As the guest comment in last weeks Real Deals, Tim Draper outlined his views on how the US is losing its competitive advantage and has lost its competitive governance. The key issues he points to are:
1. Stock Options. 409a forces US companies to value stocks in the future and if they get it wrong, penalizes them
2. Sarbanes-Oxley. It forces companies to spend between $2million and $6 million per year in compliance.
Again, two reasons why the UK is an interesting place to be making early stage investments- options are tax free, and capital gains tax is only 10%. AIM is lightly regulated and costs half as much for the initial listing vs NASDAQ.
However, I still think the West-coast approach to investing is the correct one – and is an approach very few VCs in the UK take.