Forbes: Stimulus Bill Could Leave Out the Country’s Most Eligible Employers

My thoughts in Forbes:

Without some immediate clarity in the stimulus law, startups that have accepted investor capital are in jeopardy of being deemed ineligible to borrow SBA money or otherwise qualify for stimulus aid.

The uncertainty surrounding the global health crisis will eventually give way to the certainty of the financial crisis. The economic impact of this unprecedented pandemic is not (entirely) unpredictable, and the swift, bipartisan action from Congress to protect livelihoods, jobs and opportunity is critical.

However, overly broad language in the stimulus bill risks missing (or even actively excluding) startups from helping to rebuild the economy. Startups with investors may be ineligible to borrow SBA money or otherwise qualify for stimulus aid. It’s not too late for Congress to fix this in the bills report language, and/or for the SBA and the Administration to clarify when they issue guidance and implement. 

I’ve written here before about how startups can create the next wave of opportunity for Americans everywhere, across a wide range of industries. In 2019 alone, over 3.1 million jobs were directly created by startups that were less than a year old. 

The US economy might be anchored by large private and public sector employers, but the small businesses which line Main Street America collectively employ half of us. Even more to the point, it’s the startups — fast-growing young companies in all 50 states — that really drives the innovation, growth and new jobs. Nearly all net new job growth in the past 40 years has come from entrepreneurs taking risks, investors backing them, and teams of people coming together to create new companies, technologies and innovative new business models. 

But we can’t create jobs and spur economic development if we are locked out of COVID-19 emergency relief programs, and I’m worried Congress is passing a bill that does just that. The stimulus response to the Great Recession in 2008 did far too little to help all small companies, let alone prioritize the kind of fast-growing startups upon which America’s economy really relies. The banks and big companies might have been boosted, but the last recession left Main Street and startup ventures suffocating for access to the credit or capital to make payroll and rebound.

The proposed stimulus package is using eligibility guidelines issued by the Small Business Association (SBA) to identify the companies that need help. And while this stimulus at least considers small businesses, the SBA’s affiliation rules might inadvertently (and mistakenly) exclude the most critical part of the economy.

The SBA affiliation rules could be interpreted to force startups to aggregate the employees of all the unrelated companies in which some of their investors have also invested, even minority shareholders with a small amount of equity in the startups.

If that’s the interpretation, then all of the employees of the investors might also be counted against the SBA’s definition of a small business (less than 500 employees).  

Without some immediate clarity in the stimulus law, startups that have accepted investor capital are in jeopardy of being deemed ineligible to borrow SBA money or otherwise qualify for stimulus aid. To avoid any discrepancies in interpretation, Congress should clearly waive the SBA’s “affiliation rules” so that equity-backed startups can access the proposed emergency relief programs.

This isn’t about “big tech” companies and rich venture capitalists tucked away in Silicon Valley, it’s about the source of innovation and jobs across all industries and across the country. Startups are everywhere, they’re growing rapidly, and they are critical to manufacturing, healthcare, education and every industry that employs Americans. Atlanta, Washington, D.C., New Orleans, and Minneapolis are among 25 emerging startup hubs in the U.S., according to TechNet and the Progressive Policy Institute.  From 2007-2016, these 25 cities averaged 11.9% private sector job growth.  By comparison, areas with lower levels of startup activity averaged approximately half that level of job growth. 

It’s not too late for Congress to get this right and clarify the stimulus package to include startups. Forbes Entrepreneur readers should reach out to their elected officials now, and tell them to write in a waiver provision for minority-equity-backed startups in small businesses from the SBA affiliation rules. It is critical to the success of this stimulus package that startups have access to the bill’s proposed emergency relief programs.

Read More

LinkedIn: Leading a Venture through the Financial Crisis

An open letter to founders and leaders of ventures across our ecosystem…

Over the past few years the TechNexus venture investment portfolio has grown to include companies in nearly 30 cities around the globe, and the broader ecosystem of partners expands to dozens more parts of the world. We separately shared workplace wellness suggestions for the current health crisis, but the effects on our economy and all of our businesses are real and interconnected.

More on LinkedIn

Read More

LinkedIn: Open letter on healthy workplace during crisis

An open letter to TechNexus teammates, the leaders of our Portfolio of Venture Investments, and to Collaborators and Guests to our Facilities:

With hundreds of people coming to work each day in our facilities, and thousands of employees at work in ventures we have been privileged to invest into around the world, the ecosystem and workplaces surrounding TechNexus are vast and interconnected. The same is likely true for many organizations.

More on LinkedIn

Read More

Startup Dad: An open letter to my kids

I’ve spent a lifetime as an entrepreneur, starting a company in high school and spending every day of the next 30 years building, funding and mentoring many startups. But without a doubt the most rewarding — and challenging — startup of my life has been my family and the young women they are becoming. Now, many years have passed, and they will venture out into a world of their own soon.

The characteristics I’ve seen over and again among the best entrepreneurs I have known, and the traits that I’ve seen that help startup teams succeed, have much in common. I think these lessons matter regardless of what path you take in life.

I want my kids to be intellectually curious. To be helpful, courageous and reach beyond their comfort zone. I want them to be driven, to have passion that makes them work hard and love doing so. I want them to define their own success and achieve it. I want them to enjoy and be happy with the life of their own making.

So here’s an open letter to my kids, published by Entrepreneur magazine.

Read More

Entrepreneurial Insights from Davos, the World Economic Forum 2017

The forward march of automation, much of which is being driven by innovation in the tech community, indicates strong industry advancement. However, it comes at the cost of economic anxiety for many of the people – often not the decision-makers – who are potentially displaced by this tech progress. As entrepreneurs and tech leaders, we have an obligation to offer solutions to ease this uncertainty.  Thoughts following the World Economic Forum in Davos.

