What The Biden Administration Must Do For Entrepreneurs And The Economy

Times of E reached out to entrepreneurs and leaders in the entrepreneurship community to ask for their thoughts about priorities for the Biden Administration as it looks to the future.

Entrepreneurs create two-thirds of net new jobs and are the driving force behind U.S. innovation and competitiveness,” says the SBA. Small businesses accounted for 44% of all economic activity in the United States and were responsible for $5.9 Trillion in GDP in 2014, the last year for which data are available.

When entrepreneurship takes root in some communities and not others, our divisions deepen. In the 30 years leading up to the Great Recession, fully 80% of metro areas experienced an increase in the number of firms annually. This trend was completely reversed by the Great Recession, after which only 20% of metro areas have seen an increasing number of companies created. New business formation has been depressed in most of the United States.

Meanwhile, technology continues to drive entrepreneurship and innovation and break down barriers between countries and organizations, even as, in the absence of a coherent policy, it risks accelerating class disparities worldwide, as it has in the United States and during the pandemic.

What are specific ideas and policies useful to the Biden Administration? Send them to Elizabeth MacBride, [email protected].

Embrace The New Globalism

The greatest revolution in technology today is not the tech itself, but the near universal access to it. Since the Second World War, to “make it” in the global economy has effectively meant to make technology in, or sell product to, the United States. For the first time, and as talent is unleashed everywhere, innovation is happening and globally competitive enterprises are being built anywhere. China is certainly exhibit A of a rising market that now stands toe-to-toe with us globally not by copying our innovation overall, but leading their own that is increasingly embraced and adopted globally. There are many “mini Chinas” rising from Jakarta, to Saigon, to Cairo, to Nairobi, to Tallinn, to São Paulo. We are in the midst of a new globalism, if we wish to believe it or not. No where does this global shift appear in our strategic and political debate in America today. When technology does enter the political discussion it is often treated as an interesting side show, a ribbon-cutting PR event for politicians, and move on. Or it’s viewed, by many, solely for the threats it also offers from data security breaches, hacking, fraud and political manipulation. It is in the nature of Washington to look backward and try to drive policy change into existing models. Do we need to have a “START” treaty for Cyber? Should fintech innovators be treated under complex regulatory regimes created for banking systems decades ago?  This instinct is not only antithetical to the new realities. Washington gets caught in the tar of bureaucratic and regulatory constraint and mindset whose tactics bury what, in fact, we hope to achieve for our citizens and place in the world. This new administration can step into this new reality by simply acknowledging and prioritizing it. Only then can it begin an immediate and speedy coherent, cohesive, down the middle and fact-driven analysis of where we are, what we want strategically and what is a concrete path to get us there. We risk chasing cyber crime here, anti-trust of large tech innovators there, supply chain concerns over there with no cohesive plan our fellow citizens can co-author and support.

Christopher M. Schroeder, co-founder of Next Billion Ventures and advisor, Village Global Ventures. Next Billion Ventures is a group of investors and operators championing venture capital as a means to deliver outsize returns and catalyze impact in emerging markets.

Start A Global Innovation Movement

The world is facing a multitude of problems including: unemployment, climate change, poor regulatory environments, injustice, inequality, inadequate infrastructure in rural areas – the list can go on. All of these challenges stand in the way of global prosperity that is both sustainable and inclusive. Entrepreneurship and innovation are critical pathways to achieving that prosperity. The Biden administration should work towards creating a global movement to innovate our way out of today’s challenges, leaving no remote area behind. They should work to create a regulatory environment that incentivizes and rewards entrepreneurship that creates multiple layers of value both for shareholders and stakeholders alike. In this process youth should be seen as their biggest asset.

Dina Sherif, executive director, MIT Legatum Center for Entrepreneurship & Development. The Legatum Center is a community hub for students, alumni and faculty who seek to accelerate social and economic progress through innovation-driven entrepreneurship.

