Startup News Digest: 5/20/2016

Our weekly take on some of the biggest stories in startup and tech policy. 

Engine Drives Startup Engagement on Encryption. In the wake of the Apple-FBI dispute, lawmakers have made encryption a top policy priority. Several Congressional working groups have now been established to determine the best approach to address regulation of encryption technologies, but very little of the public debate focuses on the detrimental impact any new rules could have on startups. To encourage Congress to focus on how anti-encryption policies could damage the startup ecosystem, Engine is building a coalition of entrepreneurs, startups, and innovators to weigh in with Congress and setting up meetings between policymakers and startup leaders. If you’re a startup interested in shaping the encryption debate in Washington, sign our letter here.

Regulation Crowdfunding Goes Live. Regulation crowdfunding went live Monday, allowing startups to raise up to $1 million in a 12-month period from everyday investors. Platforms including SeedInvest, StartEngine, and WeFunder are already displaying offerings from early-stage companies soliciting investments and at least 17 companies filed the necessary issuing documents with the SEC. Regulation crowdfunding offers unprecedented opportunities for retail investors to participate in the startup economy and for entrepreneurs struggling to raise capital from traditional investors to tap into new funding sources. While it’s obviously too early to tell whether this new financing option will truly jumpstart the startup economy, we’ve said before that legislative reform is needed to improve the current regulatory framework. Until then, startups and investors would be wise to familiarize themselves with the risks, rewards, and rules required to participate.

New Numbers about the New Economy. The Pew Research Center released a new report this week, “Shared, Collaborative and On Demand: The New Digital Economy” about Americans’ usage of online ride-hailing, home-sharing, and crowdfunding platforms. One major finding: 72 percent of American adults have used at least one of 11 different sharing and on-demand services. But digging into the numbers reveals greater divides. For instance, while 15 percent of Americans have used apps like Uber or Lyft, twice as many have never heard of these companies. Meanwhile, crowdfunding is slightly more popular than ride-sharing among American adults: Pew reports that 22 percent of this population have contributed to an online fundraising project. The study also took into account people’s opinions on whether these new services should be regulated. As of now, “the public at large is relatively split,” Pew explains.

Growth Entrepreneurship on the Rise. The 2016 Index of Growth Entrepreneurship from the Kauffman Foundation has some promising numbers for the startup economy: 2015 was the largest year-over-year increase in growth entrepreneurship in the last decade. By measuring the rate of startup growth, the share of those startups scaling, and startup revenue growth, this index indicates the overall health of America’s new, growth-oriented businesses. It also reflects wider trends in the national economy. Overall startup growth today is still slower than it was in the ‘80s and ‘90s, but these upward trends are promising. Moreover, the Kauffman Foundation reports that newer companies contributed approximately 200,000 more jobs to the economy in 2015 than in the previous year.

Anti-Muni Broadband Provision in Missouri Fails to Pass. Two weeks ago, we flagged a transportation bill passed by the Missouri State House of Representatives that included an unfortunate (and entirely unrelated) anti-municipal broadband provision. The provision would have prohibited cities or localities from building their own networks unless they met certain restrictive conditions or put the project up for a vote. But community-owned broadband advocates can rest easy: the Senate-passed version of the transportation bill did not include the anti-muni broadband provision, and it was stripped from the final bill by the conference committee this week.

What’s the Hold-up on Net Neutrality? If you’re like us and have been obsessively refreshing your email every Tuesday and Friday morning waiting for the D.C. Circuit Court to announce its net neutrality ruling, then you might also be wondering, “What is taking so long?” 169 days have elapsed since oral arguments were heard back in December. But according to a piece published in Bloomberg BNA this week, the D.C. Circuit Court’s seemingly slow pace may actually be within normal bounds. Legal experts note that the time the court has taken so far is “not outrageously long” and it wouldn’t be surprising if we had to wait until the summer for a decision. The case is incredibly complex, and one judge could be holding up the decision because a dissent is not finished. We may never know why the pace has been slower than most experts predicted, but one thing is clear: we are going to have to wait a little while longer before we hear the court’s final decision.

Make Tech Bubbles Great Again. Donald Trump made it clear once again this week that he is not the tech community’s candidate. In an interview, Trump warned that a dangerous financial bubble has formed in the technology industry and likened today’s climate to the situation right before the housing market crashed in 2008. His comments were met with a collective sigh in Silicon Valley, with Marc Andreessen sarcastically tweeting "FINALLY someone calls it out.”  Check out Engine’s candidate report card for more analysis on how Trump fares on tech issues. Hint: He doesn’t do too well.