The Case for the Startup Act




About the Startup Act

The Kauffman Foundation has created a "Startup Act" proposal to jump-start the ailing U.S. economy and increase job creation by accelerating the growth of startups and young businesses.

The Startup Act focuses the attention of citizens and policymakers on the central role that high-growth startups must play to assure continued U.S. economic strength. The benefits of startups are well-established: Virtually all of the growth in U.S. jobs has been driven by the formation of firms less than five years old, and these new firms have been disproportionately responsible for commercializing the cutting-edge innovations that characterize modern life.

The act was unveiled at the National Press Club in Washington on July 19, 2011, by Kauffman President and CEO Carl Schramm and Vice President of Research and Policy Robert Litan, followed by videotaped remarks from House Majority Leader Eric Cantor (R-VA) and Senator Jon Tester (D-MT).

The Startup Act references recent Kauffman data that found that while more firms than ever have been created each year since the last recession began, the numbers of new firms with employees continues to drop—and this is a trend that pre-dates the recession.

Specific changes in government policy that the Startup Act proposes include:

  • Welcoming immigrants capable of building high-growth companies to the United States by providing "Entrepreneurs' visas" and green cards for those with degrees in science, technology, engineering and math.
  • Providing new firms with better access to early-stage financing, creating capital gains tax exemptions for long-held startup investments, providing tax incentives for startup operating capital, facilitating access to public markets, and allowing shareholders of companies with market cap below $1 billion to opt-in under the Sarbanes-Oxley Act.
  • Accelerating the formation and commercialization of new ideas by creating differential patent fees to reduce the patent backlog and providing licensing freedom for academic innovators.
  • Removing barriers to the formation and growth of businesses through the introduction of automatic ten-year sunsets for all major rules, establishing common-sense and cost-effective standards for regulations, and making assessments of state and local startup and business policies.

Job creation is a nonpartisan issue, and the Startup Act aims to educate policymakers on all sides of the political spectrum about the need for comprehensive legislation aimed at helping startups.

Coverage of the Startup Act