What We Get Wrong About Small Business

No American politician can go wrong singing the virtues of small businesses. But the much-revered cornerstone of economic growth is a broad category, encompassing everyone from the independent consultant to the coffee-shop owner to the start-up founder on the verge of explosive growth. And while our rhetoric may not distinguish between them, policymakers must in order to understand how to best support the needs of different kinds of small businesses.

That's something Karen Mills learned as head of the Small Business Administration during President Obama's first five years in office (Mills stepped down in September). A longtime venture capitalist—she was a founding partner and managing director of Solera Capital—Mills had a special interest in identifying promising businesses in areas outside Silicon Valley and New York City, which are already saturated with interest from investors. National Journal recently caught up with Mills, who is splitting her time this year between Harvard Business School and the Kennedy School of Government, to talk about the kinds of federal policies that can support innovative small businesses. Edited excerpts follow: