2015 Year in Review

Looking Forward (and Backward) to the 2016 Presidential Election

This post is one in a series of reports on significant issues for startups in 2015. In the past year, the startup community's voice helped drive notable debates in tech and entrepreneurship policy, but many of the tech world's policy goals in 2015, such as immigration and patent reform, remain unfulfilled. Check back for more year-end updates and continue to watch this space in 2016 as we follow policy issues affecting the startup community.

As 2015 comes to a close and we look forward to 2016, it is nearly impossible to ignore the presidential contest and its impact (or lack thereof!) on technology and entrepreneurship policy. As the party primaries rage on, notably missing has been any real debate about many of the issues that are most important to the startup community, such as access to capital, net neutrality, patent reform, and access to talent.

A few things are at play here: First, most of these issues are largely bipartisan. On the one hand, this is good news, since we’re more likely to see something get done. On the other, the polarizing nature of primaries—when candidates play to their bases—disincentivizes candidates from addressing anything that could be seen as centrist. Take, for instance, Sen. Marco Rubio’s 2013 efforts to strike a bipartisan deal on immigration, for which his Republican opponents now take him to task.

Second, with at least one notable exception (crypto and cybersecurity, more on that below), the issues startups care the most about frankly aren’t proving to be all that popular with campaigns. This is incredibly short-sighted. As economic growth and opportunity are central issues to every campaign, candidates should recognize startups as significant contributors. Startups are responsible for all net new job growth in the United States. They create opportunity and help the continued economic recovery in cities all over the country.

That’s not to mention all of the amazing technology they create, which is increasingly making its way into crucial and highly-regulated sectors such as health, transit, and education. How our federal government adapts to and regulates new technologies will greatly impact the future and the pace of innovation.

Our political leaders should support this community, which is why we’ve been disappointed to see so little attention paid to startup issues this political season. Troublingly, the only tech conversation receiving any significant airtime in the campaign—cybersecurity—has reflected a serious misunderstanding of the underlying technological issues and a disregard for the impact that ill-conceived cybersecurity policies would have on the startup economy. In the wake of numerous terrorist attacks, it’s no surprise that candidates are looking for any tool available to improve national security. But proposals to curb encryption technologies and increase surveillance programs only serve to make American companies and users more vulnerable to cyberattacks—there is simply no such thing as a “government-only” encryption backdoor—with no likely associated safety benefit. Tech companies and advocates have tried time and again to explain why such policies are technologically unworkable, but politicians do not appear to be listening. Obviously, this should be troubling to the startup sector. If policymakers are unwilling or unable to understand technology and tech issues, it’s unlikely that they’ll be able to craft policy that supports innovation.

It’s not just politicians, of course. Our community needs to make its voice heard, particularly as the primaries wrap up and we get down to the brass tacks of a presidential election. When that time comes, it will be up to us as much as to them to ensure that tech issues get their fair share of debate. We hope you’ll join us in making that happen!

2015 Year in Review: Privacy and Security

This post is one in a series of reports on significant issues for startups in 2015. In the past year, the startup community’s voice helped drive notable debates in tech and entrepreneurship policy, but many of the tech world’s policy goals in 2015, such as immigration and patent reform, remain unfulfilled. Check back for more year-end updates and continue to watch this space in 2016 as we follow policy issues affecting the startup community. 

by Emma Peck and Evan Engstrom

This year saw an alarming number of high-profile data breaches—as of mid-December, there had been over 750 breaches exposing nearly 178 million records, surpassing 2014’s pace. Not surprisingly, policymakers were compelled to turn their attention to data security and privacy issues, putting forth a range of proposals around privacy, encryption, surveillance, and data security. These proposals were met by the startup community with both praise and disapproval, but one clear message permeated the debates around all of these issues: too often, offered policy solutions do not take into account the needs and realities of the quickly evolving startup ecosystem. Outdated laws are applied to new technologies, and increasingly, new proposals show a clear lack of understanding of the technologies they will impact.

