One thing that makes Mitt Romney so confusing to non-business folk is that he was both a venture capitalist and private equity investor. But the distinction often gets lost, in part because Romney mentions his work with companies like Staples (venture capital) and Dominos Pizza (private equity) in the same breath.
So last Friday the National Venture Capital Association sent the following email to its members:
As the race for the Republican Presidential nomination has moved into high gear, both the media and the competing campaigns have turned their focus to Mitt Romney and the time he spent at Bain Capital. Unfortunately, much of the coverage has created significant confusion regarding the difference between venture capital and private equity. While NVCA does not endorse presidential candidates, and we have not and will not comment on Mr. Romney or any other candidate’s credentials, we must and will engage the media in the discussion about what venture capital is and is not.
Of particular importance is accurately communicating venture capital’s unwavering commitment to job creation and innovation – characteristics that distinguish our asset class from all others. To that end, you can expect to see NVCA focusing in the coming weeks and months on educating the press, campaign staff, and Capitol Hill on these notable differences. We will also be calling on members to help support our messages in this regard so please stay tuned. In the meantime, if you have any questions, please do not hesitate to contact us.
Expect the Capitol Hill piece to be particularly important, given that legislation soon will be introduced to raise raise taxes on both venture capitalists and private equity pros. Venture capitalists historically have tried to cleave themselves from private equity during such policy debates, while private equity clings to its more popular cousin.
So to begin its education campaign, the NVCA already has begun circulating a one-page document highlighting what it says are the differences between VC and PE. Read it below: