What’s Next for Entrepreneurship Policy?
In a year when America will pick a new president and decide control of the House and Senate, policymakers are unlikely to fight for bold policy changes in areas such as immigration. The Wall Street Journal sees lawmakers ready to focus on traditional policy areas, with national security at the forefront, which pits the two leading parties against each other.
However, despite low expectations for Congress, 2016 promises to push the frontier of entrepreneurship policy forward through regulatory bodies. Here are three predictions for regulatory experimentation likely to become highlights of the year – and that might even slip into the speeches we will hear during the presidential election.
Regulatory battles ahead for new sharing economy startups
In 2015, the sharing economy entrepreneurs waged serious legal and political wars, such as the regulators’ scrutiny of Airbnb and the situation Uber faced in California. Startups will continue to see opportunities to disrupt more and more traditional industries. The New Year promises to bring greater policymaker experimentation in this arena, but new regulatory models for these type of businesses will unlikely reach an equilibrium any time soon, particularly as new rock star sharing economy businesses emerge in areas ridden by inefficiencies and high costs, such as health care. Policy experimentation will have just started in these sectors, and tough battles lay ahead until a new regulatory equilibrium is reached for the worker protection and fiscal aspects of sharing economy innovations.
Equity crowdfunding will be slow to gain traction
Title III crowdfunding regulations, also known as Reg CF, were a highlight of 2015, marking the onset of a much awaited new area of startup financing that opened startup equity to all investors. Before, startups could only raise capital from accredited investors. Yet the first Title III offerings are expected to emerge only in mid-2016, at the earliest. This is in part because regulatory shifts take time to take effect, and also because not all existing fundraising platforms will jump at the opportunity to offer Reg CF services just yet. Many platforms seem to still be unsure whether it will be economically viable to do so. The new rules require intermediary funding portals to provide educational materials about the offerings, take steps to reduce fraud, and make company disclosures public at least 21 days before the sale of securities. In addition, the Securities Exchange Commission (SEC) will require all intermediaries in crowdfunding transactions to register with a national securities association, and the process for approval of membership in such association is still unclear. We look forward to reporting on such developments.
U.S. President Barack Obama will leave a high mark for startup policy
While reviews of the impact of President Obama’s domestic policies on business overall remain mixed, his administration was the first to recognize that Washington must have a separate set of policies for helping new firms start and scale. Through initiatives like Startup America and actions like the JOBS Act, the notion of a disruptive “startup” entered the lexicon of Washington policymaking.
The outgoing President will be leave the White House emphasizing this legacy through events such as the Global Entrepreneurship Summit in Silicon Valley this summer, which returns to the United States after several summits abroad. The administration will also convene an entrepreneurship ministerial at the Global Entrepreneurship Congress (GEC) this March. There, leaders such as Maria Contreras-Sweet, administrator of the U.S. Small Business Administration (SBA), will be sure to document the steps the Obama administration has taken to elevate the cause of entrepreneurial growth and job creation, including having repositioned the SBA to Cabinet level.
Looking Ahead at 2016
You can mark your calendars for an exciting schedule of gatherings for policymakers in entrepreneurship. Beyond the GEC and Ministerial held March 14-17 in Medellín, Colombia, and the President’s Summit in California, the Kauffman Foundation will host the State of Entrepreneurship Address on February 17, 2016, in Washington. Entrepreneurship educators and researchers will also convene from around the world in Seoul, South Korea, in August. Top policy advisers will wrap up the year in Ireland, right after the U.S. elections, to look ahead to 2017 at the Startup Nations Summit.
Of course, the interesting U.S. policy developments at the national and local level supporting entrepreneurs will be ones we cannot predict. Naturally, job creation and economic prosperity sit at the top of every presidential candidate’s priority list. We should challenge those running for office to provide more fresh ideas about how they would support America’s most effective new job creators – our entrepreneurs. What advice would you give them?
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