The startup ecosystem is a unique business model based on companies taking significant losses in early years in pursuit of innovation and growth in the future. Startups are disproportionately responsible for the innovations that drive economic growth and job creation and are crucial to the U.S. economy’s capacity to respond to, and recover from, the COVID-19 crisis and the damage it has inflicted on economic growth and the labor market. TechNet supports a policy agenda to help startups whose success will determine the country’s future competitiveness, as well as our capacity to research and produce tools to help the U.S. fight the COVID-19 pandemic.
Access to Capital and Markets
Startups thrive when they have access to capital and markets. As the COVID-19 pandemic continues to pose significant challenges for our public health system and economy, startups across America face an ongoing cash liquidity crisis as they struggle to survive an economic crisis of unknown depth and duration. Despite admirable efforts by Congress to shore up small businesses and the American economy, startups have largely been left behind because they typically operate in a loss position for several years, deliberately choosing instead to invest heavily in growth activities such as research and hiring and necessarily generating tax assets in a bid to develop long-term value. Federal policymakers can improve the capital allocation process through targeted reforms to regulations and tax laws. TechNet supports:
· Targeted tax reforms that allow startups to bring forward the value of their tax assets, providing fast and efficient capital availability to support companies through the downturn.
· Federal policies that create “venture exchanges.”
· Promoting more stock ownership opportunities for workers at startups by allowing them to defer the tax associated with the exercise of their personal equity until they sell the underlying shares and thus have the cash to pay the tax, instead of taxing these options upon vesting.
· Federal policies that reduce unnecessary barriers for private companies opting to go public.
· State-level policies that encourage crowdfunding.
· The permanent exclusion of federal and state capital gains taxes on investments in startup businesses that are held for more than five years.
· Innovative tax credits that can apply to other tax requirements beyond corporate income tax obligations.
· Ensuring that tax policies affecting the gig and sharing economy help promote economic opportunities, provide clarity, do not impose significant administrative burdens for job creators, and also recognize the unique differences that exist among the business models of innovators operating in this growing segment of the economy.
· A smart regulatory approach that requires state and federal regulators to review any regulation’s impact on startup companies and new business creation.
· International trade agreements that reduce market access barriers for digitally delivered goods and services, promote the free flow of data across borders, contain “safe-harbors” against intermediary liability, and include strong protections for intellectual property.
· Access to federal, state, and local infrastructure, transportation, services, and resources.
Access to Talent
The modern American workforce requires a flexible employment environment which allows workers to find opportunities that best match their skills, interests, and availability.
· TechNet opposes efforts to eliminate or severely restrict this essential flexibility, including restrictions on the use of independent contractor and consultant classifications, inflexible overtime rules, and the indiscriminate expansion of collective bargaining rules.
· TechNet supports efforts to develop new avenues and “safe-harbors” that empower companies to provide benefits to workers without impacting classification outcomes.
Access to Innovation
Public policy should help startups move projects efficiently from the idea phase to the new business phase. TechNet supports:
· The exploration of new ownership models, including co-ownership between inventors and universities.
· The creation of a National Innovation Foundation — modeled after the National Science Foundation — to focus on innovation and technology commercialization.
· Patent policies that level the playing field to promote innovation in all sectors of the economy and minimize frivolous litigation.
· Procurement reform at the local, state, and federal levels that acknowledges the evolving technology landscape and enables governments to purchase and utilize innovative and secure products on a technology-neutral basis.
· Efforts to open insurance markets to competition.
The world’s most talented innovators and entrepreneurs should be able to stay in the U.S. and contribute to the economy, rather than be forced out to start competitor businesses in competitor nations. TechNet supports:
· Federal immigration legislation, regulations, policies, and adjudications that facilitate, not restrict, the movement of high-skilled workers and entrepreneurs starting a new company.
· Numerical levels and categories for high-skilled non-immigrant and immigrant visas that are responsive to economic need, and, where appropriate, include mechanisms to fluctuate based on transparent, predictable, and objective standards.
· The removal of per-country green card caps.
· A STEM visa for foreign students attending U.S. universities and colleges who have earned Master’s degrees or above.
An educated, diverse American workforce is the lifeblood of the innovation economy. TechNet supports:
· Consistent short- and long-term funding for science, technology, engineering, and math (STEM) and computer science courses.
· Strong standards and rigorous assessments to better evaluate what and how students are learning.
· Programs that ensure the principles of computer science, computational thinking, and STEM skills are integrated in other areas of K-12 instruction.
· Effective professional development and new teacher training programs to train high-quality STEM and computer science teachers.
· Policies and programs that focus on providing STEM education and career opportunities for female and minority students.
· School and public/private programs, such as robotics clubs, which emphasize hands-on, inquiry-based learning to inspire the next generation of scientists and engineers.