Early Adaptors Cameron, Obama Leave Startup Legacy
Before they each took office (Barack Obama in January 2009 and David Cameron in May 2010), the implementation of policies thoughtfully designed to meet the specific needs of new and young firms was far from the agendas of any heads of state. Obama and Cameron nevertheless adopted a new, dedicated approach to spurring new startups that was independent of their nations’ traditional package of programs and policies for small and medium-sized enterprises (SMEs). In short, they designed new policy instruments to specifically target new and young businesses.
The Obama administration, for example, has repeatedly given credit to companies less than five years old for nearly all of the net job growth seen between 1980 and 2005.
David Cameron elevated entrepreneurs as crucial to national economic recovery, as did Obama. At the 2011 launch of the StartUp Britain campaign, Cameron vowed to embark the nation into the most entrepreneurial decades in British history.
“If you've been turning over a good idea for years – now is the time to make something of it. If you're working for a big firm but you know you could do a better job on your own – now is the time to make that leap. If you've been dreaming about starting up the next great British brand – now is the time to make it happen … Make it happen – and together we can drive our economy forward,” Cameron said during the campaign ceremony.
As part of a paradigm shift that brought heads of state into startup policy, both leaders showed some commonalities in their rationale and perspective on growing the economy through entrepreneurship.
An Ecosystem Approach
The White House’s Startup America campaign was an unprecedented “all-hands-on-deck call to action" for Federal agencies, Congress, and the private sector to help increase the success of entrepreneurs across the country. Launched in 2011, during Obama’s first term, the Startup America campaign pledged to achieve the following over three years:
- Drive up to $2 billion in private investment into high-growth companies over the next five years, at no cost to taxpayers.
- Use the tax code to incentivize more private investment in the early-stage companies that need it most.
- Connect more entrepreneurs with experienced mentors.
- Get first-hand input from entrepreneurs around the country about how to reduce barriers.
Get more taxpayer-funded research innovations from the lab to the marketplace.
These core pledges have guided the programs for and investments in entrepreneurship of the Obama administration. However, the government understood they can only achieve so much alone, so it called for an independent private-sector alliance, known as the Startup America Partnership, to mobilize private-sector commitments to provide products, services, mentorship and funding to scale and grow U.S. startups. The Case Foundation and the Kauffman Foundation answered the call.
The White House has offered periodic progress reports on the fulfillment of the pledges that are worth perusing for they show significant efforts have been deployed to identify new innovative approaches.
Around the same time, David Cameron publicly supported the launch of the private sector led initiative StartUp Britain, which offered support to entrepreneurs worth about £1,500 across various areas like IT training and Internet advertising. StartUp Britain, now coordinated by the Centre for Entrepreneurs think tank, works in conjunction with the government’s Start Up Loans scheme, a £310m publically-funded initiative to expand access to capital.
These initiatives on either side of the Atlantic inspired other nations to follow suit with their own 1.0 approach to putting the spotlight on new firms. In fact there is now a 70-country strong Startup Nations network of peers focused on knowledge sharing about similar domestic policy goals. And for some, focusing on the issue has paid dividends. Leveraging that network as a sounding board and source of best practices, policy advisor Mariano Mayer of Argentina has helped catapult President Mauricio Macri as one of the heads of state writing the next chapter in startup policy evangelism.
A Package Approach
President Obama’s 2012 Jumpstart our Business Startups (JOBS) Act was the first comprehensive “Startup Act” in history, followed shortly that same year by the Startup Italy legislative package.
The JOBS Act achieved the following major regulatory framework changes, which are just now being fully implemented due the slow rule-making process at the U.S. Securities and Exchange Commission (SEC).
- Exempted companies with up to $1 billion in annual revenue from certain onerous Sarbanes-Oxley regulations governing financial disclosure and governance requirements for up to five years.
- Expanded the threshold of shareholders for private firms from a maximum of 500 to 2,000, before they are required to file with the SEC.
- Removed a SEC regulatory ban on solicitation – allowing startups to advertise for investment and accept capital from “small investors.”
Cameron did not achieve a legislative package of quite the same game-changing consequences, but he led a string of coherent government initiatives for startups, particularly around tax breaks and the funding of tech programs.
In terms of tax benefits, Cameron focused on persuading investors to put their money into high-risk startup businesses. His government’s policy legacy includes the Seed Enterprise Investment Scheme (SEIS), a program launched in 2012 by Chancellor of the Exchequer George Osborne. SEIS was designed to help early stage companies raise equity finance by offering tax relief to individual investors who purchase new shares in those companies. Doug Richards, a serial entrepreneur known for his role on the BBC’s “Dragons Den,” described SEIS as potentially “one of the most extraordinary incentives ever created,” as reported by Forbes.
Cameron also implemented budget “allocations” for entrepreneurs, which in 2011 introduced a package of tax incentives that led venture capitalists to name the measures “a shot in the arm" for UK entrepreneurship. As part of this package, the UK government created, for example, 21 enterprise zones offering tax breaks.
In terms of programmatic support, Cameron launched the Tech City UK organization in 2010 to support the East London tech cluster. And the reach of its portfolio of programs for entrepreneurs has grown comfortably now supporting all major cities around the UK.
In 2014, Cameron announced a £45 million investment in the Internet of Things (IoT). With this and other programs, the Prime Minister showed relentless and consistent commitment to high-growth, high-impact entrepreneurship. While impact of each of these public sector instruments is yet to be fully measured, one thing became clear: startup policy was not being executed in an ad-hoc manner, but rather as a long-term strategy. Care has gone into a strategy that expands the public sector access to its data, via the data.gov.uk platform for example. Similarly, the government has been transparent around performance data concerning the UK’s experimentation with startups visas.
