The importance of the U.S. startup ecosystem was made crystal clear during the pandemic: Many of us came to rely on new technologies that had been developed over the past decade, including revolutionary vaccines and testing devices, cutting-edge video-conferencing software that kept workers productive and kids learning online, and financial technology that allowed restaurants and other small businesses to move their operations online to survive.
As we move into this period of national recovery, high-tech startup companies — and the venture-capital investors who back them — are poised to play a critical role in creating higher-paying jobs across the country. These jobs can be created in both the traditional U.S. technology centers and regions hit hard by the decline in manufacturing. Venture investors also help create and deploy technology (think advanced computer chips and electric-car batteries) that increase America’s economic competitiveness vis-à-vis China and help address the climate crisis. All of these are key goals of the Biden administration’s ambitious new jobs plan.
But these worthy goals could be hamstrung by policies that fail to account for the unique business model of high-tech startups. We must realize that we are in an increasingly fierce global competition for innovation. The share of global venture-capital dollars going to U.S. companies has dropped precipitously over the last two decades, from 84% in 2004 to 51% last year. Given that venture capital plays an enormous role in creating economic value, including new jobs, innovation, economic growth and tax revenues, we must refocus our efforts to keep the U.S. positioned as a global innovation and research and development leader.