In addition, congressional funding for Energy Secretary Steven Chu's program to solve energy problems through the creation of eight innovation hubs could be curbed due to budget cuts. So far, Congress has allocated $22 million for partial funding of three hubs, but the future of the program remains uncertain.
The recently passed health care reform bill included a 2.3% tax on medical device companies, which investors claim will make it more challenging for venture firms to identify emerging technologies that address important medical needs and bring them to market. The tax will impact medical device startups more than established companies, Green said, because they are in earlier stages of development and profitability.
Some venture capital firms claim that the tax will also limit investments in medical device startups.Venture capital in the life sciences sector -- which includes the medical device industry -- comprised the second highest total of VC dollars invested in any category in the most recent quarter. Over $944 million was invested in the sector, with medical devices claiming 61% of dollars. A Republican-controlled Congress will likely look to repeal this tax, and if not successful, the venture capital industry may push for a tax exemption for small companies. --Written by Olivia Oran in New York.
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