Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of

RESEARCH TRIANGLE PARK, N.C. – “Voodoo economics” is back, but this time the criticism comes from an entrepreneur and it is aimed at venture capitalists.

Vivek Wadhwa, a serial tech entrepreneur, is hardly a fan of venture capitalists after his experiences in starting and growing Relativity Technologies – an experience that ended up nearly killing him with a heart attack.

Now an executive in residence at Duke University as well as working with UC-Berkeley and Harvard law School, he is even more outspoken about the vices of VCs.

In a post Sunday at TechCrunch, Wadhwa took aim at the National venture Capital Association and its recently published annual report that touts the role of VCs in growing new businesses. He calls out the VCs for ‘voodoo economics” claims.

“The point is that to boost the economy, we need to help the real sources of innovation and growth,” Wadhwa wrote in a note to friends and colleagues about his TechCrunch broadside. “These are the entrepreneurs who take the risk – not the middlemen VC’s and investment bankers who got themselves into trouble and now want bailouts and tax-breaks.“

Wadhwa obviously struck a nerve. His opinions have already triggered more than 150 responses.

Titled “What Have VCs Really Done for Innovation”, Wadhwa wrote:

“Back in 1986, when Bill Gates was still making sales calls, he pitched my group at First Boston on why we should bet the farm on Windows. Despite the risk involved, we gave his fledgling startup the deal. This wasn’t because of his financial backers (he didn’t even drop any names), but because we believed in his vision and nerdiness. In the same way, Google became a huge success long before the deep pocketed VC’s arrived to ride Larry and Sergey’s coattails. They simply had a great technology and winning strategy.

“So I’m miffed by the National Venture Capital Association’s (NVCA) claim that companies like Microsoft and Google “…would not exist today without the funding and guidance provided during their early stages by venture capitalists.” And I’m amused that the NVCA claims credit for creating 12 million jobs and generating $3 trillion in revenue (that’s only 21 percent of U.S. GDP). In the software industry (which includes Internet/Web 2.0), they stake claim to 81% of the all jobs created. Yes, 81%. Can they please give the entrepreneurs who risk their life savings, max out their credit cards and put their families in the back seat a little more credit? We’re not talking about divvying up the company’s stock here, just a pat on the back.”

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