VC and Buyout Profits are Different

There is a problem with the carried interest debate: VCs are wrongly being lumped in with buyout pros. 

It is entirely appropriate for congress to reexamine whether the profits from buyout deals should be taxed at the capital gains rate. But the profits from venture deals should NOT be part of that discussion.

Venture capitalists are primarily interested in driving innovation, while buyout pros are primarily interested in turning a profit by wringing inefficiences out of established companies.

One could argue that profit is profit. But there is a difference between the money that Kleiner Perkins made on its $375,000 investment in Genentech in 1976 and the money that Texas Pacific Group made on its $1.5 billion investment in Burger King in 2002. One company makes drugs that help to save children’s lives and one makes food that helps expand their waistlines.