The Thinking Blog

A pilot program to help Entreprenuers and Small Businesses.
July 4, 2010

I’ve been watching, as most of us have, our government set history making bail out records on business models that, for the most part, haven’t been working for quite some time. Now this is true regardless of which side of the political fence you are on. However, rather than rant about the negativity, I want to discuss an idea that would help small businesses and entrepreneurs obtain the capital they need.

You see, for far too long, entrepreneurs who wanted to start their own business, have had the illusion that the SBA would be the place to go to get started. I don’t even need to cite statistics here, but most people know the SBA never became the powerhouse program that it could have been.

So what should we do? Here is one idea. Why not test a pilot program that is a government sponsored venture capital fund? I know you may be thinking, “no more government spending!” Hear me out. It would work something like this.

1. A team of seasoned professionals such as current CEOs, former CEOs, successful entrepreneurs and venture capitalists like Ann Winblad and Tim Draper would create a set of guidelines for utilizing a $100 million in the form of a government sponsored venture fund. What the heck, let’s throw in a couple of traditional bankers from non-bailed out banks in for good measure. This group would determine the criteria, guidelines and process for investing the capital.

2. Web technology would be used as the input mechanism to begin the screening process. For those that met the criteria, an initial business plan review would take place.

3. For the worthy projects who have people that look promising, an extensive interview would be conducted to determine whether or not the funding should be approved or denied.

4. Once the person was approved, the terms of the investment would be in the form of a convertible note and equity. The fund would actually loan the money to the company and take a reasonable amount of equity in the company. This would do a couple of things. First it would create a process for replenishing the fund. Second, in those cases where there was a liquidity event (merger, acquisition, IPO, etc.), the government (taxpayers) would benefit from the success of that business.

5. Lastly, and this is very unlike traditional loans, a representative (advisor) for each project funded would be assigned to the company. This is a critical component missing in traditional business loans and that includes SBA loans. Typically, once a loan is made, all the bank ever cares about is collecting its monthly payment on the loan. The days where the banker visits the business that they’ve loaned money to see how well things are going…have been gone for a very long time. I think when “Leave It To Beaver” went off the air was about the same time that banks stopped really caring about their customers. Sorry, I digressed. Seriously, what happens when the business owner or entrepreneur needs a sounding board? Usually they don’t have one or they do but they are missing the right kind of advisor.

So I’ve been tossing around the idea of putting together a real proposal and present this idea to one of our California senators. Thinkubator and the experience we have has been invaluable to a lot of companies, big and small. And the truth is, most of the time, you don’t need a Harvard MBA to give you advice. What most people need is someone that has a lot of real world experience under their belt. You know, the good success stories and the less desirable stories, or the “been there done that” experience that can help navigate another person to success.

If you’d like to add to this thought process I’ll leave this idea open until November 1, after which time I’ll consolidate the input into a formal proposal and submit it. If you have additional thoughts or ideas regarding this concept, email them to me at ken@thinkubator.biz and if your input is used, I’ll be more than happy to include you as a contributor to the document.

I think we need to do something more creative and with sensible accountability than what has been done by our elected officials. Our country is great. We have some issues, no doubt about it, but I believe with a sensible, fiscally responsible approach, it can be fixed.

Here’s to your success.