The Big Story: Artificial intelligence, innovation funding, spectrum left off of Congress’ 2024 to-do list
Congress is whittling down its to-do list before the end of the year, and several proposals that would help the startup ecosystem seem poised to get left behind. Lawmakers often use year-end must-pass legislation—including the National Defense Authorization Act and government funding legislation—as vehicles for unrelated policy priorities. This year, advocates and legislators have pushed to include measures that could significantly affect the startup ecosystem, particularly around artificial intelligence and telecommunications.
Several AI bills have passed through committee and are awaiting broader consideration. Among these is the bipartisan Creating Resources for Every American To Experiment with Artificial Intelligence Act of 2023 (CREATE AI), which was on the list to potentially be attached to the NDAA. This bill would fully authorize the National AI Research Resource (NAIRR), expanding access to compute resources, data, and educational tools for startups, researchers, and academic institutions. A pilot of the NAIRR is currently underway thanks to the Biden AI executive order, but its future could be at risk as President-elect Donald Trump has indicated plans to target the order. Codifying the NAIRR through the CREATE AI Act would provide certainty for the program. If Congress fails to act on this and other widely-supported AI bills, it is increasingly likely that the inaction could prompt states to justify stepping in with their own legislation.
Another bill that had been on the table for end of year discussions was the Spectrum and National Security Act, which would reauthorize the Federal Communication Commission’s auction authority, providing auction revenue to fund initiatives such as semiconductor manufacturing incentives and key research programs at the National Science Foundation and National Institute of Standards and Technology. The bill would also allocate auction funding to the Regional Technology and Innovation Hubs program, a vital initiative for fostering startup ecosystems, and fund the Affordable Connectivity Program, a key broadband subsidy program that expired earlier this year.
With a slimmed down priority list and a condensed end-of-year timeline, it’s unlikely that significant progress will be made on these proposals. These bills have broad support and would help boost the startup ecosystem, but the new Congress will have to work to ensure they don’t get lost in an already crowded agenda for the new year.
Policy Roundup:
Opportunity Zones are expiring and startups need Congress to act. The Opportunity Zone (OZ) program, set to expire in 2026, has been a critical driver of investment for startups in undercapitalized communities. In a new blog post this week, Andrew Prystai, Co-Founder of Event Vesta Inc., shares how his startup has thrived as an opportunity zone business, thriving amidst the challenges associated with the pandemic. He calls on Congress to reauthorize and improve the program, prioritizing input from the startup ecosystem to ensure its benefits reach more small businesses and startups.
Court pauses beneficial ownership reporting requirements. A federal court in Texas issued a preliminary injunction on Wednesday, temporarily halting enforcement of the Beneficial Ownership Information (BOI) reporting requirements of the Corporate Transparency Act. The ruling delays a nationwide regulation requiring companies, including startups, to file detailed BOI reports—a mandate that many small businesses and startups find burdensome and costly—beginning at the end of this year. While the ruling provides temporary relief, startups should remain prepared to comply as the situation develops.
Hearing explores finance opportunities for small businesses and startups. Retiring House Financial Services Committee Chairman Patrick McHenry (R-N.C.), led his final hearing on Wednesday diving into how technology and innovation are shaping the future of finance. Ahead of the hearing, Chairman McHenry and Ranking Member Maxine Waters (D-Calif.) introduced two bipartisan measures focused on the impact of AI in financial services. The hearing also touched on ways to unlock private capital, including by expanding access to more investors, to facilitate the growth of the startup ecosystem.
AI Essentials: The role of data and where it comes from. This week, we continued our AI Essentials series with a new blog post discussing the role of data in AI development, where companies get their training data, and what this means for competition and innovation in AI. There are different types of data that are utilized for different functions in AI development, and varying sources of that data. Policymakers should seek a balanced and competitive landscape that ensures small startups with few resources can access the data they need to continue to innovate, grow, and compete in the AI space.
Virginia digital replica bill progresses. The Virginia AI Subcommittee advanced a draft of the Digital Replication Right Act. This bill, modeled after the federal Nurture Originals, Foster Art, and Keep Entertainment Safe (NO FAKES) Act, would create significant challenges for startups by imposing liability on platforms and AI developers for unauthorized digital replicas that use individuals’ voice and visual likeness. Engine previously urged the subcommittee against moving the bill forward. Both generative AI and content-hosting startups would face innovation and litigation challenges by holding platforms and developers liable for unauthorized digital replicas.
Startup Roundup:
#StartupsEverywhere: Boulder, Colorado. With a deep understanding of the statistical realities shaping our world, Mike Conover recognized the limitations of human cognition in active asset management. As the co-founder and CEO of Brightwave—an AI research assistant for finance professionals designed to enhance investment decision-making—he is committed to harnessing the power of language models to process vast quantities of information and identify mispriced assets. We sat down with Mike to discuss AI for startups, state policy, and more.
