Is America's entrepreneurial spirit declining? As the nation broods over its long-term decline in productivity growth, mulls over its industrial policy, and frets about protectionism and overseas competition, the question continues to spawn some serious soul-searching.
It even surfaced in a General Accounting Office (GAO) report to the congressional Joint Economic Committee on venture capital last summer.
But the people most interested in that report - the venture capitalists themselves - answer that question with a resounding ''No.''
These businessmen and women, who use pools of private money to fund company start-ups in risky and sometimes obscure high-technology areas, say the old-fashioned pioneer spirit of risk-taking is alive and well and living in America.
Year-end telephone interviews with venture capitalists and bankers around the nation suggest that:
* Venture capital is critically important to maintaining America's lead in international high-technology competition.
* There are growing numbers of entrepreneurs with good ideas waiting to be funded.
* There is a large and growing supply of money to fund them.
* Increasing amounts of venture capital bring increasing numbers of good ideas to the surface.
''There's been a steady increase in the number and quality of ideas over the last two to three years,'' says Michael Bell, president of the National Venture Capital Association and a partner in the Hixon Venture Company of San Antonio.
Peter Brooke of Tucker Anthony Associates, one of the largest venture capital firms in the nation, managing some $250 million in assets, agrees. ''The money coming into (the industry) now,'' he says enthusiastically, ''is forming new enterprises that you and I haven't even heard of, and that will be the lifeblood of this economy in 10 years.''
And Stanley E. Pratt, president of the Venture Economics Division of the Capital Publishing Corporation in suburban Boston, traces the ideas that produce good business deals back to the people who have them. ''One commodity we are not short of in this country,'' he says, ''is entrepreneurs.''
And Mr. Bell adds that ''the hardest part of our job (is) sifting the chaff from the wheat.''
They are not always easy to locate, however. ''There always seems to be too few deals,'' complains Charles Weight, a partner in a New York-based but French-backed venture capital fund, Elf Technologies.
When they are found, however, entrepreneurs need what venture capitalists provide - someone willing to risk money on their ideas. ''Capital,'' as San Francisco venture capitalist Thomas Perkins says, ''creates opportunity.''
Mr. Pratt, a highly respected scorekeeper for the nation's venture capital funds, confirms that 1982 was the industry's biggest year ever. According to his estimates, America's total pool of venture capital reached a record $7.5 billion - nearly tripling the 1977 figure. Last year, he says, the pool apparently grew by about $1.6 billion - well above the $1.3 billion increase recorded for 1981 and leagues ahead of the paltry $39 million recorded five years earlier.
That $1.6 billion, however, needs to be seen in perspective. It is still no more than the annual research and development budget of IBM. The $7.5 billion total is only a fraction of total US investment wealth - which includes, for example, an estimated $250 billion in the nation's pension funds.
Productivity-enhancing inventions, in fact, are far and away the most popular ideas funded by venture capital. Mr. Pratt sees a trend away from biotechnology investments (which many financiers agree has lost their shine) and into computer software, process control, factory automation, and robotics. In 1981, entrepreneurs whose ideas were directly or indirectly linked with productivity improvement accounted for 82 percent of the private venture capital investment.
Why such rapid growth in venture capital investments over the last five years? Most observers link it to changes in federal tax regulations. The reduction of the capital gains tax in 1978 from 49 percent to 28 percent nearly doubled the amount of private venture capital investment in one year - from $550 million in 1978 to $1 billion in 1979. The reductions in 1981 (from 28 percent to 20 percent for individual investors) further spurred growth.
Where is the industry headed?
Lower earnings. Over the past 10 years, Mr. Perkins says, his California-based company compounded its capital at a rate of 70 percent each year. ''Inevitably,'' he says, ''there will be a gradual lowering of the rates of return'' - although the rates will still be attractive. One reason: The total nationwide venture capital pool, now at $7.5 billion, is drawing closer to the $ 12 billion to $15 billion upper limit - a level at which, says Mr. Pratt, the venture capital industry might begin to run out of worthwhile ideas to fund. With increasing amounts of money available, some entrepreneurs are striking harder bargains - retaining a greater share of the newly forming companies for themselves.
Geographic diversity. Venture capital investments have historically centered on Massachusetts' Route 128 and California's Silicon Valley. Mr. Pratt sees the trend moving into Texas, Minnesota, and elsewhere in the Midwest, where hard economic times sometimes make it easier for would-be entrepreneurs to find factory space and hire top-level talent.
Foreign capital. Venture capital funds are an almost uniquely American phenomenon. ''There is no remotely comparable venture capital activity anywhere in the world,'' says Cleveland venture capitalist David T. Morganthaler, although some activity is beginning to occur in Britain. Why? Many point to the American willingness to risk failure. In Japan and Germany, says Mr. Pratt, ''failure is an absolute no-no.'' Americans, he notes, are more willing to view failure as ''a learning experience.''
Whatever the reason, foreign investment is growing - from 8 percent of the money in private venture capital funds in 1981 up to 15 percent in the first six months of 1982, Mr. Pratt says. Daniel S. Gregory of the Greylock Management Corporation says he sees no danger in such foreign investment, even though some of the ''share'' sought by foreign investors is the right to license any new technological developments for production overseas.
But venture capital projects, when they are successful, are typically long term. As Mr. Pratt puts it, ''Lemons ripen early, but pearls take a long time to cultivate.'' Such long maturity, says Mr. Gregory, turns away some foreign capital. ''I would question whether asset-oriented, yield-oriented capital from (such areas as) the Middle East is in the long run intellectually compatible with American innovation.''