I hardly know where to start with this John Kerry letter to the Small Business Administration. In it he calls for an increase in the amount of SBIC money (i.e., state venture capital) going to minority-owned and women-owned businesses. While I would love to see more businesses run by women and/or minorities — and everyone else, for that matter — Kerry’s arguments are awry.
For starters, greed is blind, so the whole idea that any remotely rational venture investor cares about gender, color, creed, or tracing skills is dubious at best. They want financial returns, and if it’s five-handed, blue-skinned hermaphrodites from Alpha Centauri who have the best deals, then, damn it all, five-handed, blue-skinned hermaphrodites from Alpha Centauri will get the preponderance of the venture money.
Second, the period is absurd. Comparing what happened in 2000 in venture capital to any other period is a recipe for nonsensical results. Take out 2000 and you see that the percentage of SBIC money to women-owned businesses has increased from 1.4% (2001) to 2.2% (in 2004), and the percentage of money to minority-owned business has increased from 3.3% (2001) to 5.2% (2004). Those are significant increases, even if the overall percentages are not huge as a percentage of the overall risk capital pie. Nevertheless, a) they are increases (contrary to Kerry’s assertion), and b) the numbers are representative of the number of VC-centric minority-owned and women-owned startups out there.
Let’s just say it’s another reminder why politicians need to be kept far from the venture industry.