We have arrived at a moment of truth. In the wake of the election, the bitterly divided halves of our country need to come together and find a way to reconcile differences for the good of all. But for entrepreneurs, investors and other members of the innovation economy, there is an additional reconciliation urgently needed. Two very different and inconsistent threads emerged from President-Elect Trump's campaign - one pro-business and one populist. Because of the gaping dichotomy between those two threads, the value and importance of the innovation economy is being overlooked and therefore greatly underestimated. For the good of entrepreneurship, jobs and the innovation economy, it is vital that we reconcile them, especially as policies and legislative priorities come into focus.
Trump the Business Man
President-Elect Trump ran partly on his credentials as a very successful no-nonsense business person. He said he is someone who understands the tax code better than anyone; a proponent of small government who will slash regulation and unlock the potential of American businesses; and, a tough negotiator who will restore America's place in the world.
Social implications of this election aside, these stances sound beneficial - for the business community at large, and for the innovation sector. For example, fewer regulations might allow for easier formation of capital to invest in new startups and innovation. Better international trade deals might allow easier access to global markets for young American companies. Lower corporate tax burdens might allow American companies to compete more easily.
Trump the Populist
If only it were that simple. Another aspect of President-Elect Trump's campaign included very strong populist economic rhetoric. From the start Trump criticized many of America's best known companies, stating companies like Ford, Nabisco, General Motors and Carrier should be punished for manufacturing off-shore. He asserted that Apple should be boycotted for refusing to help law enforcement break into a customer's phone. Trump claimed that Amazon is "getting away with murder" for not paying enough in taxes. He claimed large mergers such as between Time Warner and AT&T "must be stopped because they destroy democracy." He implied that Silicon Valley and the start-up community are members of a "liberal elite." He spoke against immigration policies allowing H1B visa holders to fill the shortage of skilled workers for tech companies; asserted that America is not as innovative or as competitive as it should be; and that we are being victimized by cyber warfare from other nations.
Sadly, for entrepreneurs and members of the innovation economy, this populist view completely ignores the vital contribution the tech sector makes toward achieving both the business and populist priorities.
The fact is, start-ups create all net new jobs in the United States. They have increasingly become out-sourced R&D centers as large corporations continue to spend less on basic research, choosing in many cases to acquire after it has been developed elsewhere. Additionally, innovation and invention are vital to keeping our country competitive in a global economy. Entrepreneurs are the engine of innovation in this country. The tech start-ups they run are responsible for the strength and knowledge of our cyber-security sector. This know-how will be the key to building our nation's cyber defenses. Through their development of social media platforms, American start-ups have reinvented the global media landscape, generated new ways of connecting and communicating and revolutionized how society and politics work in this country.
Tech is Not the Enemy - It is the Solution
Entrepreneurs, start-ups, and the investors who fund them are not the enemy. They are the engine that creates America's jobs and drives its innovation and national competitiveness. As the world turns increasingly digital and global, America's innovation economy is the key to "making America great again." It should not be beaten down, dismissed, criticized, undermined or feared. It should be embraced as the key to our future security and prosperity. We can either lead or be left behind, and our innovation economy will be the foundation on which our leadership is built.
Make Your Voice Heard
In my work as the Chair of the Angel Capital Association (ACA), I have the privilege of collaborating with a very talented public policy team, that is doing everything it can to make legislators aware of the importance of the innovation economy and the critical role of entrepreneurs and start-ups.
It is equally important that legislators understand the economic importance of the investors who fund startups. Estimates show angel investors fund approximately 75,000 start-ups in the US each year. They use capital, usually from their own savings, and risk it in support of new ventures and innovation. Comparatively, each year angel investors collectively put roughly the same amount of capital to work as the entire venture capital industry puts into early stage deals. This astonishing amount of angel capital directly supports approximately 15 times as many more companies than the number of companies supported by VCs. Additionally, angels directly nurture the growth of startups by freely giving their time, talent, advice and mentorship to entrepreneurs. This economic engine is how American makes start-ups flourish, creates new jobs, and gives birth to new innovations.
Awareness and appreciation of this innovation and start-up economy has steadily been building across Capitol Hill, but, given the dichotomy of President-Elect Trump's pro-business and pro-populist positions, steady progress is no longer enough. The innovation economy must make itself heard and appreciated as an antidote to the rising tide of anti-business populism now taking hold. The time to speak is now.
At ACA, we are working on a letter to Trump's transition team to connect the dots on the importance of the innovation economy, how it is fueled, and request care when considering policies that could damage this engine of job creation and competitiveness.
In the aftermath of this election with so many policy questions in flux, ACA is re-invigorating its fight for entrepreneurs, startups, innovations and the investors who fuel their growth. But we cannot do it alone. The time for members of the innovation economy to speak is now. How will you make your voice heard?