Op-ed: 5 ways Congress can support startups to power the U.S. economy’s revival
BY SENATORS TIM SCOTT AND CATHERINE CORTEZ MASTO
From America’s big cities like Las Vegas to its small towns like Sumter, S.C., startups power new jobs. Other businesses tend to hire consistently from year to year, but startups manufacture entirely new positions. In 2019, startups less than a year old created over 3 million jobs, and over much of the past decade, slightly under a third of new jobs were attributable to startups. Given their power in our economy, startups deserve support and attention as we work to revitalize our economies in the wake of the coronavirus pandemic.
Understandably, COVID-19 has had a huge impact on startups. Many of them have had to lay off employees—in the tech sector alone, almost 70,000 startup workers have lost jobs. And the economic downturn has meant that it’s harder for startups, which always struggle to access capital, to get the seed funding they need.
Women- and minority-owned businesses, in particular, have difficulty getting funding. Companies with all-women founders get venture-capital funding beyond the first round just 2% of the time—compared with 35% of the time for companies with founders who are men. Black entrepreneurs are three times as likely as white entrepreneurs to say that problems finding investors have had an impact on their profitability.
We’re working in the U.S. Senate to address these issues by working on policies—many of them with bipartisan support—to help new companies get off the ground. And we’re cochairs in the Senate of this year’s Congressional Startup Day, a nationwide celebration of entrepreneurial communities that took place on Aug. 12.
Catherine has launched an Innovation State Initiative to support Nevada’s in-demand industries, including the technology sector. She has introduced the bipartisan Small Business Innovation Voucher Act to provide grants for small businesses that partner with colleges and universities to pioneer new research and development. And she’s co-led the bipartisan 21st Century Entrepreneurship Act to pair students with retired business leaders to gain skills from these experienced mentors. Catherine has also introduced legislation to increase STEM education, bridge the digital divide, and help workers who want to retrain learn new skills. Policies like these support startups by improving their Internet access and making sure they have a broad talent pool to draw from in hiring.
As a child raised in a struggling single-parent household, Tim cites ownership—whether a home or business—as the pathway to success. At a young age, he learned the importance of having an entrepreneurial spirit, which helped him to weather life’s storms and understand the importance of the independence that comes with being able to create jobs in the community. So when he became a senator, he launched the bipartisan Senate Entrepreneurship Caucus to address startup needs, which affect business development and jobs in our communities.
Tim has introduced the Enhancing Entrepreneurship for the 21st Century Act, along with his caucus cochair, which would require the commerce secretary to work with partners at all relevant government agencies to conduct a comprehensive study into the underlying hurdles that startups are facing. In 2017, as part of the Tax Cuts and Jobs Act, Tim’s Opportunity Zones legislation was signed into law, which was designed to spur economic development in distressed communities.
As the American economy adjusts to and recovers from the coronavirus pandemic, we’re going to be relying on new and small businesses to do the hiring that will provide quality jobs across the country. We need to increase support for these businesses to power our growth in the future, so that America can breathe new life into its innovative, groundbreaking economy.
Catherine Cortez Masto is the senior U.S. senator from Nevada and a member of the Senate Banking, Housing, and Urban Affairs Committee.
Tim Scott is the junior U.S. senator from South Carolina, a member of the Senate Small Business Committee, and cochair of the Senate Entrepreneurship Caucus.