

Fact Sheet: White House Launches “Startup America” Initiative - senthil_rajasek
http://www.whitehouse.gov/startup-america-fact-sheet

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bugsy
The federal government is now using taxpayer funds to _buy equity_ in
promising startup firms, on the same great terms as other early angel
investors.

Isn't state ownership of the means of production called Socialism? Well don't
answer really, it's a rhetorical question, the government buying ownership of
new firms is socialist by definition, and this is not a "Obamer is socerlist
derp derp derp" silliness, but a real concern.

This will distort and warp the investment field. Companies that qualify for
federal treatment not only get VC funds instantly doubled, but they then
qualify for a whole host of competitive advantages such as the listed "patent
fast tracking" not available to those who don't drink from the fountain. In
other words, those not participating are penalized.

VCs are individuals often with business acumen and understanding of
entrepreneurship who do due diligence and keep tabs on their investments. The
largest bureaucracy on earth and in history can not make the same decisions,
it is not possible. But it does have infinite funds because it owns currency
printing presses, and doesn't lose anything if the businesses fail, so there
is no risk to them.

To understand one of the many problems here, take the word "government" out of
this and replace it with "Bob Smith". Bob Smith is an investor funded with a
printing press that he prints counterfeit dollars with to invest in companies.
Without any concern for business plans or profits, if any VC in the world
invests in a company, Bob agrees to double their investment on the same terms
of ownership. Also, Bob has arranged with politicians to create many special
benefits available only to firms he is invested in, such as expedited patents
that aren't looked at as carefully for those in his special Bob Smith fund.
Companies they are competing with don't get the same special legal privileges
unless they agree to sign the contract with Bob and give him partial
ownership. If the business fails, Bob prints more money. If it succeeds, he
takes a slice of a real business for himself. Does this seem like a good idea?

This is not a good situation nor can it end well.

~~~
ramanujan
The other key aspects are:

1\. Bob Smith can legally point a gun at another VC to take large quantities
of their money.

2\. The process of getting an investment from Bob Smith puts the relative
trivialities of "office politics" or "networking" in perspective. The US
Government is to Office Space as Office Space is to a startup.

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cuchoperl
Founders Visa is missing. It was the perfect moment to introduce it.
<http://www.paulgraham.com/foundervisa.html>

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alexwestholm
Interesting that they're targeting the $1-4 million range for the early stage
fund. Sure, there's not much investment in that range, but perhaps there's a
reason... it would seem like that's the range where most companies are sorting
themselves out and determining whether they're actually going to succeed or
not. Pouring money into companies to artificially help them to bridge this gap
may be a disservice to the companies and a poor investment.

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vantran
I am disappointed that there's still nothing in there regarding foreign
founders, who account for a fairly large percentage of new startups. Are
foreign founders supposed to just plunge themselves into it and hope they
don't get removed from the US after their visa runs out? What can they do if
they want to start a company in the US right now?

I understand immigration is a complicated topic, but if the US plans on
retaking the lead without the help of immigrants, it'll have very little
chance of success.

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eljaco
Can someone please make the title stop shouting?

~~~
senthil_rajasek
I edited just the capitalization of the title. I did a cut and paste from the
original article and did not want to do any editing on my own. I guess the
white house needs an Editor-in -Chief.

~~~
eljaco
Much appreciated - I understand why you felt that way, but it is just so much
easier to read in the new format.

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dshankar
How does this help people who just raised capital? Will the govt. match what
we raised 1:1?

