The Big Story: As startup funding declines, stimulus offers some relief. With seed-stage investments disappearing as a result of the coronavirus pandemic, the $2 trillion stimulus package approved by the U.S. Senate this week offers some short-term relief for small businesses, entrepreneurs, and gig workers who are struggling as a result of the global economic downturn.
A new report from market intelligence firm CB Insights found that early-stage startup funding has decreased by 22 percent globally since the beginning of the year. Industry analysts warned that many new startups could fail without receiving the funding they need to stay afloat, leaving a growing chasm in the nation’s tech development ecosystem. Startups all across the country have already had to temporarily lay off staffers as a result of the economic uncertainty.
While the bleak economy may be making things difficult for small businesses and entrepreneurs, the Senate stimulus package offers some desperately needed short-term relief. Small businesses can qualify for funding from the $350 billion small business loans program, although the Small Business Administration’s affiliation rules would disqualify many venture-backed startups. The National Venture Capital Association is continuing to engage with policymakers in the hope that the House will not unfairly exclude startups from accessing needed loans when it votes on the package.
The approved legislative package also takes the unprecedented step of extending unemployment benefits to gig workers for up to four months, a move that will provide needed financial assistance to workers who are suffering the most from the economic downturn. As we noted earlier this week, it's critical for lawmakers to ensure that gig workers "are treated the same as other U.S. workers when it comes to receiving desperately needed protections."
Policy Roundup:
Internet companies dealing with sharp spikes in online traffic. Online firms of all sizes are dealing with increased usage and moderation concerns in response to the ongoing pandemic. Facebook has seen a sharp rise in usage as users across the world turn to the platform to follow the news and keep in touch with family and friends. Smaller Internet firms like Wichita-based video transcription startup Quicc—which has seen a 7,000 percent increase in video uploads to its platform within the past month—are also experiencing increased usage as more Americans rely on online tools and websites to telework.
Flattening the curve by policing online misinformation. Internet companies are aggressively working to curtail the spread of COVID-19 misinformation to help stem the global pandemic. Twitter is blocking users from sharing content that questions expert guidance and encourages the use of fake treatments, while sites like Instagram are removing all coronavirus-related content from users’ recommendations unless they are posted by credible health organizations.
DOJ, FTC to expedite antitrust reviews of joint ventures. The Federal Trade Commission and the Antitrust Division of the Department of Justice issued a statement announcing that they would offer expedited antitrust reviews of joint ventures “addressing public health and safety” concerns related to the coronavirus pandemic within seven calendar days of their requests.
Patent-related antitrust case underscores how abusive litigation harms innovation. In an op-ed for Law360, Engine IP Counsel Abby Rives discusses how an ongoing antitrust case over patent assertions—Intel Corporation v. Fortress Investment Group LLC—could also impact tech startups across the United States. Abby notes that startups can face severe consequences when large investment firms are allowed to amass large portfolios of weak, overbroad patents that they monetize through actual or threatened litigation.
Trump administration releases 5G strategy. The White House released a National Strategy to Secure 5G of the United States to better protect the country’s next-generation wireless networks and position the U.S. “to lead the development, deployment, and management of secure and reliable 5G communications infrastructure worldwide.” The report was released after President Donald Trump on Monday signed the Secure 5G and Beyond Act, a bill which required the administration to release a 5G security strategywithin 180 days of the law’s enactment.
Startup Roundup:
#StartupsEverywhere: Boston, Massachusetts. Humanyze, an analytics startup that developed out of the MIT Media Lab in 2011, is helping companies across the world gain a better understanding of their organizational health. With a privacy-first focus, the startup uses anonymized and aggregated enterprise data to help firms measure and comprehend how work gets done across their teams. We recently spoke with Ben Waber—Humanyze’s co-founder and president—to learn a little more about the startup’s work, goals, and policy concerns.
