This post is one in a series of reports on significant issues for startups in 2016. In the past year, the startup community's voice helped drive notable debates in tech and entrepreneurship policy, but many of the startup world's policy goals in 2016, such as immigration and patent reform, remain unfulfilled. Watch this space for more year-end updates and continue to watch this space in 2017 as we follow policy issues affecting the startup community.
Conversations about talent and diversity were once again at the forefront in 2016, with a heated Presidential election, bold actions by the Obama Administration around immigration and computer science education, and efforts by major tech players to diversify their workforces. The tech community and policymakers continued to search for solutions, and while 2016 didn’t unearth a silver bullet for fixing tech’s workforce and diversity issues, significant progress was made.
Diversity
The lack of diversity in the technology, startup, and investment communities is well-documented. Female and minority representation at technology firms remains abysmal, with women, African Americans, and Hispanics making up just 18, 2, and 4 percent, respectively, of technology workers at America’s top tech firms. In the startup community, only 9 percent of venture-backed founders are women, and only 1 percent are Black. Beyond issues around representation, analysis by the job review site, Glassdoor, also uncovered that women in technology earn lower salaries than the men who hold their same positions: the pay gap for women programmers can be as high as 28.3%, or about 22% higher than the pay gap for all workers.
Despite these statistics, there was continued progress and engagement from the technology industry and policymakers on solving tech’s diversity issues in 2016. In February, the Diversifying Tech Caucus (DTC), with Engine at the helm, held a congressional briefing on African Americans in tech. Panelists called out institutional barriers to entry, including limited computer science programs in public schools, but remained optimistic that the industry is moving in the right direction, albeit slowly. Encouraging greater participation in tech and entrepreneurship by women was also a focus this year, with high-profile initiatives launched by Ellen Pao, Melinda Gates, and various investment funds.
Bringing more veterans into tech also got attention in 2016. In June, Engine sent a letter co-signed by over 30 veterans and veteran organizations supporting the Veterans Entrepreneurial Transition (VET) Act, which would empower veterans to pursue their entrepreneurial aspirations by giving them access to training resources. To promote support among Congressional members for this type of legislation, Engine co-hosted a Hill briefing on the challenges veterans face during their path towards a career in technology in November.
2016 also saw broad efforts by a number of industry leaders to address issues around diversity. National accelerator Techstars continued its diversity push, producing resources for founders, implementing staff and portfolio company training around unconscious bias, and publishing a report on their progress. Additionally, more than 30 investors pledged to increase access to capital for diverse founders. Taking another step on behalf of the investor community, The National Venture Capital Association (NVCA) Diversity Task Force released a report outlining their progress since committing at last year’s White House Demo Day to advancing opportunities for women and minorities in the entrepreneurial ecosystem. The NVCA also released a dashboard with data on diversity within the VC workforce in an attempt to help VC firms expand the diversity of their teams and portfolio. Going into 2017, we hope to see efforts like these continue and additional progress made.
Computer Science
Limited computer science programs in public schools has been identified by a number of advocates as contributing to tech’s workforce and diversity issues. Recognizing this, the Obama Administration announced its Computer Science for All initiative in February, pledging an impressive $4 billion in funding for computer science education in K-12 schools across the country. Similar calls also came from government, business, education, and nonprofit leaders, who urged Congress to amplify and accelerate efforts around computer science. While advocates were not able to secure federal funding for computer science in 2016, Congress passed the American Innovation and Competitiveness Act before recessing for the year, which authorizes the National Science Foundation to provide grants to improve CS education in K-12 schools.
Immigration
The biggest news in immigration policy in 2016 was undoubtedly the Obama Administration’s proposed International Entrepreneur Rule (IER), which would allow qualifying foreign-born entrepreneurs to live in the United States for up to five years while building their startup. According to the National Foundation for American Policy, immigrants have been responsible for the establishment of more than half of U.S.-based unicorns, or startups valued at more than $1 billion. Further, immigrants have founded 25 percent of high-tech startups across the country. The White House’s recognition of this proven relationship between skilled immigrants and economic growth was welcomed by the startup community, which voiced its support for the rules at roundtables on both coasts following the release of the proposal. Engine, joined by Tech:NYC, submitted comments supporting the Administration's efforts and recommending a number of changes that we believe will allow the IER to have an even greater positive impact.
In addition to the proposed IER, there were a number of other immigration-related developments this year. 2016 brought a new record for the number of H-1B visa applications received by USCIS during the annual filing period: 236,000 applications were filed for the 65,000 available visas, meaning that countless vital skilled workers were turned away from companies across the country. In more positive news, we saw a number of innovative programs created to help foreign entrepreneurs obtain visas in creative ways, such as the NYC Economic Development Corporation (NYCEDC) IN2NYC program. In 2017, we hope to see more programs like this one to help grow the startup sector and bolster jobs in the United States.
Looking Ahead
President-elect Trump’s position on high-skilled immigration has been tough to pin down, but his campaign promise to “build a wall” and his selection of staunch H-1B opponent Senator Jeff Sessions for the post of Attorney General doesn’t bode well for the tech and startup communities. However, Trump has recognized that “we have to keep our talented people in this country,” and some have argued there’s reason to believe he might keep the International Entrepreneur Rule around (though we think this may be overly optimistic).
Despite setbacks around immigration, we are hopeful that the next Congress can make progress on less partisan issues, like helping veterans to succeed and giving American children the skills they need to thrive in the 21st century economy. We will continue to work with our partners in Congress, and especially at the Diversifying Tech Caucus, to ensure that smart, effective policies move forward. We are also cautiously optimistic about improvements in diversity on the industry side. Quantitative advances in 2016 have been sluggish at best, but the myriad initiatives launched over the past couple of years give us hope that efforts by the technology sector, and especially the startup community, will continue to grow and begin to pay off over the next year.