ECPA Reform

A prime example of a law that is completely ill-fitted for today’s technological realities is the Electronic Communications and Privacy Act (ECPA). ECPA is the privacy law that governs our interactions with the Internet. But the law was passed in 1986 (before most people even had computers in their homes), and it allows law enforcement to access electronic communications that are older than 6 months without a warrant on the grounds that such communications are “abandoned.” These rules do not conform to how people use and understand the Internet, and providing such lax privacy protections for electronic communications erodes consumer confidence in the safety and security of online services. Thankfully, a coalition of industry and civil rights organizations—including Engine—helped persuade California to correct this problem at the state level. In October, California passed reforms to ECPA requiring law enforcement to obtain a warrant before accessing a wide variety of digital information. A bill to reform ECPA at the federal level also resurfaced this year, garnering support from over 300 cosponsors in the House, which made it one of the most popular bills in Congress. There are still a few federal agencies that oppose reform, but a provision in the recently passed omnibus served as a rebuke to the remaining hold-outs. ECPA reform will likely be one of the first topics considered by the House Judiciary Committee in 2016, and we are tracking.

Encryption

This year, 2016 presidential candidates and current policymakers also put forth proposals aimed at combating terrorist threats to our nation—from “closing that Internet up,” which has been broadly viewed as preposterous, to creating backdoors for encrypted technologies, which unfortunately has been met with acceptance in some circles that ought to know better. The debate around encryption is one of the best examples of the problems that arise when lawmakers don’t understand the technologies at issue in the policies they are proposing. It is well accepted by cryptographic experts that creating a backdoor (or “golden key”) for encrypted technologies is not technically feasible without undermining the security of the system as a whole. And in addition to threatening constitutional rights, it is unlikely that creating a backdoor would even be effective in keeping bad actors from using unbreakable encryption. Yet this “solution” has been central to a number of policy proposals, highlighting a lack of understanding from lawmakers on both sides of the aisle.

Safe Harbor

In October, the tech world was left in a state of confusion after the European Court of Justice (ECJ) invalidated the safe harbor agreement that allows for the legal transfer of data between the U.S. and EU. In short, the ECJ ruled that U.S. laws allowing the government to broadly and secretly collect consumer data violated EU privacy rules and therefore, the safe harbor rule was incompatible with EU law. As such, companies that had previously relied on the safe harbor as the legal basis for importing EU customer data into the U.S. had to find other ways to legally import such data. Many commentators downplayed the significance of the ruling, noting that companies could find other legal pathways for importing EU data via contractual agreements or pre-approved internal data protection mechanisms. But, while such protocols may be feasible for large multinationals, startups with EU customers but without the resources necessary to negotiate alternative arrangements were left in legal limbo. Though EU and U.S. policymakers are working on developing another safe harbor arrangement, the recent push in the U.S. to further weaken privacy protections through misguided encryption policies could end up ensuring that any new safe harbor rule would also fall short of EU privacy standards. More broadly, the court ruling helped crystalize the nonsensical nature of enforcing territorial data restrictions in a globally interconnected digital world and highlighted the impact that U.S. surveillance practices have on the ability of American startups to thrive in an increasingly global world, where many countries have concerns about the privacy of their citizens’ data.

Data Security

Spurred on by the many data breaches in 2015, members of Congress spent considerable time crafting legislation regarding how companies should handle security breaches. A number of the proposals require notification within a set amount of time following discovery of a breach. While well-intentioned, security professionals agree that publicly announcing a breach too early actually decreases security by allowing for bad actors to take advantage of vulnerabilities that have not yet been patched. It’s true that a uniform federal standard would be preferable to the existing 47 state laws governing breach notification insofar as compliance with a single standard is easier for cash-strapped startups than having to comply with 47 different regimes. But the bills introduced this year are deficient in a variety of ways that highlight the alarming lack of technological expertise on Capitol Hill.

Additionally, as a result of a court decision earlier this year, the Federal Trade Commission (FTC) now has explicit authority to police whether companies’ data security practices are “reasonable”. However, determining which practices are reasonable and which are not is a difficult task—even security experts disagree over which protections companies should have in place. The FTC has tried to bridge this gap in technological understanding through their “Start with Security” initiative. And Engine hosted an event in October to help startups navigate data security policy. But it is still clear that lawmakers do not understand data security as a technical matter, and it is the role of the startup community to try to educate policymakers on the ways in which proposed policies can dictate practices, for better or worse.

Looking Forward

Privacy and security were two of the most talked about issues in 2015 and it’s unlikely that they’ll go away in 2016. They have already featured heavily in the Presidential debates, and as more of our daily life migrates to the online world, cybersecurity threats will only continue to grow. Policymakers know they must do something to address these threats, but doing something is not necessarily better than doing nothing if proposed policies don’t reflect the technological realities of today. Before the tech sector can convince Congress to pass bills that support the work we are doing, we have an obligation to instruct policymakers on how their policies will impact and interface with technologies in practice. Engaging at this level will pay dividends down the road.

