Startups Push Government on Diversity in Innovation
TLDR: The federal government recently solicited public input about a national strategy for building more diverse and inclusive innovation ecosystems. While startup communities across the country comprise individuals of every race, gender, ethnicity, and culture, more needs to be done to empower underrepresented entrepreneurs and dismantle the unjust barriers they routinely face. As the U.S. continues to address systemic inequalities, many startups, entrepreneurs, and support organizations are calling on the government to use this opportunity to support entrepreneurship for all.
What’s Happening This Week: The U.S. Patent and Trademark Office (USPTO), in consultation with the National Council for Expanding American Innovation (NCEAI), closed a public comment period yesterday on the topic of expanding the country’s innovation ecosystems to be more diverse and inclusive.
The call for public comments provided the startup community and entrepreneurs across the U.S. with the opportunity to offer feedback on how the government can remove barriers to entry that keep too many underrepresented individuals from pursuing great ideas. A letter to USPTO yesterday—signed by 113 startups, entrepreneurs, investors, and support organizations—offered a variety of suggested steps that officials can take to achieve this goal, including incentivizing private investments in underrepresented founders and making direct government funding fairer and more equitable. Engine also submitted comments to USPTO yesterday, in collaboration with students at Stanford’s Juelsgaard IP and Innovation Clinic. Our comments call on the entire federal government to mobilize toward increasing diversity and inclusion in innovation.
Why it Matters to Startups: It would be difficult to overstate the value of diversity to innovation and entrepreneurship. Diverse teams generate better economic results, and more—often better—innovation emerges from their unique perspectives. In addition, as America continues to address systemic inequalities and structural racism across society, policymakers should ensure that increasing diversity in innovation remains a key part of their strategy for promoting equity for all.
When it comes to the patent system, the USPTO must recognize that its stakeholders extend beyond just patent applicants and owners. In thinking about its role in promoting diversity, USPTO should think about all startups and entrepreneurs (not just patent owners), and also be sure to look at customers and users who never interact with the patent system, but nonetheless are impacted by the Office’s decisions. To promote diversity among patent owners, Engine encourages policymakers to expand upon initiatives that equip underrepresented founders who want patents with the tools or resources they need to obtain high-quality ones. And policymakers should also find ways to eliminate bias in the application process and collect better data to monitor progress.
Outside the patent system, there is much more the government should do to foster diverse and inclusive innovation. The most significant challenge facing many startups is accessing capital. Venture capital (VC) and equity investment is imbalanced along race, gender, ethnic, and geographic lines. Most VC funding goes to companies founded by white men located in a few corners of the U.S. Many underrepresented founders are further excluded because they lack equitable access to more common sources of startup capital—personal or family wealth and lines of credit or business loans. Systemic racism and sexism have created deep gaps in wages and wealth, leaving many underserved founders at an unwarranted (and sometimes severe) disadvantage.
There are many levers the government can pull, starting with its own funding. Agencies should seek to eliminate current bias and disparities in federal grants and loans. To accomplish this they should, for example, ensure diverse leaders are at the table, setting more inclusive research priorities and making funding decisions. The government should also create or improve existing financial programs to better serve startups—particularly nascent tech companies, which have different needs, and would benefit from specific tax credits or streamlined grant review. In addition, the government should consider how it can encourage private investors to spend in more equitable ways, like by incentivizing angel investors or implementing policies to reduce bias in banking.
Another core feature of startup success is rooted in networking and mentoring. Startups across the country routinely emphasize the enormous value of community. Yet this is another area where underrepresented founders have been historically excluded—costing them access to potential investors, seasoned industry advisors, and entrepreneurial peers. The government can support and bolster the connective tissue of startup ecosystems by, for example, funding incubators, accelerators, and entrepreneurial support organizations that focus on underrepresented founders. And it should actively meet startups where they are, by attending conventions or working through regional offices to facilitate access to government resources and hear directly from startups about what they need from policymakers.
Finally, the talent pipeline is key. It is critical that training resources are equitably distributed; all young people—no matter their zip code—should be encouraged to be innovators. Unfortunately, certain students lack access to STEM education, but even those who pursue it often abandon STEM before they choose a career. The government can—and should—spend more on education, but it should figure out how to get “smarter” about training tomorrow’s innovators. For many innovators, their path will not include a university degree. Part of building the talent pipeline will require new curricula to highlight accomplished innovators from underrepresented backgrounds. The government should also focus on attracting and retaining more diverse STEM educators. And finally, the government should invest in improved, dedicated innovation and entrepreneurship education, to train creative, innovative young people and equip them with the tools they need to succeed in solving problems and developing new ideas into practical solutions through advanced technology.
On the Horizon.
The Senate Banking Committee is holding a hearing at 9:30 a.m. tomorrow to discuss the pandemic and the next steps for rebuilding Main Street.
The House Judiciary Antitrust subcommittee is holding a hearing at 10 a.m. tomorrow to examine “Proposals to Address Gatekeeper Power and Lower Barriers to Entry Online.”
The Information Technology and Innovation Foundation is holding a webinar tomorrow at noon to discuss what would change if Congress decides to overhaul Section 230.
