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Kauffman Foundation unveils Startup Act proposal to boost growth of new businesses and add jobs to the US economy
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The Ewing Marion Kauffman Foundation today presented a proposal to jump-start the ailing U.S. economy and increase job creation by accelerating the growth of startups and young businesses. The "Startup Act" proposal was unveiled at the National Press Club in Washington by Kauffman President and CEO Carl Schramm and Vice President of Research and Policy Robert Litan, followed by videotaped remarks from House Majority Leader Eric Cantor (R-VA) and Senator Jon Tester (D-MT).
"With a recent Kauffman study indicating that new companies are starting smaller and staying smaller, and with our unemployment crisis, it is more important than ever for policymakers to create an environment that makes it easier for more startups to survive, grow and add jobs," said Schramm. "We hope that by outlining this idea for comprehensive startup legislation, we can stimulate a long-overdue, bipartisan conversation in this country about how to maintain and reinvigorate the entrepreneurial energy that has made our economy the most innovative in the world."
"I want to thank the Kauffman Foundation for its leadership around the Startup Act," said House Majority Leader Cantor. "It is imperative we take every possible step to spur job creation, and get our economy back on track. Now more than ever, our nation needs entrepreneurs to have the confidence to create and start their own businesses, and grow our economy."
"Our goal is to make sure that startups have access to financing to scale and grow their firms to make sure capital markets are in reach for startups," said Senator Tester, who tomorrow is chairing a hearing about access to capital for high-growth startups. "I want to thank the Kauffman Foundation for bringing so much energy and momentum to this discussion and look forward to continuing our work to get startups the resources they need to maximize the potential for innovation and job creation."
The Startup Act will focus the attention of citizens and policymakers on the central role that high-growth startups must play to assure continued U.S. economic strength. The benefits of startups are well-established: Virtually all of the growth in U.S. jobs has been driven by the formation of firms less than five years old, and these new firms have been disproportionately responsible for commercializing the cutting-edge innovations that characterize modern life.
The unveiling of the Startup Act follows Kauffman data released last week that found that while more firms than ever have been created each year since the last recession began, the numbers of new firms with employees continues to drop—and this is a trend that pre-dates the recession.
"A strong, sustained recovery and a higher rate of growth calls for a reversal of this trend," said Litan. "Achieving sustained economic growth will require more bold entrepreneurs who can launch and build new 21st century companies, a continuing stream of new ideas capable of being commercialized, fewer roadblocks to launch and grow these new enterprises and low-cost capital available to finance them. Simply put, the U.S. economy needs more high-growth startups."
Specific changes in government policy that the Startup Act proposes include:
• Welcoming immigrants capable of building high-growth companies to the United States by providing "Entrepreneurs’ visas" and green cards for those with degrees in science, technology, engineering and math.
• Providing new firms with better access to early-stage financing, creating capital gains tax exemptions for long-held startup investments, providing tax incentives for startup operating capital, facilitating access to public markets, and allowing shareholders of companies with market cap below $1 billion to opt-in under the Sarbanes-Oxley Act.
• Accelerating the formation and commercialization of new ideas by creating differential patent fees to reduce the patent backlog and providing licensing freedom for academic innovators.
• Removing barriers to the formation and growth of businesses through the introduction of automatic 10-year sunsets for all major rules, establishing common-sense and cost-effective standards for regulations, and making assessments of state and local startup and business policies.
Job creation is a nonpartisan issue, and the Startup Act aims to educate policymakers on all sides of the political spectrum about the need for comprehensive legislation aimed at helping startups.
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