In 2015, for example, the UK launched a new program called the Tech Nation Visa Scheme, which grants a visa to accepted applicants with any one of four newly introduced qualifying criteria: 1) aiding UK scale-ups, 2) emphasis on Northern England, 3) having “exceptional promise,” and 4) teams of five or more people from outside the European Union recruited by local companies.
Remaining Approachable for Entrepreneurs
I had the opportunity early on to visit No. 10 Downing Street to talk startups. Our goal in 2012 was simple. If we could just get the word “startup” into the narrative of a European head of state, we would see dividends across government in the legitimizing of entrepreneurs from the bully pulpit. We had seeded this well with Prime Minister Gordon Brown, who co-founded Global Entrepreneurship Week on account of his passion for helping young people. It worked well. Startup entrepreneurs in the U.K. and indeed in the U.S. were invited to 10 Downing Street and the White House respectively, and at several occasions as exclusive guests to meet Obama and Cameron themselves.
In the summer of 2014, for example, Prime Minister David Cameron invited young technology companies to pitch at No. 10 Downing Street for the first time ever “in a move that suggests the politician is keen to be seen supporting the tech start-up community.” At the Pitch10 event, the Prime Minister gathered 10 high-growth startup entrepreneurs, 70 venture capitalists, angel investors and other ecosystem stakeholders. As TechCrunch put it reflecting on this and other public sector signs of rapprochement, “What we’re seeing is the British Establishment whole-heartedly embrace technology entrepreneurship in the UK as a mainstream part of the business world and UK society. Who would have thought that would happen five years ago?”
Similarly, the White House’s Demo Day in the summer of 2015 featured more than 30 startup teams exhibiting at the White House and personally meeting the President to talk about their individual innovation journeys. For this first-ever Demo Day, the White focused on underrepresented groups in entrepreneurship, particularly women and people of color. Obama took the opportunity to highlight the plethora of programs the government offers to support entrepreneurs via various agencies, such as the U.S. Small Business Administration, the National Science Foundation, the Department of Commerce, the Department of Veteran Affairs, and the Department of Education (see the full list, here).
Both leaders have personally interacted with startup entrepreneurs in many other ways. For example, at the launch of Virgin Media Business £3 billion infrastructure initiative – Project Lightning – in Birmingham, David Cameron devoted a few minutes to each entrepreneur to hear the story of their businesses and about the challenges they faced. Cameron has also welcomed the iconic StartUp Britain bus and its entrepreneurs into Downing Street as part of the bus’ annual five-week national tour to help boost the number of businesses. President Obama in turn personally engaged thousands of both national and foreign entrepreneurs at seven editions of his administration’s Global Entrepreneurship Summit (GES).
Getting Entrepreneurs in Government
Another common approach from both leaders has been their willingness to surround themselves with startup-savvy policy advisors. Cameron, for example, tapped on former Facebook and Google executive Joanna Shields to lead Tech City UK and get advice on policy matters concerning the digital industry, with a particular emphasis on digital entrepreneurship.
Obama recruited UC Berkeley’s Tom Kalil and entrepreneur Doug Rand as Assistant Director for Entrepreneurship at the White House Office of Science and Technology Policy. His administration also recruited Ann Mei Chang from Google to run the U.S. Global Development Lab at the United States Agency for International Development (USAID). His State Department, under then-Secretary Hillary Clinton even opened a Global Entrepreneurship Program office.
In this regard, the Obama administration went further than David Cameron in securing entrepreneurs as allies in its foreign policy. For example, the Presidential Ambassadors for Global Entrepreneurship (PAGE) program run by the Department of Commerce features nine entrepreneurship ambassadors, including the likes of Julie Hanna of the Kiva crowdfunding platform, Brian Chesky of AirBnB, and Daymond John from Shark Tank. As I just reported in this blog, with this group of ambassadors, the Obama Administration has committed to helping the world’s entrepreneurs gain access to mentors, support and funding – but also heralded a new era where entrepreneurship is asked to play a critical anti-extremism and economic statecraft function.
President Obama and Prime Minister Cameron have opened up a new era. It is one where heads of state themselves can personally engage in elevating the role that entrepreneurs play in their society in terms of economic growth, job creation, opportunity, and of course, unleashing innovation in an effort to improve the quality of life of everyone. At the highest level of government, while from different political persuasions, Obama and Cameron have legitimized the entrepreneurial economy. They have also raised new questions for others behind them to address as entrepreneurs now embark on a fresh chapter in digital disruption.
Behind them, policy shops, staff and junior elected officials are now busy at work building out an evidence-based framework for assessing regulatory actions and policies as economies around the world step up their attention to enabling new entrepreneurs. For example, work has begun in documenting the legacies of these and other early adaptors of innovative, experimental approaches via a Startup Nations Atlas of Policies (SNAP). As other heads of state follow the Obama and Cameron example, researchers are challenging policymakers to share information in an open source fashion in order to assess the impact of public sector instruments that grab the glory and the headlines. As Aneesh Chopra, U.S. Chief Technology Officer and Associate Director for Technology in the White House Office of Science and Technology Policy has expressed on the White House blog “policy pronouncements are one thing – what does all of this mean to actual startups?”
But even if actual impact measurement is nascent, the culture of startup policymaking has changed forever in large part due to the Obama and Cameron examples and that of those now following behind. Entrepreneurship is now the domain of heads of state and there are some exciting new chapters as this area of work evolves. The challenge now is scaling the momentum. As Financial Times correspondent Jonathan Moules has said about the UK: “The concern for policymakers must be that they do not allow the UK to fritter away its opportunities by undermining what has been achieved.” I suspect the new Prime Minister Theresa May has heard that message from London’s tech entrepreneurs already. Let’s hope the next President of the United States hears the message too.
Photo Credit: Flickr
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