2015 Year in Review: Regulating the New Economy

This post is one in a series of reports on significant issues for startups in 2015. In the past year, the startup community’s voice helped drive notable debates in tech and entrepreneurship policy, but many of the tech world’s policy goals in 2015, such as immigration and patent reform, remain unfulfilled. Check back for more year-end updates and continue to watch this space in 2016 as we follow policy issues affecting the startup community.

by Anna Duning and Evan Engstrom

The ever-increasing pace of technological development and expanding reach of innovative enterprises into well-regulated industries has put considerable strain on the nation’s policymaking apparatus. As new technologies (such as recreational drones) become more popular and new platforms integrate everyday activities (such as transit) with technology, policymakers are faced with difficulties in crafting forward-thinking policies or adapting existing regimes to new technologies. In 2015, we saw this phenomena play out in a variety of ways all across the country at the municipal, state, and federal levels.

New Devices, New Rules

In 2015, the drone market grew exponentially, with more than 400,000 drones sold. The increasing presence of unmanned aircrafts—and the corresponding rise in reports of rogue drones posing safety hazards to commercial aircrafts and stoking privacy concerns—prompted the Feds to introduce new regulations for recreational drones this year. The Federal Aviation Administration, along with the Transportation Security Administration, ultimately came up with a drone registry for hobbyists, requiring recreational pilots enter their devices into a new national database. Commercial drones from the likes of Google, Amazon, and even Wal-Mart are also expected to take to the skies in the new year. These companies have all been part of a lobbying effort to keep new regulations limited and reasonable.

As the age of widely-available autonomous vehicles nears (Tesla says within two years), state lawmakers are grappling with how to establish the appropriate safety and regulatory standards for what will surely be one of the most disruptive technologies deployed in recent memory. Cybersecurity, accident liability, and basic road rules are all pressing concerns. Several states have already approved the testing of autonomous vehicles with varying degrees of regulations. Most recently, California introduced proposed rules that would require a licensed driver to be present in the vehicle. This requirement could limit some of the more promising uses of these new vehicles (such as transportation for the young or disabled) and even threaten the vehicle’s safety, but the state will take comments before instituting the final standards. We’ll be monitoring closely as state governments continue craft new regulations. These new rules won’t just impact the big manufacturers, as autonomous vehicles could spawn an entirely new sector of startups creating software for these cars.

Blockchain Rising

Though Bitcoin and the blockchain technology that powers it are relatively old developments by tech standards (2009!), cryptographically-secure distributed ledger technologies came to the attention of the mainstream in a big way this year, drawing interest from large financial institutions and regulators alike. While this increased scrutiny may rankle some of Bitcoin’s techno-libertarian old guard, the relatively cautious approach policymakers have taken to regulating the Bitcoin sector is a promising sign for the future growth of cryptocurrencies and blockchain technologies.

As Federal regulators have been content to monitor the development of cryptocurrencies, state policymakers have taken more proactive steps to regulate the sector. New York enacted its BitLicense rules this summer, which obligate financial intermediaries that hold or control virtual currencies on behalf of New York residents to obtain a license and follow certain customer monitoring and reporting requirements. The rules were meant to apply to just those companies that handle funds on behalf of customers and not impact software developers and entrepreneurs that don’t actually control customer money, but since the Bitcoin system looks so radically different from traditional financial systems, the rules necessarily have created some confusion as to how they will apply in practice. Fortunately, New York regulators appear to be cognizant of the need to avoid overregulating this nascent industry and will hopefully work to rectify any overbroad regulatory issues that may arise. As other states begin to consider regulations like New York’s regime (California for one debated a similar Bitcoin license bill this year before it died in the legislature), the need for a more uniform Federal standard will quickly become a priority for the sector. With more and more money pouring into blockchain startups ($500 million in 2015 alone), digital currency regulation will likely become a more pressing issue in 2016 and beyond.

The New Sharing/Gig/On-Demand Economy

No one seems to have agreed upon the best term to describe the collection of technology startups building platforms that connect customers to workers, homeowners, and drivers. Call it the sharing economy, the gig economy, or the on-demand economy; regardless, this new technology is shaking up well-established industries and the regulatory frameworks in which they’ve long operated.

