The Big Story: Startups need competition agenda that supports innovation
As competition policy under the new administration takes shape, startups are closely watching how it will impact their ability to raise capital and secure successful exits. Recent moves from the Trump administration signal a willingness to continue heightened scrutiny of acquisition activity, which is linked to a decrease in exits and startup investment. Policymakers should recognize how acquisitions drive growth in the startup ecosystem by facilitating cycles of capital, knowledge, and talent.
Last week, Federal Trade Commission (FTC) Chairman Andrew Ferguson confirmed that the agency will continue to follow aggressive Biden-era guidance on how they evaluate proposed mergers and acquisitions. Those guidelines broadly discourage acquisitions, especially of startups. Meanwhile, Congress is set to advance two key nominees who will shape competition policy in the Trump administration; on Tuesday, the Senate Commerce Committee will hold a hearing on the nomination of Mark Meador to be FTC Commissioner, while the Senate Judiciary Committee is expected to vote Thursday on Gail Slater to lead the Antitrust Division at the Department of Justice. Once confirmed, the nominees should pursue an agenda that supports startups and enables founders to seek the exits that best suit their businesses.
Policymakers have an additional opportunity to advance competition policy that supports startups by adopting a recently introduced Congressional Review Act resolution to repeal a Biden era rewrite of the premerger notification process. That Biden-era rule took effect February 10th and adds extensive new burdens for filings required for some acquisitions. As we and a coalition of industry groups told lawmakers, repealing the rule presents an opportunity to craft a more balanced solution, one that recognizes how mergers and acquisitions enable startups to scale, innovate, and eventually exit successfully.
Policy Roundup:
Effort to downsize government impacts U.S. AI leadership. National Science Foundation employees were fired and probationary staffers at the National Institute of Standards and Technology received warning about upcoming firings last week, as part of a larger effort of President Trump's cuts to the government. The agencies are key to supporting U.S. innovation and developing U.S.-led AI standards, and gutting them will undermine American AI leadership and efforts to avoid a global patchwork of onerous AI rules.
Senate Republicans question nominee on bill threatening independent contractors. The Senate Committee on Health, Education, Labor, and Pensions held a confirmation hearing last Wednesday for labor secretary nominee Lori Chavez-DeRemer, which included intense debate over the Protecting the Right to Organize (PRO) Act, a bill she co-sponsored as a House representative that would threaten startups’ ability to hire independent contractors. The Trump administration has also halted the federal government’s defense of the Biden Administration's rule on independent contractors, which startups often rely on—especially as they grow, when workflow may not warrant hiring full time talent.
Supreme Court allows Corporate Transparency Act to move forward. The Supreme Court said last Thursday afternoon that it would allow the Corporate Transparency Act to be implemented by the U.S. Treasury Department, overturning an injunction issued by a district court in Texas. Earlier this year, the Financial Crimes Enforcement Network announced that, due to a nationwide stay on implementing the law issued by a federal judge in Texas, companies have temporary relief from filing beneficial ownership information.
Senate Republicans eye spectrum sale. The Senate Commerce Committee held a hearing last Wednesday discussing reauthorizing the Federal Communication Commission’s authority to auction off spectrum licenses and how best to free up government-held spectrum so that it can be used commercially, including to expand wireless networks. Robust wireless networks help people across the country get online, and lawmakers should look for all opportunities to make the most efficient use of spectrum currently held exclusively by agencies, including the Department of Defense.
On the Horizon
TUE. 2/25: The Senate Commerce Committee will convene a nomination hearing for Michael Kratsios to be Director of the Office of Science and Technology Policy, and Mark Meador to be a Federal Trade Commissioner at 10:00 AM ET.
TUE. 2/25: The Securities and Exchange Commission’s Small Business Capital Formation Advisory Committee will convene a hearing to discuss capital access challenges facing emerging fund managers and barriers facing small companies not listed on a national securities exchange at 10:00 AM ET.
TUE. 2/25: The House Ways and Means subcommittee on trade will convene a hearing to discuss enforcement priorities at 10:00 AM ET.
WED. 2/26: The House Financial Services subcommittee on capital markets will convene a hearing to consider proposals to improve capital access for startups at 10:00 AM ET.
WED. 2/26: The House Committee on Small Business will convene a hearing to discuss the Small Business Innovation Research and the Small Business Technology Transfer Programs at 10:00 AM ET.
WED. 2/26: The House Committee on Education and the Workforce will convene a hearing to discuss strengthening the workforce and economy at 10:15 AM ET.
Startup Roundup:
#StartupsEverywhere: Driftwood, Texas. Fertility is a critical concern for both humans and the animals we share our world with. Whether addressing the rising rates of human infertility, finding ways to feed the global population more efficiently, or working to save endangered species, Dr. Cara Wells is tackling it all. Through her company, EMGenisys, Dr. Wells is advancing the science of embryonics for the 21st century. We sat down with her to discuss her product, patents, and access to capital.
