The Big Story: Making the startup ecosystem more equitable
Startup founders with innovative ideas should have the chance to succeed, no matter where they’re located or what they look like. But too often, underrepresented founders—including women and founders of color—are denied the opportunity to get investments, launch, and grow. This week, Engine released an assessment of barriers that underrepresented founders face as well as policy proposals to alleviate those barriers.
“Making the Startup Ecosystem More Equitable” highlights the significant barriers underrepresented founders, including women founders and founders of color, face in launching and growing startups, and proposes policy solutions to work toward solving some of these problems. While most are aware of the disparities in the venture capital space—in 2020 Black and Latinx women raised less than 1 percent of venture capital—limited access to capital for underrepresented founders extends to most forms of funding, from difficulties obtaining bank loans, to limited access to friends and family rounds. And the challenges are not just limited to capital access. While networking and mentorship opportunities can guide founders on pathways to success, underrepresented founders are historically excluded from many of these support systems. And family care responsibilities, which disproportionately fall to women, restrict both opportunities to launch startups and employment opportunities.
Startup ecosystem members discussed the barriers women founders and founders of color face during an event Tuesday. Thkisha Sanogo, founder and CEO of MyTAASK, explained that Black women founders have to “show up and keep showing up and [to] make sure people recognize how important it is for us to be part of the conversation.” Founder and CEO of fundBLACKfounders, Renee King, discussed the benefits—both to individual founders but also to the overall ecosystem—of underrepresented founders succeeding, because, as she put it, “diverse founders, solve diverse problems.”
It is critical that policymakers and ecosystem members recognize the inequities throughout the startup ecosystem and work toward solutions that support our nation’s underrepresented founders. Prioritizing an equitable ecosystem will lead to more and better innovation and help keep the U.S. as a global technology leader.
Policy Roundup:
House passes reconciliation bill. Today the House passed the Build Back Better Act, sending the package to the Senate. The bill still contains immigration provisions, including language to help ease the green card backlog and could benefit high-skilled workers, though it is unclear if they will survive scrutiny in the Senate. Other provisions that could affect startups, including language to curtail favorable treatment of qualified small business stock, potentially affecting investment opportunities for startups and startup compensation packages, remain in the bill.
Startups, manufacturers among those calling for next PTO director to prioritize patent quality and combat abuse. Kathi Vidal’s nomination to be the next director of the U.S. Patent and Trademark Office creates an opportunity to resolve problems in our patent system and allows entrepreneurs to innovate with fewer barriers that have stifled innovation in the past. In a recent op-ed, the CEO of Texas-based startup UnaliWear, and the chief patent counsel of the golf equipment manufacturer, Acushnet, discuss why and how Vidal must support patent quality, reduce bad patents, and shape the patent system future innovators need.
Acquisitions integral to vibrant startup ecosystem. In an op-ed today, NVCA’s Jeff Farrah argues that policymakers must not harm startups by limiting startup acquisitions in their zeal to go after “big tech.” Successful startup exits create virtuous cycles that enable further innovation—successful founders become mentors, investors, and serial entrepreneurs, and investors often reinvest the profit in new startups. Acquisitions are a more accessible, realistic method of exit for startups, as we highlighted in a report earlier this year.
Senate considers key telecom nominee. The Senate Commerce Committee held a confirmation hearing for acting FCC Chair Jessica Rosenworcel and FTC nominee Alvaro Bedoya. During the hearing, Rosenworcel faced questions on broadband coverage maps, the Universal Service Fund, and net neutrality, among other issues. Engine joined dozens of organizations in a letter calling on Congress to quickly confirm Rosenworcel, as well as FCC nominee Gigi Sohn and Alan Davidson, who has been nominated to lead the National Telecommunications and Information Administration. As we explained when they were nominated, these positions help determine key telecom and technology policy issues that impact the startup ecosystem.
Startups waiting on U.S.-EU data deal. In remarks on the house floor earlier this week, Rep. Anna Eshoo (D-Calif.) called for a solution to intelligence-related privacy issues and highlighted the need for a comprehensive federal privacy law. The EU’s highest court struck down a transatlantic data agreement—which let U.S. businesses, especially startups, process and store data from EU citizens in the U.S.—last year, citing concerns about Internet surveillance by the U.S. intelligence community. The issue has stymied efforts to restore transatlantic data flows and must be reconciled to ensure that American startups can compete abroad.
New report on integrating public voices in the patent system. This week the Initiative for Medicines, Access, and Knowledge (I-MAK) released a policy blueprint on the importance of public engagement in the patent system. The report, which details things policymakers could do to make the patent system more participatory and inclusive, offers suggestions that would make it easier and less expensive for startups to engage in the policy process. Recommendations include open government listening sessions before making new patent rules and protecting and expanding the ability to challenge low-quality patents, which often stand in the way of innovation.
U.S. and Japan announce new trade partnership. The U.S. and Japan have announced a new partnership to tackle an array of issues, including digital trade, and comes as the Biden Administration formulates a framework for trade in the Indo-Pacific region. The new trade forum also follows a 2019 trade agreement that included strong digital trade provisions that are beneficial for startups, such as prohibitions on levies for digital transactions and prohibitions on data localization measures.
Join us in urging the Biden administration to protect DACA. The recent ruling in the Fifth Circuit which found DACA unlawful has created uncertainty for Dreamers across the U.S., many of whom are entrepreneurs and innovators who bolster our economy. Members of the startup ecosystem can join a letter we’re organizing, urging the administration to protect DACA recipients and provide a permanent pathway to citizenship for all Dreamers. Sign on before November 22 here.
Startup Roundup:
#StartupsEverywhere: Boulder, Colorado. SparkFun designs and manufactures electronic development tools used to build new technological innovations and enable research. We sat down with Nathan Seidle, CEO and Co-Founder, to learn why he launched the company, the challenges for a small business of navigating the U.S. intellectual property landscape, and how startups looking to support educational communities can face significant structural barriers.
