Note from the editor: This is a guest post from Steve Case, the co-founder of AOL (which owns TechCrunch) and founder of Revolution. Case is the chairman of the Startup America Partnership and sits on the White House Jobs Council.
In recent weeks, Americans from all walks of life came together to stop SOPA from advancing through Congress, demonstrating the power of the Internet to rally people around an important cause. In the weeks ahead, we have reason to rally again. This time, the goal is not stopping something bad, but starting something good. Specifically, ensuring that America builds on its legacy of innovation, and remains the world’s most entrepreneurial nation.
Earlier today, President Obama unveiled his Startup America legislative agenda and called on Congress to pass it quickly, so he can sign it promptly. It’s a very positive first step.
Let’s capitalize on this moment, and call on our elected representatives to quickly pass this legislative agenda that helps entrepreneurs start and scale the companies that can change the world while creating jobs, jumpstarting our economy, and increasing our competitiveness globally.
Here’s why you should join me – now – in rallying behind the President’s proposed Startup America legislation:
Young high-growth companies have created 40 million American jobs in the past three decades thirty years – and accounted for all of the net new jobs produced during that period.
America’s entrepreneurial economy has been the envy of the world for decades. But other nations now recognize that entrepreneurship has been America’s secret sauce, and they are now racing to replicate it. Just as we’re seeing the globalization of manufacturing, we’re also now seeing the globalization of entrepreneurship.
Meanwhile, outside of some sectors (like social media) and some regions (like Silicon Valley), America’s entrepreneurial economy is sputtering. Indeed, start-ups are down 23% since 2007.
The rest of the world is accelerating, while America is slowing. But we still have time to act.
Enter the President’s Startup America legislative agenda. The proposed legislation, released this morning by the White House, builds on the great work that Republicans and Democrats in the Senate and the House have initiated in recent months.
Here’s a short primer on some of the measures included in the President’s Startup America legislative agenda:
Crowdfunding – The legislative package will allow entrepreneurs to leverage online platforms to raise small amounts of capital from a large number of people. The benefits of creating an efficient and transparent marketplace to raise capital have been established by successful platforms such as Kickstarter and IndieGoGo, and this new legislation will extend the reach of these platforms to help fund entrepreneurial companies.
IPO on ramp – Well-intentioned regulations to protect investors have contributed to a decline in IPOs. The cost and complexity of initial public offerings has resulted in fewer companies going public, and more companies being sold. Public offerings of less than $50 million were 80% of IPOs in the 1990s, but only 20% in the 2000s. Sadly, IPOs typically lead to accelerated job growth – 90% of job creation typically occurs after a company goes public – while acquisitions often lead to job-deceleration. The President is embracing the recommendations of the IPO Task Force and his Jobs Council by calling for a smart, phase-in for emerging growth companies, so that they can adjust to the most costly and complex requirements of going public.
Winning the global battle for talent – America is great at attracting talented immigrants to its universities, but then forces most to leave and return to their countries – taking their educations with them, and all too often creating companies in other countries that end up competing with ours. This is a critical issue that will require more attention, but the Startup America legislative package takes a positive first step by allowing more highly-skilled immigrants to stay, build companies in the U.S., and create American jobs.
Investment incentives – The proposed legislation provides a capital gains tax cut when an investment is kept in a business for at least five years, incentivizing investors to put their cash behind entrepreneurs who are focused on building lasting companies. In addition, the package adds investment incentives by raising the limit for “mini-offerings” from $5 million to $50 million and increasing the Small Business Investment Company program by $1 billion.
Incentives to Encourage Growth and Reinvestment – The Startup America legislative agenda would make permanent certain tax cuts for small businesses, so that once a new firm gets up and running, it has more capital available to re-invest in growing the company. The package also includes a 10% income tax credit for new small business hires, a doubling of the tax deduction for startup expenses, and an extension of the 100 percent depreciation for property through this year.
I was honored to chair the high growth enterprises subcommittee of the President’s Council on Jobs & Competitiveness. (Other members included John Doerr of KPCB and Sheryl Sandberg of Facebook.) We met with the President in October and presented a series of recommendations on steps both the private and public sector should take to improve the environment for entrepreneurs.
Since then, nearly a dozen bills have been introduced in Congress. The AGREE Act was introduced by Senators Rubio (R-FL) and Coons (D-DE) and the Startup Act was introduced by Senators Warner (D-VA) and Moran (R-KS). Now, the President has stepped forward with his own proposal, the Startup America legislative agenda.
I’m encouraged to see our nation’s leaders focus their attention on entrepreneurship – and issue legislative proposals that will help us innovate, grow our economy, create jobs, and strengthen our competitiveness.
This is a moment. While the partisan bickering in Washington is intense, and will heat up further as we head towards the November election, we can – and must – rally the entrepreneurial community to support pro-entrepreneurship legislation.
It might seem as though Washington isn’t listening, but the successful effort to stop SOPA in its track proved that we can have an impact. That was about stopping misguided legislation. This is about promoting a positive Startup Agenda that moves us in the right direction. Is it a perfect package for entrepreneurs? No, but there is no such thing as perfect legislation – and we can’t let the perfect be the enemy of the good.
So join the cause and tweet your support with the #StartupAmerica hashtag. Now is the time to rally together and pass a Startup America legislative agenda!