More young companies are using "venture leasing," whereby a start-up with no credit history or cash deposit can get leased equipment by giving warrants to the lessor. While such financing debuted just a few years ago, it's already becoming mainstream, says Arthur Young's G. Steven Burrill. According to Venture Economics, in Wellesley Hills, Mass., deal volume rose by more than 33% in 1988, to more than $200 million. So far, however, most lessors will invest only in venture capital-backed companies. Exceptions: San Rafael, Calif.-based Phoenix Venture Inc. will co-invest with corporations, and Chicago-based LINC Venture Lease Partners will go in alone in medical companies, its specialty.
Although the effort to repeal Section 89 of the tax code has picked up an impressive 252 House sponsors, it still faces formidable opposition from Rep. Dan Rostenkowski (D-Ill.), who has said he'll reassess the tax status of individual fringe benefits if the benefit nondiscrimination rules are repealed. But the powerful Ways and Means Committee chairman has indicated he will consider Section 89 reform. Meanwhile, long-awaited IRS rules provide a bit of a breather: some effective dates are pushed back to July 1 and others to 1990. In addition, 1989 compliance will be measured by a good-faith standard.
After years of unwittingly spinning off companies, a growing number of universities are now trying to foster start-ups. One method: affiliated corporations whose primary function is to use university research to form start-ups in which the university can take equity. The affiliate's employees not only find promising ideas and funding but also recruit managers -- or serve as acting CEOs. ARCH Development Corp., associated with the University of Chicago and Argonne National Laboratory, recently went further: it raised an $8.5-million venture capital fund for its companies.
At least two companies have developed frequent-flyer management services to help businesses track awards. Frequent Flyer Management Co., a Louisville start-up, sends companies bimonthly consolidated account statements, for an annual fee of $75 per traveler covered. Randy Petersen, publisher of the newsletter "Frequent," has a similar service and plans to begin marketing it soon through Rochester, Wis.-based Runzheimer International, a travel consultant. Both Petersen and Frequent Flyer Management president Kevin R. Orr suggest that clients split awards with their employees to avoid hurting morale.
Uncle Sam wants to improve small manufacturers' competitiveness -- but without spending money. Three bills before Congress would protect small companies that form cooperative "manufacturing networks" from antitrust action. In addition, last year's trade bill turned the National Bureau of Standards into the National Institute of Standards and Technology (NIST) and broadened its mandate to include teaching the latest manufacturing techniques to small companies -- although NIST got no additional funding. Nevertheless, NIST is backing three regional "flexible manufacturing" centers to demonstrate new technologies.
If Craig Shull's new company doesn't succeed, he gets his old job back. His secret? Shull is the first person to take advantage of Idaho National Engineering Laboratory's one-year entrepreneurial leave-of-absence program. The lab wants to get its technology commercialized by any means possible -- whether through licensing, doing contract research, or providing a safety net for entrepreneurially minded employees. A handful of the federal labs now have such leave policies, says Lee Rivers of the Federal Laboratory Consortium for Technology Transfer.
-- Martha E. Mangelsdorf