Startups including Uber, Lyft, TaskRabbit, Handy, and Instacart (to name just a few) are restructuring how a wide variety of services are provided, and with that, challenging the existing labor standards that by and large rely on two narrow designations—employee or independent contractor. Many of these companies now face a slew of lawsuits about that classification, including a class action against Uber in California. Just weeks ago, Seattle became the first city in the nation to allow on-demand drivers to unionize. This legislation, too, will likely be contested in courts. The outcomes of these cases could dramatically reshape the 1099 economy and will surely impact the startups who’ve built their companies around existing worker classification rules. We’ll be paying close attention as they’re debated into 2016 and beyond.

Beyond the labor market, many of these startups are providing new (and in many ways, better, faster, and more efficient) services within highly regulated industries. This year, ridesharing companies, came up against major challenges in cities throughout the world. The New York City Council proposed rules this summer that could have put a freeze on all for-hire vehicles. Another requirement—that ride-sharing apps pass government approval before making changes—was also floated, though ultimately struck down. Meanwhile, San Francisco voted on a ballot proposition to limit Airbnb rentals in the company’s home city, a measure that ultimately failed, but cost the company $8 million to fight.

Ultimately, the trend of startups beginning to compete in heavily-regulated sectors of the economy accelerated in 2015 faster than many had predicted, resulting in an all too common struggle to fit the square peg of new innovations into the round hole of existing regulations. Not surprisingly, given the slow pace at which our nation’s regulatory bodies operate, the many policy debates that came to the fore in 2015 are nowhere near resolution. Next year will almost certainly see these policy debates escalate, and it is imperative that the startup community engage in this policymaking to ensure that the incredible potential of new technologies isn’t stifled by ill-fitting regulations.

 

2015 Year in Review: Capital Access

This post is one in a series of reports on significant issues for startups in 2015. In the past year, the startup community’s voice helped drive notable debates in tech and entrepreneurship policy, but many of the tech world’s policy goals in 2015, such as immigration and patent reform, remain unfulfilled. Check back for more year-end updates and continue to watch this space in 2016 as we follow policy issues affecting the startup community.

by Anna Duning and Evan Engstrom

2015 will be remembered as the year of investment crowdfunding. In October, the SEC released the long-awaited rules that finally allow everyday investors to crowdfund startups in exchange for an ownership stake in the business. The Title III rules were certainly the most anticipated development in of the year in capital access policy, but the SEC also unveiled other alternative fundraising mechanisms that may end up eclipsing investment crowdfunding in impact, at least in the short term. Congress joined the mix as well, working on a variety of bills to help promote capital formation. However, as with the SEC’s efforts, the efficacy of these programs remains to be seen. Ultimately, 2015 was a year of new developments and renewed optimism for capital access policy.

Investment Crowdfunding is Finally Here

After Congress passed the JOBS Act in 2012, the SEC was tasked with crafting rules to fill in the details of Congress’s proposals, including Title III of the JOBS Act, which legalized investment crowdfunding for non-accredited investors. In the intervening years, the SEC passed rules supporting other aspects of the JOBS Act, but it dragged its heels in implementing investment crowdfunding under Title III. Having missed several prior deadlines, the SEC finally issued rules for non-accredited investment crowdfunding at the end of October. The rules themselves improved upon the SEC’s original proposal from 2013 in some key ways, but, as we discussed at length in a white paper on the then-proposed crowdfunding rules earlier this year, the upfront disclosure obligations are especially problematic. Unless and until startups can raise small amounts of capital without having to incur significant costs preparing disclosures, that are largely useless to investors, it’s unlikely that many startups will turn to investment crowdfunding as a primary fundraising tool. We’ll be watching.

The Mini IPO

Several months before the SEC released the long-awaited final Title III crowdfunding rules, the agency completed another set of JOBS Act rulemaking, which garnered slightly less attention. With Title IV rulemaking complete, growing private companies now have another funding mechanism, Regulation A+, through which they can raise up to $50 million without being subject to some of the onerous reporting requirements required of publicly traded companies. Industry experts have called it a sort of “mini IPO.” Regulation A+ also allows for a limited subset of non-accredited investors to participate in the investment. In its short lifespan, this new exemption has seen limited activity: as of October, only 34 companies had pursued or were in the process of pursuing a Reg A+ raise. This slow start may be attributable challenges from state securities regulators about exactly whom should be eligible to take part in these new investments.

