The Big Story: How successful exits help fuel the startup ecosystem
President-elect Donald Trump announced his selections for key antitrust posts over the past week, setting the stage for the incoming administration’s competition agenda. These appointments offer an opportunity to reset competition policy, including by recognizing the positive role acquisitions play in the startup ecosystem, fueling the cycles of capital, talent, and knowledge that drive innovation. As examined in a new collection of resources released this week, acquisitions aren’t just an exit strategy; it's vital to recognize the positive impacts of acquisitions and avoid creating barriers that could stifle startup success.
Acquisitions are the most likely form of successful exit for startups—especially outside of major tech hubs like Silicon Valley—and they drive reinvestment and growth across the ecosystem by returning capital to founders, employees, and investors. Acquisitions “fund what comes next,” Jean Anne Booth, founder of UnaliWear, told us. Acquisitions also recycle talent and knowledge, equipping founders and employees with the experience needed to launch future ventures. Founders who have been through a full cycle—from launch to exit—carry lessons that improve their future endeavors, strengthening the ecosystem with mentorship and resources. Elizabeth Yin, a venture capitalist and former founder, called acquisitions “an integral part of the knowledge transfer that makes a successful startup ecosystem.”
For underrepresented founders, acquisitions offer opportunities to create generational wealth. “With the capital from selling their company, a Black founder can become an investor that then invests in more Black founders,” explains Preston James II, CEO of DivInc. These cycles of reinvestment are crucial for fostering an equitable and accessible startup ecosystem because underrepresented founders often face significant disadvantages in raising capital.
As the new administration outlines its priorities, there’s a chance to reshape policies around acquisitions in a way that supports U.S. startups and ensures America remains a leader in innovation. By shifting to balanced policies that support startups looking to be acquired, policymakers can empower them to keep growing and innovating.
Policy Roundup:
Tech Hubs secure boost in end of year defense bill. This week the House passed the 2024 National Defense Authorization Act, which includes up to $500 million in additional funding to preserve and expand the Regional Technology and Innovation Hubs program. Established under the CHIPS and Science Act, the Tech Hubs program aims to develop regional startup ecosystems across industries like quantum computing, clean energy, biotechnology, and semiconductor manufacturing. While the program was originally authorized for $12.9 billion, less than ten percent of its funding has been appropriated, leaving hubs underfunded. Engine has long underscored the importance of the Tech Hubs program and its promise of the development of startup ecosystems across the country.
Trump’s immigration plans likely to shape startup talent. President-elect Donald Trump has doubled down on immigration policies that could have far-reaching, negative implications for the U.S. economy, including the startup ecosystem, such as ending birthright citizenship and enforcing mass deportations. At the same time, he has signaled a willingness to work with Democrats on solutions for Dreamers, though a specific plan remains unclear, and has indicated support for providing green cards for foreign graduates of U.S. institutions. Engine has long championed immigration reforms that welcome and retain talented founders and critical STEM employees—including Deferred Action for Childhood Arrivals (DACA) program recipients—who contribute incalculable benefits to the startup ecosystem and help drive innovation. Congress must prioritize immigration reforms, like graduation green cards and implementing a startup visa, to address talent shortages and ensure America maintains its competitive edge in innovation.
Incoming administration should pursue digital trade agenda that supports U.S. startups. Former U.S. Trade Representative Robert Zoellick penned an op-ed this week urging the incoming Trump administration to pursue a proactive digital trade agenda rather than just tariffs. Smart digital trade policy that pushes back on barriers like digital services taxes and data localization requirements is essential for startups to drive innovation and compete in global markets. The Biden administration stepped back from global negotiations to enshrine favorable, long-supported digital trade rules and decided not to address many digital trade barriers impacting startups, reducing their international competitiveness. The incoming administration has a chance to reassert U.S. leadership in digital trade by promoting policies that support U.S. startups’ global success.
FCC votes to open up entire 6 GHz band for unlicensed use. The Federal Communications Commission unanimously voted to open 1,200 MHz of the 6 GHz band of spectrum for unlicensed use, making the airwaves available for connected devices developed and used by startups. The FCC’s decision expands startups’ access to airwaves without having to pay for licenses, which come at a high cost and are typically only purchased by large companies. Unlicensed spectrum is critical to the U.S. startup ecosystem because it fuels everything from Wi-Fi networks to connected devices like AR/VR headsets, wearables, and on-the-ground automation technology.
Startup Roundup:
#StartupsEverywhere: Charlotte, North Carolina. From her lived experience, Gloria Folaron identified a significant gap in support for neurodivergent individuals in the workplace, particularly in project management. She co-founded Leantime, where she is developing accessible work management solutions that promote motivation, connection, and engagement for all employees. We sat down with her to discuss open-source models, navigating the grant system, and more.
