AUDIO: Venture capitalist warns American innovation is in crisis

WASHINGTON, D.C.
March 4, 2009 8:15am

The United States is in danger of losing its global technological edge unless new collaborative approaches to pursuing and funding innovation are acted on immediately, venture capitalist Pascal Levensohn warns in a speech today in Washington, D.C.

"Innovation and entrepreneurship, the crucial growth engines of the U.S. economy, are at risk of stalling out," says Mr. Levensohn of Levensohn Venture Partners, a San Francisco-based firm. "Our foundations are crumbling."

Mr. Levensohn delivered his remarks to the Cybersecurity Applications and Technologies Conference for Homeland Security.

(Pascal Levensohn outlines the problem and what needs to be done immediately in a CVBT Audio Interview recorded just after his formal presentation. Please left-click on the link below to listen now or right-click to download the MP3 audio file to your computer or mobile media device for later listening.)

Mr. Levensohn says U.S. entrepreneurs will increasingly face overwhelming obstacles to success thanks to the current timidity of the country’s lenders.

"The freedom to fail has always been one of the greatest strengths of the American economy. But this is now in jeopardy because a climate of risk aversion dominates the country's financial institutions," he says.

He cites three major negative trends that have combined to put America's technological innovation at risk:

• Research and development spending has emphasized incremental innovation over basic research for more than two decades;

• Total R&D funding as a percentage of GDP has been declining while other nations have increased their spending, successfully developed coordinated technology innovation programs and actively supported the commercial development of emerging companies; and,

• The recent systemic failure of global financial institutions has exacerbated the already deteriorated pace of innovation here by further reductions in an already diminished pool of risk capital.

Part of the solution, says Mr. Levensohn, "must also include a renewed and proactive effort to attract, educate and retain the world's best scientists to pursue innovation in the U.S."

Pascal Levensohn is the founder and managing partner of Levensohn Venture Partners a venture capital firm that invests in emerging companies in the market area of intelligent infrastructure, specializing in security, cleantech and digital media. Its portfolio includes recent exits RAPT (now a unit of Microsoft) and Reconnex (now a unit of McAfee) and private companies BigFix, Capella, BroadLogic, ShotSpotter and Ubicom.