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Public Statements

Small Business Investment Expansion Act of 2007

Floor Speech

By:
Date:
Location: Washington, DC


SMALL BUSINESS INVESTMENT EXPANSION ACT OF 2007 -- (House of Representatives - September 27, 2007)

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Mr. CHABOT. I yield myself such time as I may consume.

Mr. Chairman, today I rise in support of H.R. 3567, the Small Business Investment Expansion Act of 2007. Risk-taking and entrepreneurship have been part of the American fabric since this country's founding, whether it was emigres from France founding a munitions company in the early years that would later become DuPont or an immigrant peddler who would go on to create Lazarus stores in my district, Cincinnati, now Macy's, or two Dayton, Ohio bicycle mechanics who invented the airplane. The rise of America is replete with stories of entrepreneurs taking risks to change the economy and ultimately the world.

Recent history continues that trend. The most powerful computer software company in the world, Microsoft, was created by two college dropouts working out of a Seattle garage. Steven Jobs was tinkering in his garage when he developed the computer that would lead to the creation of the Apple. Fred Smith created Federal Express based on a paper written for an undergraduate class at Yale. All of these entrepreneurs succeeded because they had an idea and were able to raise the money they needed to perfect and market that idea.

Yet, America has changed. Investors, venture capitalists, hedge funds, and private equity firms use sophisticated global investment strategies to maximize their returns. The budding entrepreneur with a great idea today might get lost in the search by investors for a company with a significant business history and record of returns. To maintain America as the leader of innovative entrepreneurial firms, we must ensure economic and fiscal policy that provides capital to entrepreneurs.

There is little doubt that efforts of Congress, when Republicans controlled it, to adopt tax policies that spurred investment and growth provided significant incentives to invest in businesses. That is why I would very much like to see those tax policies ultimately made permanent, so we don't go back and raise taxes. But the Committee on Small Business has heard that the market does not provide adequate equity funding to the smallest of startup businesses, including those that will become the next Dell Computer, Nike, Outback Steakhouse or Callaway Golf Clubs. H.R. 3567 takes, in my view, a balanced approach to ensure that these new businesses have access to capital. It balances the need for limited Federal funding with fiscal restraint and protects the Federal taxpayers.

Now, during the markup of this bill, I did voice strong objections to title V as it was introduced. There are five titles in this particular piece of legislation. Since markup of the legislation, however, to the credit of the gentlewoman from New York, Nydia Velazquez, we worked together and we negotiated in good faith and reached a bipartisan agreement to address the concerns that we voiced. I believe that the compromise that we reached adequately addresses my concern. I want to again compliment the chairwoman for her leadership in that effort. It eliminates some of the more egregious decisions of the SBA concerning venture capital investment in small businesses while maintaining the integrity of the Federal procurement process for small business by preventing conglomerations of venture-owned firms to bid as small businesses.

Mr. Chairman, in closing, I would again like to thank the chairwoman for working in a bipartisan manner on this bill. I would also like to thank her staff, particularly Michael Day and Adam Minehardt, for their work on this important piece of legislation. I also want to thank Barry and Kevin Fitzpatrick for their help, as well, on this bill.

Mr. Chairman, I reserve the balance of my time.

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Mr. CHABOT. Thank you, Mr. Chairman. And I won't use the full 5 minutes.

I yield myself such time as I may consume.

As I have already explained when discussing the underlying bill, this amendment adopts a bright-line test for determining whether a business that receives funding from a venture capital company is considered affiliated with that firm and any other firms that the venture capital company may own.

The test is simple and sensible and I think easily applied. In my view, it strikes the correct balance between allowing needed venture capital funding for small businesses, while protecting against the possibility that venture capital firms will be able to create conglomerates that would have an unfair competitive advantage against independently owned and operated small businesses. As the chairwoman already mentioned, so I won't go into great detail, the venture capital company can't have more than 50 percent.

As a result, I believe that this amendment alleviates many of the concerns that the Small Business Administration has, although maybe not all, with title V. I ask that Members support the amendment.

Mr. Chairman, I reserve the balance of my time.

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Mr. CHABOT. Mr. Chairman, I would like to thank the gentleman for his kind remarks and also note that the gentleman also worked in a bipartisan manner with Mr. Graves from Missouri in drafting the bill and moving forward in the first place.

As he mentioned, the Small Business Committee, I think, has been a model in many ways for the entire Congress in the way a committee can work together. We have philosophical disagreements at times. We work together, and we are not going to agree on everything, but, in general, we try to work things out for the benefit of the small business community.

There are Republicans, there are Democrats, there are independents that benefit from the small business community thriving in this country. I think we are trying to work altogether to make it a healthier situation. I wish all committees around here were able to do the same thing.

Mr. Chairman, I yield back the balance of my time.

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