America’s entrepreneurs — the risk-takers and venture-builders across the country — not only create vibrant businesses they also contribute to the United States’ economic, technological and military leadership on a global stage.
That’s why China’s ongoing effort to outcompete American companies developing various emerging technologies demands so much of Washington’s attention; we are in danger of losing our place at the top of the entrepreneurial pecking order.
As co-chairs of the National Advisory Committee on Innovation and Entrepreneurship, we’ve discerned that one thing is standing in the way: The country’s innovation horizons require a radical widening.
For the past half-century, venture capital has offered critical funding to American startups introducing new technologies to the world. But venture investment has traditionally focused on a narrow band of sectors, geographies and demographics — with most of the money going to software and healthcare startups in established innovation hubs in California, New York and Massachusetts — and very little to founders who are women and underrepresented minorities.
We believe it’s crucial to expand opportunities to innovate to people, places and industries left behind by the entrepreneurial economy for too long.
There are already positive signs that such an expansion is occurring. Large numbers of Americans dealt with the economic shocks of the pandemic — as well as the new opportunities it revealed — by launching businesses and the pace of new business formation continues to be torrid.
The rapid adoption of video conferencing platforms opened up new opportunities for entrepreneurs in a diverse range of communities throughout the country, and some investors have begun looking for opportunities in previously overlooked regions.
Equally important, after snarled supply chains revealed the national security risks created by the country’s dependence on international suppliers, Congress and the administration responded with legislation that promises to provide the foundation for the next generation of American technological innovation — including the CHIPS and Science Act, the Bipartisan Infrastructure Law and the Inflation Reduction Act.
Among other priorities, these bills will help to fund economic development in neglected regions, including those part of the Tech Hubs program administered by the Department of Commerce and the National Science Foundation’s Regional Innovation Engines program.
These investments mark a welcome change in American industrial policy to create the conditions under which entrepreneurs across the country can thrive, driving innovation from the bottom up. But to get the most out of its approach, the federal government will have to address some additional barriers.
The National Advisory Committee on Innovation and Entrepreneurship’s recently released national entrepreneurship strategy has a few crucial recommendations.
First, Washington should establish a national innovation council to coordinate pro-entrepreneurship policies across federal agencies.
Second, Congress should fully fund the Tech Hubs authorized under the CHIPS and Science Act, which are intended to help different regions become global leaders in a particular critical technology. This was designed to be a $10 billion program — but, to date, the Department of Commerce has only received 5 percent of that amount.
Third, federal funding for research and development, which primes the pump for innovation, has been on a downward trend since the 1960s as a percentage of GDP. Washington should set a standard of 2 percent of GDP and invest anew in helping universities (with their often painfully underfunded tech transfer offices) transform their breakthroughs into marketable products and services.
Finally, we can’t innovate without talent. The Departments of Commerce and Education should explore opportunities to incorporate entrepreneurship coursework into the nation’s K-12 schools, community colleges, technical schools, and universities. We also recommend establishing an E-Corps offering experienced entrepreneurs a one-year stipend to support early-stage founders.
Washington should also ensure that the more than 1 million international students who study at American universities each year have the opportunity to contribute to the U.S. economy after they earn their degrees — by creating special visas for startup founders and individuals with crucial skills for innovation.
The magic of America’s economy is that our growth isn’t overly planned — it is driven by the creativity of free enterprise, and our society has long benefitted from the churn of innovation. But that doesn’t mean we shouldn’t take steps to ensure that this dynamism can continue in the future.
Few national investments will be as powerful in the long run as a thoughtful, sustained, robust effort to nurture the next generation of entrepreneurs, in every region of the country.
Steve Case, co-founder of AOL, is chairman and CEO of Revolution, a D.C.-based venture-capital firm and the author of “The Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream.
Kristina Johnson is a clean-tech entrepreneur, an academic leader and the former undersecretary of Energy in the U.S. Department of Energy.