Last Friday, the National Venture Capital Association sent President Elect Donald Trump a letter. For the most part, the NVCA's collective voice aggressively agrees with Mr. Trump that most of the country is left behind. It offers specific recommendations on how startups can usher in a new era of American prosperity.

Leaving American entrepreneurs behind?

"It is apparent that economic success has passed by large pockets of the country," the letter begins. More must be done to create economic opportunity for all Americans." The strongly worded wake-up call is signed by NVCA president Bobby Franklin.

The association sounds an alarm that echoes many of Trump's positions about America being left behind. "Whereas 20 years ago U.S. entrepreneurs received approximately 90 percent of global venture capital investment, that share has fallen over time to only 54 percent in 2015. Further, in three of the past four years, at least half of the top-10 largest venture investments in the world have occurred outside the U.S.," the letter reads.

Small-town heartbeat louder than Silicon Valley for startups?

"An underappreciated truth is that startup activity has proliferated in the middle of the country in recent years. Specifically, about 12,900 venture-backed companies in the other 47 states have raised $83 billion in funding since 2012... As a result, robust and unique startup ecosystems are now blossoming in states like Missouri, Ohio, and Pennsylvania," the letter continues.

The NVCA called out its critical alignment with Trump on reinvigorating the heartland of America as the new venture capital frontier. The letter laid down rounds of factual ammo:

  • Since 2012, nearly half of all startups receiving venture capital backing have been based outside of California, Massachusetts, and New York. The total? $290 billion spread over 27,000 U.S. venture-backed startups since 2012.
  • VCs have invested about $170 million into 15 startups each day for the past 4 years.
  • Venture capital has backed nearly half of all companies that have gone public since 1974.

Making America great again, startup style.

NVCA made strong recommendations to the incoming administration regarding key areas of change that can spur jobs and help America recover its global leadership position in new industries.

1. Support tax policy that encourages new company formation.

2. Ease IPOs to free up some 22 million jobs. "Since 2000, the U.S. has been averaging a third of the number of IPOs per year compared to what we experienced in the 1990s and half of the number of IPOs per year compared to what occurred in the 1980s..."

The result is that over the past 20 years, the U.S. has lost half of the total companies listed on its exchanges... some estimate this lack of IPOs has cost the U.S. anywhere between 2 million and 22 million jobs," the letter reads. Most venture funding goes to build teams for startups, so the cause and effect relationship between venture funding and tech job growth is significant.

3. Create a startup visa. The National Foundation for American Policy found immigrants have started more than half of America's startup companies valued at $1 billion or more. To help attract top entrepreneurs to the U.S., NVCA urges a startup visa category for legal immigration that would allow those who have already founded companies that employ Americans to get a fast track to citizenship (and to taxpaying, by the way).

4. Turn up Research and Development. "Several waves of American innovation have been based, including the computer revolution, the internet, and biotechnology," on federal-supported R&D, writes Franklin. Unfortunately, this innovation seed-capital source has all but dried up, and the NVCA calls for the Trump administration to re-bolster R&D budgets.

5. Get net neutrality and high speed for all. The letter cites a number of reasons to spread ubiquitous high-speed internet and related policies to spur job growth from coast to coast. In the heartland, lack of high-speed internet is holding back entrepreneurship and trade.

Greater entrepreneurship = greater America.

"We haven't received a response and don't anticipate a formal, written response, but rather hope it begins a dialog with the new administration on the issues in the letter," NVCA communications lead Ben Veghte wrote me in an email.

"There are a whole host of issues important to the entrepreneurial ecosystem that the Trump administration will need to confront, but by all accounts tax reform will be one of the more dominant issues," Franklin said when I asked which recommendations he found most critical. "For example, we need to reform qualified small-business stock rules to more effectively drive investment in early stage companies, make the R&D credit work for innovative startups, and stop penalizing startups for investing in innovation by providing them a safe harbor from Section 382 Net Operating Loss rules." You can see the whole letter on the NVCA web site.

(Full disclosure: Valor Ventures, my Atlanta venture capital firm, is a recent member of NVCA.)

Published on: Dec 5, 2016
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.