 

States Take Up Crowdfunding, Too

While investment crowdfunding rules languished in the rulemaking process until the very end of 2015, states took it upon themselves to craft new capital formation tools for startups. Throughout the year, several states passed crowdfunding legislation, authorizing local businesses to raise equity from local shareholders within the state. New Jersey was the most recent state to legalize intrastate crowdfunding in November. The SEC also gave intrastate crowdfunding a boost of confidence in November when it proposed a new rule that, among other improvements, would allow companies to pursue intrastate crowdfunding even if incorporated elsewhere. Ultimately, intrastate crowdfunding may not be an appealing fundraising option for high growth technology startups whose services and products may reach far beyond a state’s borders, yet we’re pleased to see state legislators recognize the importance of capital formation for new firms.

Congressional Support for Startups

Throughout the year, members of Congress also attempted to bolster capital formation through various measures, though on a scale far more modest than 2012’s JOBS Act. Recognizing that startups and other tech companies are staying private for longer, policymakers have sought ways to provide much needed liquidity for employees. One such bill, the RAISE Act—which was passed unanimously in the House and ultimately included in the massive highways bill—streamlined the process of privately selling unlisted shares. Other capital access-related legislation such as a bill that would create exchanges for private venture securities (the “Main Street Growth Act”), and one that would loosen restrictions on startups “generally soliciting” investments (the “Helping Angels Lead our Startups” or “HALOS” Act”) received some air time in Congress, but remain in legislative limbo.

Looking Ahead to 2016

In 2016, it seems likely that policymakers will direct efforts in capital access policy towards a few key areas. Improving the structure of Title III investment crowdfunding should remain a priority, as many critics have identified issues with the rules. If Congress is serious about democratizing startup financing, they’ll need to diligently track the growth of the crowdfunding sector and promptly respond to problems that spring up along the way. Similarly, despite the passage of the RAISE Act, liquidity for private shares remains a concern as IPOs decrease. While many tech companies don’t like the idea of liquid markets for their shares, if startup employees continue to find it difficult to receive value for their stock options, startups will find it harder and harder to attract top talent, as employees will be loathe to leave larger firms if the compensation startups can offer is functionally useless.

Finally, as 2016 is likely to see a large scale debate on tax reform, Congress will inevitably consider tax policies meant to help drive startup activity. 2016 may not match 2015’s monumental capital access policy achievements, but startups should work to harness Congress’s enthusiasm for policies that promote startup growth to continue the positive momentum in the new year.

Year in Review: Patent Reform

This post is one in a series of reports on significant issues for startups in 2015. In the past year, the startup community’s voice helped drive notable debates in tech and entrepreneurship policy, but many of the tech world’s policy goals in 2015, such as immigration and patent reform, remain unfulfilled. Check back for more year-end updates and continue to watch this space in 2016 as we follow policy issues affecting the startup community.

Despite real strides made in the courts, patent trolls continue to be a serious drain on the startup economy. The number of patent cases filed by trolls in the first half of 2015 outnumbered filings in previous years. Historically, the majority of troll cases were filed against small companies with revenues of less than $100 million.

Recap: Patent trolls take advantage of loopholes in the patent system to leverage bad patents and expensive litigation to force companies (especially small ones) into costly settlements. Settlements that could cost several hires, derail products, challenge customer trust, or, worse, harm the whole company.

Back in January, the House reintroduced the Innovation Act and the Senate followed suit with the PATENT Act, reflecting strong commitments from congressional leaders to pass a bill that would put a stop to this tax on startups. These bills are both comprehensive in nature, addressing the trolls’ favorite loopholes. Some of the key provisions address pleading requirements, discovery procedures, and fee-shifting standards.

The House bill also includes a provision to address venue abuse, one that specifically would keep cases out of the now-infamous Eastern District of Texas. The provision would limit patent infringement suits to districts where the patent inventor conducted research or a party operates a physical facility. This will hopefully disincentivize those who cherry-pick venues based on where they are most likely to win -  i.e., the Eastern District of Texas, where nearly half of patent cases in the US were filed in the first half of 2015. Note: Thus far, the Senate bill does not include a similar provision.