 

Read More

Bringing the next generation of innovators to the frontier

The work that TechNexus does to bridge the gap between incumbent industry leaders and entrepreneurial ventures includes bringing the next generation of innovators into the mix.

Terry Howerton delivers a TEDx talk to students about the innovation ecosystem.

“The power is in your hands to not just be disruptive… but to create an entirely new reality in business today.”

Read More

The market doesn’t need another app to find a cupcake

Blue Sky Innovation in the Chicago Tribune: “Too much of what passes as a startup venture today is really just a good new product, not a scalable business. Entrepreneurs need bigger problems to solve, and big, industry-leading companies need the agile, creative forces of a startup,” Howerton said. “Meaningful disruption of major industries is cheaper, faster and easier to achieve than ever before.”

Read More

My friends in Ukraine

For almost 14 years, I’ve worked with a software team in Kyiv, occasionally in person there, sometimes with team members visiting Chicago, but mostly through Skype, chat and mail. Still, they have become my good friends and coworkers. It’s a remarkable relationship (especially at the start) that obviously wouldn’t have happened without the internet.

The team has grown from just a couple of guys, and over the years we’ve built software solutions behind the scenes for some of the most recognizable internet brands.

My earliest days visiting Kyiv were fascinating. I came of age just as the USSR was dissolving. That was the most significant geopolitical event of my lifetime (arguably since surpassed by the rise of global terrorism). My new friendships were intriguing… these were mostly people who grew up in an independent Ukraine, building a business together, unrestrained by history.

There have been plenty of moments when I felt like the proud American, and saw the growing effects of westernization on the Ukrainian economy and friends. There have also been moments when I’ve acknowledged America and western Europe is on unstable ground to be moralizing, particularly in areas of income inequality and the occasional trampling of our own Bill of Rights.

Ukraine sits as a resource for both Russian and Western influence. The politics and oligarchy dictate much of what makes the news, but its people are usually far removed from all of that. They are busy building a bustling economy, and connecting with the world. Except times like today — or during the Orange Revolution of nearly a decade ago — when these people rise up together with passion that we in the west should envy.

Read More

Scouting calibrates its moral compass

Twenty years have passed since Scouting chose to join the culture war and began a shameful period of telling gay teenagers they were the one kind of child unworthy of being a Scout.

In 1990, the Boy Scouts of America kicked out 19 year old James Dale (over the objections of the boys and adults in his community), and fought him all the way to the Supreme Court for the right to set their own membership standards.

Today they have taken the first step back on a path that leads to equality, respect and honor for all kids. The organization has voted to ban discrimination against gay kids, and compel all of nearly 100,000 local Scout units to be welcoming. This progress was brought in part by a remarkable group of young, straight Eagle Scouts lead by Zach Wahls and the incredible work of Scouts for Equality who recruited thousands more Eagle Scouts and nearly 2 million petitioners.

Nonetheless, this is a contrived compromise that kicks gay kids out when they turn 18 and become an adult. Doing that sends a ridiculous message to kids that Scouting will tolerate who they are, just not the person they “might” become.

I wrote a piece for Forbes in January when the BSA announced a possible change in policy, highlighting the terrible business decisions that Scouting had made, not just what I believed to be poor moral choices:

“The movement of Scouting continues to be one of the great opportunities for light and goodness in the world. But in my opinion, and one shared by millions of parents with kids who could benefit from Scouting, the corporation that administers Scouting in America lost its moral compass a long time ago.” — more from me in Forbes

The BSA released their own broad survey of current members: it was convincing that a majority of Scouting parents under the age of 50 favored non-discrimination, and revealed an even higher percentage of young parents in America that weren’t even considering Scouting for their kids. By and large, the voices to maintain the status quo were older Scout leaders hanging around the program long after their own kids had grown, and specific religious institutions using the supposedly non-sectarian Scouting as a tool (though even among churches, there was growing dissent).

At the time I argued the only sane and right policy change would be to let each of the local parents and chartering partners (tens of thousands of churches and civic groups) decide for themselves whether to accept gay kids and adults. With such deeply held passions, many on religious grounds by local partners, I believed the “local option” was the only way Scouting could escape the self-inflicted wound tearing away at the future of the organization.

Last month the BSA announced details of the only resolution they would allow to be put to a vote today: one that allowed gay kids to stay in Scouting across the country, but still banned gay adult leaders.

My first, visceral reaction was that it was an even worse scenario than kicking gay kids out of the program; that Scouting had set itself up as some sort of “conversion therapy camp”, expecting kids would “grow out of the gay”.

I saw this untenable compromise – no doubt hard fought within the organization, as further proof that the BSA was still lost in the wilderness.

But today I see a real opportunity for the BSA to emerge with an even better solution than the “local option” that I previously argued was the best we could expect. By banning discrimination against all gay kids in every local community, the organization is doing what’s morally right.

Following this vote by the membership, the National Executive Board should now move swiftly to allow parents and local chartering partners to choose the right adult leaders for their Scout units, gay or straight. Legally, practically and morally, this is an inevitable position the BSA will some day take, and it’s within the authority of the National Executive Board to make that decision soon.

I’ve always believed… and for generations so did the BSA, that parents should have the right to choose adult mentors for their own kids.

If a shrinking part of America thinks gay adults are inherently unsuitable role models, they’ll still have that right as parents. They just won’t have the right to deny the Scouting experience to any kid. And they shouldn’t have the right to deny other parents the choice of adults leaders for their own kids and communities.

Today was an important first step, and if it is soon followed by another step that allows local communities to set their own membership standards for adults, Scouting will have found its way back onto the trail.

Read More