89% of investors said legal environment makes them less likely to invest
Washington, DC – Engine, a non-profit advocacy and research organization that promotes startups and entrepreneurship, and Fifth Era, an advisory and investment firm, today released a new report entitled "The Impact of Internet Regulation on Early Stage Investment". The report makes a compelling case for copyright reform, and will be used by Engine and other advocates to push Congress to enact reform legislation this session.
In 2014, Fifth Era surveyed 330 investors in eight countries around the world (Australia, France, Germany, India, Italy, Spain, the UK and the US) to assess the degree to which future legal environment might impact their willingness to invest in Digital Content Intermediaries (DCIs). These countries represent 56% of world GDP and 25 %of world population.
The survey found significant concerns among investors in all eight countries around a number of issues, including:
- Legal Environment - Globally investors view the legal environment as having the most negative impact on their investing activities with 89% of the investors surveyed saying it had a modest or strongly negative impact. A large majority of early stage investors around the world feel that the current legal environment has a more negative impact on their investing than either a weak economy or an increased competitive environment.
- Regulatory Ambiguity - When asked what it was about the legal environment that so concerns investors and impacts their investing behavior, the ambiguity in the current regulatory environment was identified as of significant concern. 88% of worldwide investors surveyed said they are uncomfortable investing in DCIs that offer user generated music and video given an ambiguous regulatory framework.
- Uncertain and Potentially Large Damages - In all eight countries surveyed, early stage investors view the risk of uncertain and potentially large damages as of significant concern as they look to invest in DCIs. 85% agree or strongly agree that this is a major factor in making them uncomfortable about investing in DCIs.
- Secondary Effects of IP Infringement Regulations - The second area of consistent concern worldwide was secondary liability. 78% of investors said they would be deterred from investing in DCI’s that offer user uploaded music or video should new anti-piracy regulations increase the risk that their investments would be exposed to secondary liability in IP infringement cases.
These findings highlight the risk that problematic copyright regulations might greatly curtail or cut off capital from the early stage companies that are driving global innovation, GDP growth and new job formation.
The full report can be found at:
Engine is a non-profit organization that supports the growth of technology entrepreneurship through economic research, policy analysis, and advocacy on local and national issues. The startups we represent are among the most innovative and fastest growing companies in the country, fundamentally altering and challenging entrenched business models, ideas, and institutions across all industries. These are the businesses that drive our economic prosperity, create jobs, and improve our lives. Visit engine.is to learn more about Engine.
About Fifth Era
Fifth Era is an advisory and investment firm based in the San Francisco Bay Area. Working with the founders, executive teams and boards of our advisory clients we develop compelling strategies with an emphasize on executable plans – not lofty concepts that an organization can not make happen. Visit fifthera.com to learn more about Fifth Era.