Overhaul And Elevate The SBA

1. Put entrepreneurship in the national discourse as a fundamental right and top Administration priority — equal access to entrepreneurship as a main driver of social and economic recovery. And foster and protect that right through strong policies and relentless public commentary and awareness campaigns that show the role entrepreneurship plays in new job creation and inclusive economic growth.

2. A public-private partnership to run a national awareness campaign — ala Partnership for a Drug Free America’s “This is Your Brain on Drugs”.  This would inspire Americans to be starters…see themselves in our nation’s entrepreneurs…understand it as a viable job….insert it into workforce development training (where it isn’t now)…make visible the invisible and make accessible what most feel is not. 

3. Reconstitute the National Advisory Council on Innovation and Entrepreneurship (make sure it is representative of the diversity of our nation) 

4. Completely overhaul and elevate the SBA. Recapitalize (at a higher rate) SBIC in particular and set clear mandates for investing in startups led by women and entrepreneurs of color.

5. Derisk entrepreneurship by providing tax support for health care mobility/portability and child care expenses (such a barrier, particularly for women)

Sheila Herrling, senior fellow, Beeck Center for Social Impact + Innovation, and former senior vice president, Case Foundation. The Beeck Center provides training and experiential opportunities for students, faculty and global leaders to enact solution-based social change.

Make Immediate Fixes To Small Business Loans And Aid

We immediately need lending to small business restored.

Increasing SBA guarantees and eliminating guarantee fees would initiate credit availability to small businesses. For PPP, additional forgiveness simplification is needed, while the treatment of the EIDL grant on the PPP forgiveness needs to be revised. Currently, the PPP forgiveness is decreased by the amount of the EIDL grant leaving some small businesses with a short amortization repayment of the grant, which stresses cash flow.

The EIDL $2 million maximum needs to be immediately restored as there are many small businesses with heavy operational costs but limited payroll that did not receive adequate liquidity to continue operations. The SBA unceremoniously reduced the maximum from $2 million to $150,000, leaving many small businesses in peril.

Jill Castilla, CEO, Citizens Bank of Edmond. Citizens Bank of Edmond is a $317 million-asset bank in Oklahoma.

Strengthen Community Banks

President-elect Biden can also assist small businesses and Main Street further by increasing the representation of community banks in urban cities as we saw PPP accessibility lacking where there weren’t community banks in a geography. A recent Federal Reserve study shows the direct correlation of healthy community bank presence with small business viability – something that played out in PPP. Decreased regulation and elimination of barriers to entry for community bank expansion is imperative for small business survival. Small business also needs better representation in the Treasury Department with more leadership from Main Street. While expertise in capital markets is essential, there was no shortage of this expertise in the highest level of government. During the crisis, we were in desperate need of pragmatic leadership that understood Main Street. We can learn a lesson from this experience and incorporate common sense into policy making and execution.

Jill Castilla, CEO, Citizens Bank of Edmond. Citizens Bank of Edmond is a $317 million-asset bank in Oklahoma.

Bring Broadband To Rural America

What’s one way the President-elect can win over rural voters who overwhelmingly voted for President Donald Trump? How about getting them something the past four presidents–Democrats and Republicans–have failed to make happen: access to basic broadband internet. In communities across the United States and especially in rural Appalachia more than one in five people still have no access to the internet. For entrepreneurs and business owners this is devastating. Imagine trying to conduct business in a cloud SaaS-based world with no internet! It’s not only impossible, it’s a disgrace. It’s time for President-elect Biden to make decades of empty promises finally come true. Bring universal broadband access to the entire United States, not to the constituencies who voted for him.

Dr. Geoff Marietta, founder, Invest 606. Invest 606 is an accelerator in Central Appalachia that awards $30,000 in prize money to small businesses.

