IVCA Feature: “View from the Hill” – Bobby Franklin, President & CEO, NVCA

April 27, 2016

The 2016 IVCA/NVCA Luncheon took place on April 13th in the Burnham Room of the Chicago Club, and the large gathering anticipated the annual coming together of the Illinois Venture Capital Association (IVCA) and National Venture Capital Association (NVCA) with a summary of Venture Capital issues.


Bobby Franklin, the President and CEO of the National Venture Capital Association, gave his impressions on legislative activity in Washington, regarding issues of interest to the luncheon audience.

NVCA focus in Washington

“We’re continuing to let the vision I brought to the organization when I started [two and a half years ago] to guide us, it needs to be about the entrepreneurial eco-system. Everything we talk about with policy makers goes through that lens, and we have a lot more success if we talk about that overall eco-system rather than individual venture capital issues.

What we’re trying to do is find ways to work on policy that increase returns, helps increase the opportunities for new entrepreneurial companies in this country...plus we’re looking for ways for funds to get established and to decrease the regulatory and compliance burden for both start-up companies and venture capitalists.”

Patent Reform

“In 2016, we’re still keeping an eye out for patent reform, and our job is to help to explain to policy makers some of the unintended consequences in legislative proposals. And in this case, the specific bill has automated fee shifting – and I understand for those who want tort reform what that eventually means – but when you’re looking at it from an entrepreneurial eco-system perspective, it really tips the balance. The cost and risks of small companies trying to protect their intellectual property against large companies are comprehensive – whether it’s a patent troll or a larger company just trying to step on that property.”

Joinder Provision

“The second, and more egregious provision of the legislation was something called a ‘joinder provision,’ which essentially pierces the corporate veil. While venture capitalists are used to losing their investment in a start up that might fail, they are not used to going ‘past zero,’ and suddenly being on the hook for legal fees.”


“We’re looking at drug pricing for our life science members. It has obviously hit the headlines that some hedge fund managers and others that they are raising the prices of certain drugs that have been around for a long time. This has gotten everyone excited in Washington about what they will do about drug pricing controls. That has obvious impact on the venture capital life sciences community. The majority of new drugs approved by the FDA are venture backed through biotech start ups.”

Tax Policy

“We know that tax policy tends to be written for those established companies, and we know that the call for comprehensive tax reform is out there, about bringing down the 35% corporate rate. We know in order to do that, to do the math, that legislators will look at other tax rates to increase. That’s the conversation we’re having, if they are thinking – for example – of raising the capital gains rate, they’re really impacting that pipeline of future U.S. companies. And we all need to understand the impact.”

United States Venture Capital v. Rest of World

“One of the charts I use a lot in Washington, shows that the U.S. slice of the venture capital pie is down to 54% of the dollars invested globally. The good news is that the pie got bigger, but what policymakers have to understand is that their decisions have consequences, but sometimes it takes many years before we see those consequences.”


“We continue to work with the administration on immigration issues. There is a lot the administration can do from their office – including working on a start-up company visa – instead of waiting for comprehensive immigration reform. There are things the administration can do that if an entrepreneur is willing to come here and put their company in the U.S., they should be allowed to do so, and the path to citizenship should be a lot clearer – when they’re starting a company, when they are creating jobs in this country.

Small Business Advocacy

“We’re working with a group of folks to try and create a small business advocate inside the Securities and Exchange Commission. This legislation actually passed the House, and we think it’s important to have someone at the SEC that is not just thinking about large cap companies, not just thinking of shareholders, but really thinking about impact on small cap companies. We hope that will come to pass.”

The Future

“For 2017, we understand the first two years of a new president’s term are usually the most active. For example, when Bill Clinton was first in office, there was a major budget bill, NAFTA, the Family Leave Act and an assault weapons ban. Can you imagine trying to get any of those done in this political climate? When George W. Bush came in, there were two major tax cut bills, Medicare Part D and two declarations of war. When Barack Obama first started, there was the Economic Stimulus package, Obamacare and Dodd-Frank. We have to be ready for 2017 and 2018 in regards to the new administration. That is our strategy.”

Other Issues in Summary

- “For tax reform, we’re working with policymakers to make sure they understand the pipeline of new U.S. companies, and there ought to be a goal in comprehensive tax reform for the creation of new companies.”

- “We’re working on basic research in tech transfer, thinking about the funding level for basic research and to also take out any friction there is, in having that research turn into great new companies.”

- “Cyber-security is another variant. There is some legislation being introduced to try and make sure that the federal government thinks about cyber-security solutions from the entrepreneurial eco-system, to tap into solutions regarding that security. Hiring such a company shouldn’t be as complicated as funding an aircraft carrier. We need to look at how government looks at procurement.”