Venture capitalists are already pushing Biden to address immigration issues, invest in climate tech. 'It wasn't really worth talking to the Trump Administration.'
- The National Venture Capital Association (NVCA) has a slew of policy proposals for the Biden Administration.
- The initiatives include a startup-specific visa, climate change investment, and tax breaks for startups.
- The NVCA previously struggled with some of Trump's policies to the point where it sued, and won.
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It's a new day for the venture capital industry. With President Joe Biden officially in office, there's finally a chance for VCs to push policies that the previous administration recoiled from.
From investment in climate change technology to immigration policies that grant visas specifically for startups, the venture industry's premier trade organization has announced the startup-friendly policies they'll be lobbying for immediately.
The National Venture Capital Association (NVCA), which represents over 450 member firms such as Sequoia Capital and Andreessen Horowitz, sent a letter to Biden last month before he even took office, announcing its policy objectives. And now that he's in, they are itching for action.
"One of the challenges we've seen in the political system in recent years is 'let's put the long-term ideas off to put out the fires of today,'" NVCA vice president of government affairs Justin Field told Insider.
Now, Field is hopeful that "we have a real good chance to have a good conversation."
Such a conversation will set the industry "on a better course by thinking more long term,"he said.
That long-term mindset is a huge shift compared to what the NVCA dealt with it under the Trump Administration, where it was constantly fighting to protect policies that were already in place.
Given how divided the legislative body still is, Field's optimism for new policies remains tempered.
"If these guys just decide to go to their corners and talk to their groups, then nothing's really going to get through," he said.
One of the NVCA's biggest initiatives is immigration reform. Startups want to hire talent globally, just like their larger competitors do, but face huge hurdles to bringing employees into the US. Founders also want to come to the US to start companies. Visas for both purposes are notoriously hard to get, and tend to tie immigration status to employment.
So if a startup fails, as many do, immigrant employees and founders risk getting kicked out of their lives in the US, rather than given the chance to find new jobs or start new companies.
"If you think about what a startup founder is going through, it is a very highly uncertain employment opportunity," Field said, pointing out that in some years, some 90% of startups fail.
The NVCA has a solution: a startup-specific visa.
Field explains the visa would lay out metrics that qualify a business as a startup — capital raised, number of employees hired, etc. — and would allow founders to build their company for a period of time without fearing deportation.
It's significant that the NVCA can even hope for something like this; they've spent the last few years in a battle to protect what visa options entrepreneurs already had.
At the tail end of the Obama Administration, they finalized a International Entrepreneur Rule, essentially allowing foreign-born founders to stay in the US for up to five years if they created a startup with rapid growth. The Trump Administration, however, delayed the rule before it went into effect, spurring a lawsuit from the NVCA.
Although the association eventually won, Field is hoping the Biden Administration will work with, not against, the NVCA on immigration reform.
Immediate liquidity for businesses
Since August, the NVCA has advocated for the IGNITE American Innovation Act, calling it "the most significant pro-startup proposal" in the economic recovery negotiations.
The initiative gives startups tax breaks that allow them to reinvest more money into their companies. Startups can carry forward tax credits for up to $25 million of a net operating loss to the next year to offset their tax bills.
For example, if a startup spent $20,000 this year and made no profit, there would be little-to-no taxes to pay. But if the company made $100,000 the next year, instead of paying taxes on the full $100,000, it could subtract the previous year's losses and pay taxes on only the $80,000.
The IGNITE American Innovation Act applies to startups with less than 1,500 employees.
Field said this is crucial for startups, which often operate at a net loss for years.
"What better way to encourage job creation — particularly the jobs of tomorrow — than to provide some additional liquidity to these companies?" he said.
Considering former President Donald Trump referred to climate change as a "hoax," VCs didn't expect much federal support for green tech startups.
"It wasn't really worth talking to the Trump Administration about," Field said.
But now he sees "a real opportunity" to work with Biden. Environmentally-focused founders should love Biden's Clean Energy Revolution plan. If passed, it would mean a federal commitment to move towards 100% clean energy and zero-emissions vehicles. It would also increase government investment in clean energy technology and enhance the electric vehicle tax credit.
Field says these measures will help environmental startups thrive and potentially be instrumental in preventing climate catastrophe.
"If the country does get to some solutions on climate technology," he said. "It's going to be due to venture capital investment."
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