Our Weekly Take on Some of the Biggest Stories in Startup and Tech Policy.
GOP Releases Party Platform. As the Republican National Convention kicked off this week, GOP leaders released the final draft of their party platform. The platform included a commitment to several issues important to the tech industry, such as expanding broadband access and pushing back against over-regulation, as well as a nod to startups and small businesses by supporting an expansion of tax deductions for startup and small business expenses. The GOP also reaffirmed their commitment to digital privacy rights and called for a resolution to the ongoing encryption debate, though they declined to take a firm stand on the issue. Unfortunately, the party reiterated their ardent opposition to net neutrality, and language in the platform on high-skilled immigration reform and LGBT issues will likely disappoint the tech community. Read our full take here.
Congress Wants a National Fintech Policy. On Wednesday, Reps. Adam Kinzinger (R-IL) and Tony Cárdenas (D-CA) introduced H. Res. 835, a resolution expressing support for the development of a national fintech policy. The bipartisan resolution reflects an acknowledgment by policymakers of the growing importance of fintech companies and startups, many of which are working to disrupt an industry filled with entrenched incumbents. Fintech startups have the potential to revolutionize the way people manage their finances and interact with the global economy. As these companies grow, a unified national fintech policy will be important in ensuring regulatory certainty as they navigate the current patchwork of regulation, which oftentimes was not written with innovative fintech companies in mind.
New Oversight of Autonomous Vehicles? The May 7 crash of a Tesla using its automated driving system has intensified the debate around the appropriate role of government in ensuring the safety of driverless car technologies. On Tuesday, U.S. Department of Transportation Secretary Anthony Foxx hinted that the agency is considering rules that would require pre-approval of autonomous vehicle technologies before they reach the road. This was met with concern by some in industry, who acknowledge that while certain safeguards will be necessary, policies like this have the potential to significantly slow down the adoption of this promising new technology. A day later, National Highway Traffic Safety Administration chief Mark Rosekind took to the stage at the same conference to reiterate his commitment to the development of self-driving cars, stating that "no one incident will derail the Department of Transportation and NHTSA from its mission to improve safety on the roads by pursuing new lifesaving technologies." The agency is expected to release driverless car guidelines later this summer.
GAO Report on Patents. As we’ve argued time and again, the U.S. patent system is not working for innovators. A huge piece of the problem is the prevalence of low quality patents, patent trolls’ deadliest weapons. A report released this week by the Government Accountability Office (GAO) directly ties the increase in the number of patent lawsuits (up 150 percent since 2007) to issues around patent quality and notes that the majority of lawsuits are now tech-related. The independent, nonpartisan agency wrote in its report, “Patents related to computer and communications technologies are easier to unintentionally infringe because they are more likely to be unclear and overly broad.” GAO identified issues with certain agency policies that might be negatively affecting the quality of patents, including a lack of a clearly articulated, consistent definition of patent quality, as well as agency compensation practices that reward quantity of work completed over quality. We’ve looked at issues around patent quality before, and believe that the U.S. Patent and Trademark Office should redouble its efforts around reducing the number of improperly issued patents.
The Gender Gap in Startup Success. Did you know that just 7 percent of partners at top 100 venture firms are women? Well, it turns out that this lack of gender diversity among VC partners may actually be having a negative impact on the success of female-led, venture-backed startups. According to a recent study, startups led by women successfully exit venture capital financing (defined by an IPO or acquisition) at a rate 37 percent lower than those led by men. But when a female-led startup is financed by a VC firm with female partners, this gap in success basically disappears. The author of the report, Sahil Raina, argues this is likely because VCs with female partners “are either better at selecting women-led projects, or better at advising them, or both.” His research provides important insights, which indicate that if we want to see more female entrepreneurs, simply encouraging more women to start companies may not be enough. VC firms play an important role too, and should make efforts to diversify their teams.