Third Time's A Charm? Startup Act 3.0 Introduced… This Time With An Infographic

Politics

from the maybe-maybe dept

Last year, we wrote about the importance of the Startup Act 2.0 in helping to create more jobs via startups (the creators of tons of new jobs in our economy), and now there’s a new version, the Startup Act 3.0. The Senate bill is truly “bipartisan” — sponsored by Senators Moran, Warner, Coons and Blunt. The key focus, as in the past, has been on solving the issue in which we are driving some of the best skilled tech workers to other countries to build companies, rather than bringing them to (or keeping them in) the US. Our visa policy for skilled workers has been flawed for way too long, and this takes us a step in a saner direction. With the President and both parties of Congress seemingly (finally) open to the idea of comprehensive immigration reform, hopefully something as basic as better immigration policies for skilled workers is no longer even remotely controversial. In fact, for the most part, it seems like a very large number of folks in Congress support such reforms. The issue that has tied it up in the past has been whether or not this needs to be its own thing, or if it needs to be tied to more comprehensive immigration reform. And, really, I would imagine that’s still the same stumbling block this time around, but with more appetite for that, hopefully the Startup Act 3.0 can be a part of all of that.

In terms of specifics, the bill would boost new visas for foreign-born entrepreneurs (these are people who create jobs, not take them from others) as well as for foreign graduates of US universities who have advanced degrees in science, technology, engineering and math. We train them, we might as well get the direct benefit of their work after they graduate. This is different than the issue of H-1B visas for skilled immigrants — which is also an important program, but one that has been abused too often by companies. In this case, the visas are for the individual, not the company, and it focuses strongly on immigrants who create companies and jobs. As with previous startup visa efforts, I do have one minor quibble, which is that the entrepreneur visas will require you to have raised at least $100,000 in outside investment (or for an investment business, have invested that much). That’s lower than we’ve seen in past proposals, but still seems to predicate the idea of doing a startup with raising outside capital. In this day and age, that’s less and less necessary for many types of companies. Similarly, they need to have hired 2 outside full time (non-family) employees, and by the end of four years, increased employment to at least five non-family employees. The bill is useful for many foreign born entrepreneurs, though I still would have liked to have seen a test for entrepreneurs who don’t want to raise money, but are building successful bootstrapped businesses.

The bill also has a few other provisions designed to help startups, including making permanent a 100% exemption on capital gains taxes for investments held for at least five years in “qualified small businesses” (i.e., a way to encourage long-term investing in small businesses) and creating an R&D tax credit (up to $250k) for startups less than five years old and with less than $5 million in annual revenue. Basically, small businesses get a tax credit for investing in research and development.

I’m also a bit concerned about section 8, which focuses on “accelerating commercialization of taxpayer-funded research.” This one basically provides grants and funding to universities to do more commercialization. In theory, this sounds good, but I worry about it in practice. Most universities have, unfortunately, decided that “commercialization” means getting lots of patents and then selling licenses. In other words, the push to “commercialize” university research hasn’t actually led to much commercialization — but rather an awful lot of universities turning into pseudo-patent trolls. The plan leaves open some of the details to the National Advisory Council on Innovation and Entrepreneurship. Hopefully, they recognize that merely pumping up patenting and “tech transfer offices” is not really about commercialization. In fact, a better way to encourage commercialization might be to make federally funded (i.e., taxpayer-funded) university research public domain, rather than patented. That would actually encourage more usage in industry.

Either way, there’s a lot of good stuff in the bill, and this time… they’ve even put out a snazzy infographic to go with the bill. How can it not pass after that?

Filed Under: jerry moran, startup act