red-brick buildings, the former home of a
wool mill which was reborn as the new corporate headquarters of Digital
Equipment Corporation, the second largest computer manufacturer in
the world at the time. The development and growth of Digital Equipment
was made possible through financing obtained through venture capital.
Venture capital has played an integral part in the evolution from the old
to the new economy, yet not all areas of the country have fully participated
in this renaissance. This chapter will discuss the role that law, in the form
of legislation that creates state-sponsored venture capital programs, can
play in providing the capital necessary for states to create an environment
that supports entrepreneurs in commercializing their intellectual property.
Access to capital is critical for business startups and expansions and,
more importantly, to the health of state and local economies. Despite the
need for startup capital, many small businesses find that obtaining such
funding is a difficult, or sometimes an even impossible, challenge. The dif-
ficulty of small businesses to raise capital is primarily because banks are
reluctant to provide conventional debt financing to companies with little
to no track record. In the recent economic downturn, ...