Though voted out of their respective Judiciary Committees in June, we’ve seen both bills stalled, waiting to be scheduled for a vote by the entire Congress. Why? As Engine’s Executive Director Julie Samuels explained: competing interests operating in a one-size-fits-all system. The patent system, as it stands now, works for incumbents, like the pharmaceutical and manufacturing industries that have profited from it for decades. Unfortunately, this system does not work so well for technologies that rely on software, which represent an ever-increasing amount of economic activity. And not just from tech companies! Industries like retail, homebuilders, and realtors, for example, increasingly rely on software innovations to grow their business, only to find themselves facing a broken patent system, staring down the gun of a patent troll.

This year, we also saw non-comprehensive patent reform legislation introduced (again) that, while a good start, would not have gone nearly far enough to address the patent troll problem. And due to the lack of action from Congress, 2015 saw an increasing number of state legislators attempt to curb the patent troll problem. And there was also the evolution of the Pharmaceutical industry’s (PhRMA) own troll: Kyle Bass, the hedge fund manager who uses the Inter Partes Review (IPR) program at the Patent Office to challenge weak pharmaceutical patents and then short the stock of the company that owns the patent. In response, PhRMA has advocated for changes to the IPR process to limit Bass’ success. We hope these changes don’t happen; it’s important that we keep this program robust as an effective alternative to challenging bad patents without wasting the resources demanded in a courtroom.

Though patent reform was met with challenges in 2015, we remain confident that 2016 could bring about real and comprehensive legislation. Representative Goodlatte in the House and Senators Schumer, Cornyn, Grassley, and Leahy in the Senate remain committed to seeing legislation through. Coupled with court cases that help address low patent quality (like last year’s Alice v. CLS Bank decision, which has gone a long way to help get bad patents out of the system), the prospect for patent reform remains good. Engine will remain a firm supporter of comprehensive patent reform as we head into the new year.

Year in Review: Tech Talent and Diversity

This post is one in a series of reports on significant issues for startups in 2015. In the past year, the startup community's voice helped drive notable debates in tech and entrepreneurship policy, but many of the tech world's policy goals in 2015, such as immigration and patent reform, remain unfulfilled. Check back for more year-end updates and continue to watch this space in 2016 as we follow policy issues affecting the startup community.

by Anna Duning and Ange Royall-Kahin

Lawmakers, industry leaders, and nonprofit groups alike contributed to important, and sometimes heated, conversations about America’s tech talent pool this year. The growing need for talented workers, the lack of diversity in the industry, and the vexed immigration system continue to pose challenges to both tech firms as well as policymakers.

Diversity

Additional tech companies joined some of the larger firms this year in releasing their diversity numbers. While the figures themselves didn’t inspire much confidence about industry diversity, we observed a growing recognition of the issue and commitment to creating a more inclusive tech industry. Engine participated in the Tech Inclusion Conference in San Francisco, where participants from across the country discussed challenges to improving the makeup of the tech community and solutions to making change. Several companies have also demonstrated good faith commitments to closing these gaps.

In Congress, Engine helped launch the Diversifying Tech Caucus in January to highlight the importance of diversity in the tech community and craft policy solutions to bring new people into this workforce. The bicameral, bipartisan Caucus, now with over 20 members, facilitated dialogues about startup efforts to diversify tech as well as the roles and obstacles veterans face in the industry. Another legislative group, the Congressional Black Caucus, also affirmed its commitment to diversifying the tech industry this year and launched Tech2020, an effort to increase the participation of African Americans in technology.

The White House and federal agencies also launched several initiatives this year to bolster and diversify the tech workforce:

  • In March, the White House announced TechHire, a national program to get more Americans the training they need to enter the tech workforce. Through partnerships with universities, community colleges, apprenticeship programs, and non-traditional educational offerings such as coding bootcamps, TechHire has recruited over 40 communities to support their efforts.
  • At the beginning of August, the White House hosted its first Demo Day under the theme of inclusive entrepreneurship, showcasing a diverse set of 50 entrepreneurs. The event also highlighted members of the tech community making concrete commitments to improving diversity.
  • Later this year, the Department of Education launched a pilot program to evaluate the effectiveness of non-traditional education providers, such as coding bootcamps. While these new programs offer students valuable skills for well-paying, in-demand jobs, many are un-accredited and therefore disqualify students from using federal funding towards tuition. If successful, the outcomes of the Department’s pilot may help expand access to new learning models for vital technical skills.

