Tech Startups are Being Ignored
Cringley is a man after my own heart. And he knows how to spot a good startup – a truly valuable skill that most venture capitalists lack. And he is a man of action too – he is just finishing up a tour of startups you can read about here.
These are the kind of companies that create industries, build or renew cities and industrial centers — companies that create jobs in the kind of abundance needed to keep our nation prosperous. Yet in terms of government policy, it is as if they are unknown. The Obama Administration just successfully passed important small business legislation, for example, that has no value at all for tech startups.
Banks should lend to tech startups. They don’t because they can’t tell a good one from a bad one. They should because doing so would be good for both the economy and America. The way to do so is by lending not to individual companies but to baskets of companies. If banks don’t have the confidence to create such baskets themselves, heck, I’ll do it. I’ve visited enough startups to tell with a 85 percent certainty whether they have what it takes to succeed.
But even lending to a basket of companies that has a near-100 percent chance of delivering 3-5X on each loaned dollar, the banks still won’t do it because they are cowards lacking any — any — moral fiber whatsoever. They won’t do the right thing even if I make it low- or no-risk, because they don’t know what a right thing looks like anymore.
This is where there becomes a true role for government — to require that banks lend to those baskets of tech startups I put together. Make lending to tech startups a condition for even having a banking license.
While this make seem a wild-ass idea, isn’t that the essential nature of licensing? IF you want this privilege THEN you assume this obligation. And with tech startups representing only $20 billion in a $20 trillion economy, what’s the big deal? That’s the very chump change that can lead us out of recession and deflation and back toward world leadership.
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