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VENTURE CAPITAL REVIVAL NEEDED TO KEEP U.S. AHEAD

 VENTURE CAPITAL REVIVAL NEEDED TO KEEP U.S. AHEAD
 BOSTON, July 29 /PRNewswire/ -- U.S. Small Business Administration


(SBA) Regional Administrator Susan M. Collins today called the establishment of a new, improved Small Business Investment Company (SBIC) program "critical to financing successful conversion of technology into jobs and long-term commercial leadership for the nation."
 Citing reports that private venture capital commitments in the United States have declined from a peak of $4.2 billion in 1987 to approximately $1.1 billion in 1991, Collins warned that the trend must be reversed.
 "If we want to keep our pre-eminence in the global marketplace, we must invest in the commercialization of technology. If we do, the results will be jobs, exports, growth and prosperity. If we do not, we will fall behind our international competitors," Collins said.
 SBA Administrator Patricia Saiki testified today before the Senate Small Business Committee in support of a legislative package of structural revisions to the Small Business Investment Company program, the government's only venture capital program.
 SBICs licensed and regulated by the SBA are privately owned and privately managed investment firms that use their own capital, plus funds borrowed with SBA guarantees, to make venture investments in small businesses.
 According to a recent report by the Investment Advisory Council (IAC), a broad-based group of business and venture capital professionals appointed by Saiki in 1991 to examine the program, SBICs have invested nearly $10 billion in more than 70,000 small businesses since the program's inception in 1958. Those investments created more than one million new jobs and tens of millions of dollars in exports -- all at a net profit to the government.
 The report found that 46 percent of the investments made by SBICs were to businesses in the manufacturing sector and 17 percent were to businesses in the technology sector.
 "The federal government spends $70 billion a year on developing new technologies," Saiki said. "This produces an immense variety of manufacturing and commercial opportunities. But the venture capital machine that invests in transforming these high-tech wonders into marketable products has been slowing down since 1987.
 "The surest way to rev it up again is to adopt the changes we've proposed for the SBIC program," Saiki said.
 SBA has asked Congress to approve legislation creating a new funding security designed to provide new incentives to SBICs to make long-term equity investments in small businesses and to attract substantial new private capital into the industry. It would also give SBA a share of the profits realized from investments funded by federal funds.
 Other elements of the proposed legislation include opening the program to investments by public pension funds and state and local governments, tightening regulatory oversight, increasing the maximum funding SBICs can receive from SBA, and reducing constraints on SBICs that do no risk government capital.
 -0- 7/29/92
 /CONTACT: Amy Dondero of the SBA, 617-451-2032/ CO: Small Business Administration ST: Massachusetts IN: SU:


TM -- NE012 -- 4606 07/29/92 12:10 EDT
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Publication:PR Newswire
Date:Jul 29, 1992
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