Despite continuing political deadlock in Washington, there were some interesting efforts made on behalf of entrepreneurs by policymakers this past year. One of my favorites was President Barack Obama announcing partnerships last summer to breathe more “entrepreneurship” into manufacturing through maker communities across the country. This included a commitment from the Department of Education to create more Makerspaces, to encourage more educators in teaching Making, and to launch various partnerships between federal agencies (USPTO, SBA, HHS, NSF, DOE) as well as more than 150 colleges and universities, 130 libraries, and major corporations to boost resources for maker entrepreneurs.
Given campaign season for the next occupant of the White House is already warming up, can we expect to get anything done in 2015? Here are three areas I will be watching.
New layers to the crowdfunding regulations battle
One important policy announcement in 2015 that didn’t happen last year was the much awaited U.S. Security Exchanges Commission crowdfunding rules called for in the 2012 Jumpstart Our Business Startups (JOBS) Act. I think we can safely expect a solution, or several solutions, in 2015 to the crowdfunding regulatory gridlock although it will not come easy as frustration will likely continue to dominate deliberations, particularly with regards to the avenue of capital formation for pre-IPO companies.
In December 2013, the SEC quietly proposed rules designed to expand the use of the “Regulation A” exemption for private securities. This means, businesses would be allowed to raise up to $50 million over a year without having to register the offerings with the agency. This exclusion provoked reaction from state securities regulators, which means we will likely see more intense debate to settle this turf war before the Regulation A-plus rules are to be adopted.
Of course, with a new Republican majority in the Senate and a strengthened majority in the House of Representatives, it is possible that despite the JOBS Act having enjoyed bipartisan support, the SEC may sit on the rules as Republicans push forward JOBS Act “2.0” legislation that would present the agency with a new set of rulemaking tasks. In the end however, I think we can expect action on this important unresolved matter by the end of this year.
Skills-based immigration fixes
To boost output in 2015, even the IMF has explicitly urged the U.S. to undertake a "skills-based approach" to immigration reform. However, this has been hard for Washington, grid-locked over immigration policy, to achieve to date.
Although the immigration reforms by executive order announced by President Obama on November 20, 2014 primarily sought to tackle the most politically-sensitive part of immigration reform – illegal immigration - entrepreneurs were a part of the President’s executive fixes. We will therefore see in 2015 a Department of Homeland Security (DHS) issuing, after gathering public feedback, detailed guidance and rules to establish eligibility criteria for entrepreneurs seeking one of the two following immigration pathways, as explained by White House Office of Science and Technology Policy:
“1. Lawful permanent residency (also known as a "green card"): As defined by Congress, the ‘EB-2’ visa category is available to applicants who can demonstrate either an advanced degree or exceptional ability. Typically, a U.S. company must sponsor the application, but this requirement can be waived if it would be in our national interest. DHS will provide a detailed standard for this ‘national interest waiver,’ so that entrepreneurs have greater clarity on when they might self-petition for a green card on this basis.”
“2. Temporary status: Under existing authority granted by Congress, DHS may allow an individual to work in the United States when doing so would yield a ‘significant public benefit.’ DHS will design a program to grant this temporary ‘parole status’ to inventors, researchers, and entrepreneurs who may not qualify for the green card pathway described above, but who promise significant public benefit. This program is also likely to include criteria related to creating jobs, attracting investment, and generating revenue within the United States. As a discretionary program with case-by-case determinations, it will not be subject to statutory caps. Eligible individuals will be subject to income and resource threshold requirements and therefore will not be eligible for certain Federal public benefits.”
The President’s announcements last November also contained a measure to seek to retain scientists and engineers who graduate from U.S. universities, by extending on-the-job training, as well as the period of time to fully realize their course of study.
Since only legislative reform can address the full spectrum of immigration bottlenecks, we can expect the Senate to pick up its bill which included options for entrepreneurs and passed with substantial bipartisan support more than 500 days ago. Again, the new Republican majority in the Senate and an expanded Republican majority in the U.S. House of Representatives, plus resentment over the President’s executive actions could mean political battles will likely continue to delay comprehensive legislative action making any of the actions sought by Executive Order all the more relevant at least for the short-term.
One glimmer of hope for getting the parties to reach agreement on immigration reform ironically comes from overseas. There is nothing that motivates decision makers to act more than international competition. In 2015 we can expect early impact reports of Canada’s startup visa program, implemented in 2014. Plenty of keen eyes from around the world are looking closely at what works in attracting the world’s brightest to their startup communities – especially those with doctorates from Ivy League universities in the United States who are told they cannot stay and start their businesses here.
Evidence-based creative economy policies
The creative industries are grabbing the attention of policymakers as powerful engines for job creation and competitiveness. For example, economists and city leaders across the United States increasingly discuss the roles artists play in local economies.
Policymakers overseas may again offer some insights and ideas for us here in the United States. Europe has been at the forefront of a myth-busting movement about the ecosystems that support creative industry entrepreneurs and we can expect in 2015 to see some concrete policies being implemented there. In fact, the European Commission’s Directorate General for Enterprise and Industry started in January 2012 a policy initiative called the European Creative Industries Alliance (ECIA), which brought together policymakers and practitioners from 28 organizations and 12 countries to develop and test better policies and tools for creative industries. Marking the culmination of this initiative at the end of 2014, its participants agreed on an integrated policy initiative that combines policy learning with eight concrete actions, such as innovation vouchers and better access to finance.
Other action is likely to come from South Korea, where President Park Geun-hye, has lent strong support in favor a new growth strategy aimed at fostering a “creative economy”, and now seeks to prove that venture businesses will play a key role in it. At the November 2014 Creative Korea Summit, she sought to give clear examples to “dispel the myth that creative economy policies are conceptually vague”.
The expected new wave of creative policies will be increasingly guided by a new set of creative industries economic estimates. The latest methodology was most recently refined by Nesta in the UK, which subsequently published a Creative Economy Manifesto. Those latest estimates are a win for the cause of evidence-based policymaking. For example, they provide benchmarks showing that the UK’s creative economy employs around 2.5 million and is growing much faster than the UK workforce as a whole. In the latest edition of the estimates, the creative industries accounted for 5.2 percent of Gross Value Added, and are growing faster than all other sectors, except for real estate activities.
As policymaking in this field becomes increasingly globalized and decision makers are less reluctant to engage in policy experimentation, we can expect to see more testing of regulatory changes borrowed from other jurisdictions and nations. Mayors, governors and ministers are all watching the results of their neighbors’ experiments – anxious to make the path of their enthusiastic entrepreneurs as easy as possible. We can expect to see more of these ideas come to light when the Startup Nations Summit reconvenes in Mexico in November 2015.
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