VCJ Report: Paul Maeder Advancing the NVCA Agenda

Paul Maeder, a general partner of Highland Capital Partners, clearly has a lot on his plate.

That was clear after reading his interview with VCJ Senior Reporter Mark Boslet, who chatted with Maeder last month, shortly after the National Venture Capital Association tapped him as its chairman for the next year.

Among his priorities and goals, Maeder says that immigration reform is high on his list of critical issues. So are regulatory changes tied to the Dodd Frank Act of 2010, a re-thinking of Sarbanes Oxley and topics such as patent reform and clean energy regulation.

“I don’t personally believe in no regulation,” Maeder tells Boslet. “My view is if you want to see what too much regulation does to an economy, look at the Soviet Union in 1970. And if you want to see what too little regulation does to an economy, look at the Soviet Union in 1990.”

As a treat for peHUB readers, a portion of the Maeder Q&A from the May 2011 issue of VCJ is below. Let us know what you think.

Q: Last year was a tumultuous period for Washington regulations. What were the results of the NVCA’s efforts?

A: Last year, Dodd Frank came in and the NVCA was able to exempt venture capital from Security and Exchange Commission regulation. This was justified because the Dodd Frank Act was, among other things, designed to protect the financial system from systematic risk, and of course venture capital doesn’t present systematic risk. It took a lot of work and a long time to convince Congress this was the case.

Q: In July the SEC is set to release its proposed regulations. What do you anticipate?

A: The SEC staffers are genuinely interested in understanding venture capital. So I actually think the regulations that will come out will be ones that we can live with. After that, how the regulations are enforced, will probably be another area of some concern. We may need to have some input on that.

Q: Another focus of the venture industry is Sarbanes Oxley. Where does this issue rank in your mind?

A: The regulatory constraints of Sarbanes Oxley do present an undue burden of compliance on smaller companies. The act is totally appropriate for companies with revenue in the billions of dollars that can afford large audit staffs and millions and millions of dollars in expenses.

Small companies—those such as $100 revenue companies or $200 million revenue companies—do not present substantial risk to the financial markets. Sarbanes Oxley is a big reason why small companies can’t afford to go public when it costs $3 or $4 or $5 million to comply with regulations.

Q: What other issues are at the top of your agenda?

A: Another major area is the Spitzer accord. The Spitzer accord was a response to the fact that research analyst reports were too tightly involved in the investment banking process. The trouble is research coverage went away for all but the largest companies in the economy. So when we’ve got a $100 or $200 million company that goes public, it all but gets ignored by institutional investors cause there are no third party analysts out there telling the story.

Q: What is the biggest challenge facing the U.S. venture capital business today?

A: Venture capital has been a wonderful engine for growth and competitiveness in the United States. For the last 30 to 40 years, we’ve effectively had a monopoly on it. The rest of the world has taken notice. At this point we no longer are the only game in town.

Subscribers of VCJ can read Boslet’s full interview with Maeder by clicking here. Not a VCJ subscriber? Click here for a free trial.

And if you want to chat about Maeder, the NVCA agenda or other VC-related topics, send an email to VCJ Editor-in-Charge Alastair Goldfisher at alastair.goldfisher@thomsonreuters.com.

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