Veterans

This year, we saw Washington take interest in how to connect veterans with resources that would aid them in transitioning into the tech industry. In July, Senators Moran and Tester introduced the Veterans Entrepreneurial Transition Act of 2015. The bill would allow veterans to apply their GI Bill benefits towards starting their own businesses. In August, the Department of Veterans Affairs (VA) launched a new pilot for accelerated learning programs (e.g. coding bootcamps with certain providers) - at no cost to participants. We look forward to seeing how the results shape the conversation around using GI Bill benefits towards coding bootcamps and alternative tech education.

Immigration

Immigration policy also plays a key role in supporting and growing technology companies and startups, too. Some of our country’s most successful technology firms were founded by immigrants and foreign talent is in high demand among U.S. tech companies, big and small. In 2015, the United States Citizen and Immigration Services (USCIS) received a record number of H-1B visa applications: 233,000 for the 85,000 spots. The H-1B program also came under fire this year for both favoring large companies and outsourcing firms (see Disney’s actions), as well as for abuse.

The H-1B program represents just one set of issues rattling our outdated immigration system, yet, none of these additional challenges saw real solutions from Congress this year. Speaker Paul Ryan made it clear that it’s unlikely any needed legislation will pass until a new president is elected. Nonetheless, a few incremental improvements (that didn’t require congressional approval) were pushed forward. USCIS began accepting work authorization applications so H-4 dependent spouses can work here, too. The Department of Homeland Security (DHS) is considering extending the OPT visa program for STEM students. And we soon expect DHS to announce guidelines for improved pathways for foreign entrepreneurs to acquire visas in order to start companies here.

Looking Ahead

While Speaker Ryan’s outlook gives the tech community little optimism for immigration reform in 2016, we hope high-skilled immigration policy will make its way into the presidential candidate agendas. It is likely that progress will be made to support veterans entering tech. The VET Act is gaining support and we expect that it will head to the Senate floor in the first half of the year. We also hope to see legislation introduced that would allow veterans to use their GI Bill benefits towards alternative tech education programs, such as coding bootcamps. On the industry side, we’re optimistic, too. The public pressure and attention on tech firms’ employee diversity that mounted throughout this year has now raised expectations. Companies are keenly aware they need to do better and made promises that we hope to see begin to come to fruition in 2016.

2015 in Tech and Startup Policy

In 2015, Engine celebrated several political victories for the tech community, traveled across the country to emerging startup ecosystems, and published new research on the challenging issues facing startups and policymakers alike.

We’re especially grateful for all the support of our community of entrepreneurs, VCs, and technology experts. They helped us win net neutrality, signed our letters to Congress, joined us on Capitol Hill, and shared their stories to demonstrate why entrepreneurs and the startups they build are such a valuable part of our economy and our nation.

Watch this space to read about all the issues we tackled this year.

Engine Highlights in 2015: Major Wins and Moments for Technology Startups and Entrepreneurs

Net Neutrality: The FCC announced its historic net neutrality decision to keep the Internet open and fair. Engine has since defended attempts to undermine net neutrality in the courts.

Capital Access: The SEC finalized investment crowdfunding and Reg A+. Engine published a paper on improving investment crowdfunding policy for startups and investors.

Patent Reform: Over 140 venture capitalists and 200 startups signed letters in support of patent reform. We brought several groups of startups to the Hill and released a book of troll stories. And this summer, the PATENT Act and the Innovation Act were passed out of Judiciary Committees in both the Senate and House.

Diversity in Tech: Engine launched Congress’ first and only caucus uniquely dedicated to expanding diversity in the tech industry. We also launched efforts to support #VetsWhoTech with a briefing on Capitol Hill, support for the VET Act, and released a series of stories about veterans in the tech sector.

Telecom: We worked with a coalition to successfully stop Comcast’s attempted merger with Time Warner.

Digital Privacy: The state of California passed one of the strongest electronic communication privacy laws in the nation.

Startup Cities: Engine visited emerging startup ecosystems around the country, stopping with the #RiseofRest tour in Richmond, Raleigh-Durham, Atlanta, New Orleans, Baltimore, Philly, Buffalo, and Manchester.

2016 Race: Engine hosted the first ever Iowa Presidential Tech Town Hall.

We hope you’ll join us in 2016 as we continue to fight for greater capital access, improved educational opportunities for tech workers and aspiring entrepreneurs, patent reform, and strong net neutrality protections.

Catch you next year!