Guest Post by Sue Lebeck, Program Director of the "Silicon Valley Letters to Washington" initiative from the Silicon Valley Innovation Society.

We are facing an interesting time here in Silicon Valley, and in the entrepreneurial community at large. Just as innovation has been re-confirmed as a critical element of our national success, our once potent "innovation engine" is sputtering and may soon stall.

Our nation, and the world at large, faces an unprecedented array of challenges today. These challenges come in all flavors -- economic, social and environmental. New solutions to old problems are needed now, more than ever. As President Obama recently declared and we believe, we must "innovate our way out of this recession."

Moreover, we must innovate our way out of the constraints of our outmoded ways - whether in the fields of healthcare, finance, transportation, construction, manufacturing, energy, water, or the information systems that control them - the systems which drive our economy need to evolve. But first, the innovation-related structures which drive or impede that process need themselves to evolve.

"Innovation engine" is a potent metaphor for our innovation-driving structures. It reminds us of what is needed, and it underscores what is often missing in our innovation environment today. An engine needs fuel and air to run. The "fuel", if you will, is money: first, "seed" capital for an entrepreneur to investigate a solution; then "venture" capital to launch and grow a company; and finally a "liquidity event", such as an Initial Public Offering (IPO) of stock or an acquisition by another company, that frees the entrepreneur to repeat the cycle. All three types of funding have contracted significantly. Early-stage companies, more than ever, are choking. Many others are DOA.

Equally important to the operation of our engine is "air", the environment in which innovation operates. Laws and regulations, including tax policy, accounting rules and intellectual property rights are critical to support an innovation-friendly environment. Government policies have not kept up with the realities of innovating in a global economy; often they actively, if unintentionally, work against our ability to compete.

The Silicon Valley Innovation Leaders group, an informal collaborative convened through the Silicon Valley Innovation Institute (SVII)in late Spring of 2009, decided to launch an initiative to address the critical issues faced by the entrepreneurial innovation community. We've dubbed this initiative "Silicon Valley Letters to Washington".

This all-volunteer initiative was executed this autumn. Three working sessions over the space of two months produced a collaboratively written letter, viewable in detail at www.svletterstowashington.org. Its authors and contributors seek to share with our policy leaders the financial and environmental reality currently experienced by Silicon Valley entrepreneurs and, we imagine, entrepreneurs everywhere. We are outreaching to those in Washington who direct innovation policy, with a focus on the offices which manage Science and Technology and related policy.

Many additional issues are on our minds, but we wish to focus on these structural fundamentals. Our goal is not to speak just for ourselves, nor for any particular field of innovation, but for entrepreneurial innovators everywhere. Our hope: to engage in a dialogue that will inform and influence future innovation-related policy. For details on this letter, its recommendations, its authors and its audience, go to www.svletterstowashington.org. We hope you will review our point of view. Then, if you are an advocate of innovative entrepreneurship, we hope you will add your name to our cause.

Because, at the risk of being cliché, an innovation engine is a terrible thing to waste.