07/12/2009 05:12 am ET Updated May 25, 2011

Obama is Selling the Small Business Administration to the Venture Capital Industry

The first line of an October 2005 article in Entrepreneur Magazine read:

"Depending on whom you talk to, Texas-born small-business advocate Lloyd Chapman is either a modern-day Cesar Chavez or a conspiracy theorist with a grudge." Entrepreneur, October 2005.

Since that article ran, a series of federal investigations have confirmed everything I have been saying since 2002 about the diversion of federal small business contracts to corporate giants. Most of the largest newspapers in the country have covered the issue along with major television networks like ABC, CBS and CNN.

I won't say I'm Cesar Chavez, but you sure can't call me a "conspiracy theorist."

Now, I'm going to sound the alarm on the latest threat to federal small business contracting programs. I hope it won't take five-years and a dozen federal investigations before the general public and the media catch on.

President Barack Obama is going to support legislation and policy that will allow the venture capital industry to dominate all federal small business contracting programs including those for women and minorities. Billions of dollars in federal contracts designated for legitimate small businesses will be diverted to some of the nation's wealthiest venture capitalists and some of the largest venture capital firms in the country. He will also pass legislation to exempt venture capitalists from capital gains tax on the profits they make from the contracts. Millions of hardworking middle class firms will be negatively impacted, thousands of firms will be forced to close their doors, and countless jobs will be lost.

It is no coincidence that President Obama has appointed wealthy venture capitalists Karen Mills and Winslow Sargeant to fill the two top spots at the Small Business Administration (SBA). Both Mills and Sargent were major contributors to Obama's campaign. They have also been vocal advocates of changes in federal policy that would allow federal small business contracts to be diverted to firms controlled by venture capitalists.

President Obama's contributors from the National Venture Capital Association (NVCA), and the venture capital industry as a whole, have blanketed both the House and Senate small business committees with a level of contributions that have allowed them to virtually control both committees. An April 2008 article in described House Small Business Committee Chair Nydia Velazquez (D - NY) as "quarterbacking" the legislation for the venture capital industry.

Here are the facts. U.S. Census Bureau data shows that 98 percent of all U.S. firms have less than 100 employees. Approximately 27 million firms fall into that category. These firms are responsible for over 97 percent of net new jobs, over 90 percent of all U.S. exports and over 90 percent of all patents.

To create jobs and rescue our nation's economy we need to direct more federal money to small businesses, not take it away. One of the nation's top economists, Dr. Laura Tyson, stated on CNN that the most efficient way to stimulate the national economy is to direct federal infrastructure spending to small businesses. You don't need to be a famous economist to see that. The last thing America needs right now is legislation and policy that will divert federal contracts away from the small businesses that create over 97 percent of net new jobs in America. (

I worked very hard to help get President Obama elected, but I am afraid he is not the man most of us were hoping he would be. His promises of "change we can believe in" are starting to look like campaign slogans and nothing more. President Obama is a politician. I hate to be the one to break it to you, but politicians take money from big companies and powerful industry groups in exchange for political favors and legislation that increases their profits. The money the venture capital industry gave members of Congress and President Obama is an investment for them. Their plan is to take over the SBA, and federal small business contracting programs as a means of collecting billions of dollars in federal contracts. So far it's working.

If we let that happen, the middle class economy will be negatively impacted. Thousands and possibly even millions of small businesses will be devastated. More people will lose their jobs and their homes. As national unemployment heads to 10 percent and beyond, we don't want that to happen.

This is not some rinky-dink story. We are talking about $140 billion a year in government contracts. This is also a story of how a man most American's thought was going to rescue all of us from "business as usual in Washington," is planning on selling federal small business programs to the highest bidder. This time the highest bidder happens to be the NVCA and the rest of the venture capital industry.

It is time for the mainstream media to expose the truth behind this story and help stop it from happening. Who has Anderson Cooper's cell phone number?