Here are a few telling statistics to come out of the report, which captures data beginning in 2006 through the end of 2008:

- Venture-backed companies now account for 12 million jobs and 21% of GDP

- 81% of the software industry’s 1 million jobs originate from venture-backed startups

- Over that time, venture-backed business showed 1.6% job growth in the private sector vs. 0.2% in the industry as a whole

The full details of the report can be found here. I highly suggest spending some time with this document as it does a nice job of framing not only the financial ramifications that VCs have on fledgling businesses, but the culture that they can help to create during early stage growth. This guidance and development of best practices won’t show up on any balance sheets, but can certainly make the difference between success and failure.

NVCA Venture Impact 5th Ed

[image via Mark Coggins]

Essentially, “the proposed laws would cover the range of funds that deal in derivatives, auction-rate and mortgage-backed securities, highly leveraged transactions and a slew of other instruments so complicated as to defy description. In registering, these funds would need to open their books to the government so that they could be duly monitored, thus limiting further risks to the financial system.” But in expanding these rules to include all pools of private capital, the consequences could make doing business in the private sector much harder.

Because venture capital firms deal with private stakes of equity securities, they do not present a threat of systemic risk in the way that massive, over-leveraged entities like AIG, Lehman, and the like did for the past half a decade. It’s important, now more than ever, that venture capital be thought of as separate from these aspects of our financial picture.

I think venture capital could undergo a grand reawakening in this new economic climate, and it’s important to protect that potential. Job growth, innovation, and entrepreneurial exuberance are staples of the America’s economic future, and should not be hampered by legislation that seeks to hold the shadier bodies of finance accountable for their investments and questionable hedging techniques.