The first piece of legislation from a freshman Democrat in a contentious Senate is one that could appeal to senators on both sides of the aisle. Sen. Tammy Baldwin (D-Wis) introduced a measure last week that would create a new equity-financing fund for fledgling businesses, and provide for increased venture capital funding for start-ups.
According to a July 10 story by Gannett reporter Donovan Slack on the website thenorthwestern.com, Baldwin’s Small Business Innovation Act of 2013 would dedicate half of the new equity fund to young and growing industries in innovative sectors such as biotechnology, digital media, water technology, life sciences and advanced manufacturing. She said her legislation is aimed at spurring job growth.
“My legislation targets investments in these industries to build our innovation economy and move it forward,” Baldwin said in a prepared statement.
Slack noted that although the bill does not specify the amount of the fund — the funding level would be determined by legislators — it would require a one-time federal ante to get it started. The fund is designed to be self-sustaining through loan repayment and fees after initial government priming. The legislation would also expand an existing Small Business Administration loan program by $1 billion, to a total of $4 billion. Under the existing program, venture capitalists can receive matching financing for investments in start-ups. The new fund, which would also be managed by the SBA, would likewise provide finance matching to venture capitalists for their investments in small newer businesses. Small young businesses have been defined as those with less than $15 million in gross annual sales.
“The majority of new jobs in the U.S. are created by start-ups,” said Baldwin, emphasizing the timeliness and urgency of her bill. “[A]nd small businesses are the engines of our economy, creating two out of every three jobs right now.”
Slack noted that, while Baldwin may find a receptive audience among follow Senators, the legislation could meet resistance in the Republican-majority House of Representatives, which is more likely to champion austerity measures than more spending, even to spur jobs and business. However, Slack reported that Baldwin’s aides pointed out that the bill authorizes only loans that are to be paid back, not grants, and thus would come at little-to-no cost to taxpayers.