Rent Seeking Alert

In case you think rent seeking is confined to the big boys, here’s a case in which the small fry are learning their lessons well. It’s from a blog called The Private Equity Reader.

Thanks to a small tip from PEHub, I learned that more and more buyout shops (including a prominent one, The Riverside Company) are applying to get capital through the Small Business Investment Company (SBIC) program. In my opinion, this is one of the greatest trends that private equity firms have been doing recently.

The mission of the SBIC, paraphrased from their website, is simple: provide strength to small business through private equity capital and funds from long term loans. The program’s been around for some time (since 1953), and it provides a safe source of money for private equity firms to invest in significantly smaller rising stars among the small business world.

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