Create An IRA For Small Businesses

1. Immediate Need: Work to extend CARES Relief to small business owners in industries significantly impacted by COVID paying special attention to sole proprietors, which are 81% of all small businesses

2. Mid-term Need: Reopen our borders to encourage the world’s best and brightest to come to America 

3. Long-term Need: Look at ways to change the tax code that would encourage small business owners to build up better cash reserve. Similar to how individuals have the ability to create a personal IRA to create a rainy day/retirement fund, business owners could have the ability to set aside funds, pre-tax, to create a Business Investment Crisis Fund to hold up to a maximum of one year’s expenses, based on a running five-year average.

Eric Groves, CEO, Alignable. Alignable is a small business referral network.

Partnerships For Employment

As the Biden-Harris administration begins the challenging work of healing our divided nation, they must call on purpose-driven entrepreneurs to support their efforts.  The most important opportunity is partnership for employment and the future of work. entrepreneurs need the support, validation, complementarity and scale of the government.  The Biden-Harris administration can support and amplify these efforts in the following ways: 

1. Develop an office of employment innovation to broker creative partnerships with the private sector on work and employment, 
2. Work closely with leading data driven companies to leverage public labor data to identify declining industries and growing opportunities to better match job seekers, 
3. Serve as a credible and objective auditor of the growing vocational and reskilling platforms that are proliferating across the country, 
4. Provide a “transition voucher” for all Americans transitioning to a new job that will provide them the financial and network access to the best models for retraining and coaching.  

More than any industry the future of work will be determined by a combination of entrepreneurial creativity and public sector innovation that can reengineer some of our most deeply held professional pathways to serve our changing workforce. 

Blair Miller invests in socially responsible companies focused on the future of work and is a senior fellow at Yale’s Jackson Institute where she lectures on “Aligning Profit and Purpose”.

Support One-Person Businesses

Leaders who are setting entrepreneurship policy often ignore a vast group of entrepreneurs: “nonemployer” firms–or those with no W2 employees. The Census Bureau counted 26.5 million nonemployer firms in 2018. Most nonemployer firms are one-person businesses.
Many leaders don’t realize that supporting nonemployer firms is a way to advance diversity and inclusion in the entrepreneurship world. The Fed has found that among nonemployer firms, young entrepreneurs and racial and ethnic minorities are statistically overrepresented. Women are also one of the fastest-growing groups of founders of nonemployer firms. Some of these owners are creating job-alternatives for themselves. Others may eventually become employers, particularly if they can get access to capital. 
Leaders often assume that people who run nonemployer firms would rather have traditional jobs and are victims of misclassification. In my experience as a reporter, I’ve found most of the owners are running them by choice–they want freedom, flexibility and the opportunity to build something of their own. They don’t see themselves as victims. They understand there is some risk to self-employment and are willing to take it on so they can live life the way they want. 
The most important thing any leader can do is to spend time getting to know this sector and how varied it is. The situation of a self-employed engineer or attorney is likely very different from that of a rideshare driver. One-size-fits all solutions really don’t apply. At the same time, many founders of nonemployer firms have something in common: They are left out of the social safety net and don’t have access to affordable benefits. Many are looking for answers to that challenge that don’t involve giving up their freedom and simply taking a W2 job. A leader who can offer them real options on this front will no doubt see a lot of support. 

Elaine Pofeldt, journalist and author of The Million-Dollar, One-Person Business. 

Lead To A Place Of Healing

1. Get the country back on track so that we can reopen to business. This requires leadership to show us the way.

2. Provide certainty to the political process so that we can each focus on ourselves.

3. Reach across the aisle to get things done so that as a country we don’t keep lurching from thing to thing.

4. Soothe racial tensions, so that we all feel safe and included.

5. Implement policies and programs that level the playing field

6. Keep showing the way (as with Kamala) that diversity and inclusion is important.

7. Generally lower the tone and acrimony in Washington.

David Brown, CEO, Techstars. Techstars is a global platform for investment and innovation.