COVID-19 has devastated broad swaths of the American economy, killing hundreds of thousands of our citizens and sickening millions. As our country works to recover from this health and economic catastrophe, two things are clear:
First, millions of jobs must be created for the economy to fully recover. Too many Americans suffer from financial uncertainty, and we cannot rely on a handful of large companies in a few locales to bring relief by hiring back workers. We must unleash entrepreneurial activity that spreads the benefits of innovation more broadly, including to underrepresented groups and pockets of the country that historically have not seen robust new business creation.
Second, new technology is needed to fight COVID-19 and other challenges facing our country. The speed with which the private and public sectors have collaborated to develop COVID-19 treatments and vaccines has been inspiring, and it is a blueprint for the future as we tackle our nation’s challenges.
The good news is we have a proven playbook to draw upon: entrepreneurship.
New-company formation has set the United States apart as the most dynamic economy in the world. Take Moderna: In just 10 years, the company went from being incubated in a venture capital firm to deploying a lifesaving COVID-19 vaccine. American entrepreneurs have benefitted from a policy landscape that has enabled bold bets on new ideas.
Here is how policymakers can double down as a partner to entrepreneurs.
Encourage patient, long-term investment
We need better medicine, clean technology, cybersecurity tools and greater computing power. But such pioneering companies take many years to establish and scale. To demonstrate that patient, long-term investment will be rewarded, we must maintain a globally competitive capital gains rate that encourages talented individuals to take a risk and create new jobs out of thin air. Congress should also support the growth company model by improving tax policy through legislation like the bipartisan IGNITE American Innovation Act and the American Innovation Act.
More opportunities across the U.S.
An underappreciated trend in recent years has been increases in venture investment and startup activity off the coasts. Silicon Valley is well known for startups, but states with the highest VC growth rates in recent years include Ohio, Illinois, Georgia and Michigan. These regions were helped when federal regulators modified the Volcker Rule to once again allow banks to invest in venture capital funds. This change helps get venture funds off the ground in emerging regions where access to institutional capital is limited. Congress should build on this momentum and pass the bipartisan Endless Frontier Act, a bold commitment to encouraging regional economic growth through innovation. This bill would leverage existing strengths of regions across the country to increase economic activity in core technology areas of the future such as quantum computing, advanced manufacturing, energy and new materials.
Recruit the world’s top entrepreneurs
The United States has benefitted tremendously from the contributions of immigrant entrepreneurs who have started iconic companies like Moderna, Tesla and Intel. But increasingly the world’s best entrepreneurs have their choice in where to start a new high-growth company. Other countries have established startup ecosystems through policy changes, have capital available and recruit foreign-born entrepreneurs through startup visas. Frustratingly, the U.S. is not well positioned to take the “free lunch” of having foreign-born entrepreneurs create new companies in our country because our immigration laws push these company builders away. We need to create a startup visa that is tailor-made for the entrepreneurial model so our country gains all the benefits of new business growth, such as employment, tax revenue and intellectual property. The Biden administration can take immediate action by formally launching the International Entrepreneur Rule, an Obama -era regulation that operates similarly to a startup visa.
Harness entrepreneurship to solve the climate crisis
Speed is of the essence in the development and deployment of technologies to combat climate change, both for environmental and economic competitiveness reasons. Policymakers should prioritize policies that would focus the tremendous innovative power of our startup ecosystem on climate technologies, building off the momentum we are seeing today to grow climate-related technology industries into significant components of the U.S. economy.
Invest in basic research and facilitate tech transfer
The United States has set itself apart historically through a strong partnership between the federal government and private sector in developing U.S. technological and scientific superiority, leading to successes like the invention of the internet, the Human Genome Project, and the creation of GPS. But our country has fallen behind in basic research investment in recent years, just as strategic competitors have taken a page out of our playbook and ramped up support. In addition to passing the Endless Frontier Act, Congress should increase our commitment to basic research investment and modernize technology commercialization programs across the government.
The challenges of COVID-19 are not insurmountable. We have overcome much before, and tenacious entrepreneurs who ask “What if?” are often the ones who change the course of our future. Let’s unleash their creativity and genius for the betterment of our collective future.
Bobby Franklin is the president and CEO of the National Venture Capital Association, the venture community’s preeminent trade association.