States gear up to work on AI
Startup policy outlook under second Trump term
Executive coaching should be accessible to anyone who is interested, but oftentimes scaling the education is not practical. With her company Zella Life, co-founder Remy Meraz is democratizing professional development using AI. We sat down with her to discuss AI, independent contractors, and more.
After working in the financial sector for over 20 years, Mical Jeanlys-White founded her own company, WealthMore, a wealth tech with a focus on tackling a key financial barrier—wealth building and management. Her company leverages technology to connect everyday Americans with accessible wealth management services, aiming to provide wealth creation for all. We sat down with her to discuss her journey in raising capital, navigating tax policy, the evolving role of AI, and more.
Vance Reavie is no stranger to entrepreneurship. Using his knowledge from previous ventures, he created an AI platform that intelligently automates manual marketing and merchandising workflows and content generation processes for brands and retailers. We sat down with Vance to discuss the startup ecosystem in Arkansas, AI policy and regulation, grant opportunities, and more.
The Big Story: Supreme Court strikes down Biden student loan relief plan. The Supreme Court this week struck down President Biden’s student loan relief plan that would have canceled up to $20,000 in student debt for qualified borrowers. The decision, while not unexpected, is a blow to the millions of Americans riddled with student debt, and individuals whose debt acts as a barrier to pursuing entrepreneurship.
The Big Story: Startups call on Congress to fix R&D expensing. Lawmakers in both chambers of Congress took steps this week toward addressing a critical tax issue impacting startups’ bottom lines: a recently enacted change to how startups expense research, development, and experimentation costs. House and Senate lawmakers held two hearings this week exploring how the tax code, including incentives around R&D impact small businesses and startups.
The Big Story: House passes capital formation bills. The House passed several bills this week to improve capital access for startups, including by providing educational resources on capital raising options for underrepresented small businesses and another to broaden the pool of potential startup investors.
The Big Story: Congress digs into recent bank failures. This week, committees in both chambers held hearings to examine recent bank failures, including the collapse of Silicon Valley Bank (SVB)—a key financial institution in the startup ecosystem. The collapse of SVB in particular devastated many across the innovation ecosystem, sending companies scrambling to withdraw funds and make payroll, uncertain if their full balances would be secured.
The Big Story: The difficulties of content moderation and the chance to try it yourself. Critics of the Internet industry, including policymakers, frequently complain about content moderation decisions and propose legislative changes that would make it harder for Internet companies to host, remove, demote, amplify, and curate user content. To help inform those conversations, Engine worked with Copia and Leveraged Play to develop a new video game this week—Moderator Mayhem—with the goal of highlighting the difficulties and the inherent tradeoffs Internet companies, especially startups, face while navigating moderating their users’ content.
The Big Story: “Children’s safety” push for more data collection, content scanning. Lawmakers reintroduced and advanced legislation that would push Internet companies of all types and sizes to collect more data from their users and scan public and private user content in the name of childrens’ safety. The bills—including the Kids Online Safety Act, the Children and Teens’ Online Privacy Protection Act, which were reintroduced this week, and the Eliminating Abusive and Rampant Neglect of Interactive Technologies (EARN IT) Act, which advanced out of the Senate Judiciary Committee this week—would remake the regulatory framework that enables startups to grow and succeed.
The Big Story: Over 65 startups call for uniform federal privacy law. This week, startups are calling on Congress to pass a federal privacy law that takes the startup ecosystem into account. A coalition of startups and support organizations across 26 states sent a letter to Congress urging lawmakers to pass a law that creates uniformity, promotes clarity, limits bad faith litigation, accounts for the resources of startups, and recognizes the interconnectedness of the startup ecosystem. The letter comes as states continue to enact their own unique data privacy laws, and as a Congressional committee explored the problems posed by a sectoral federal privacy landscape in a hearing this week.
The Big Story: Non-compete ban would boost the startup ecosystem. Policymakers received thousands of comments this week as a key agency considers a change that would make it easier for people to leave their jobs, including to found and join early stage startups. In conjunction with the Juelsgaard Intellectual Property and Innovation Clinic, Engine submitted comments this week to the Federal Trade Commission urging the agency to move forward with a proposed rule change that would ban most non-compete agreements, which are post-employment contracts that bar workers from taking up jobs with competitors for a prescribed period of time.
Engine is a non-profit technology policy, research, and advocacy organization that bridges the gap between policymakers and startups. Engine works with government and a community of thousands of high-technology, growth-oriented startups across the nation to support the development of technology entrepreneurship through economic research, policy analysis, and advocacy on local and national issues. Engine appreciates the opportunity to submit this response to the Federal Trade Commission’s request for comment on the Commission’s notice of proposed rulemaking banning most non-compete clauses in employment contracts.
The Big Story: Policymakers set their sights on artificial intelligence. This week saw a frenzy of activity from policymakers around the globe looking to regulate artificial intelligence technologies, which startups are increasingly leveraging in their products. In the U.S., federal agencies recently kicked off processes to examine AI and intellectual property as well as AI accountability, while Congress is exploring legislation. Abroad, policymakers have used existing regulations to ban certain AI tools and are looking to adapt their proposed AI rules.
The Big Story: SVB fallout puts startup banking needs in the spotlight. In the wake of last week’s collapse of a key startup-facing bank, many in the startup ecosystem are concerned about the banking options and funding landscape for startups across the country. Last week, California regulators and the Federal Deposit Insurance Corporation (FDIC) shuttered and placed into receivership Silicon Valley Bank (SVB), a mainstay bank for the global startup ecosystem. At the same time, startups scrambled to move funds and were unsure if they’d have the capital to pay their employees this week.
The Big Story: Hearings cast spotlight on capital access obstacles. Lawmakers heard from entrepreneurs and investors this week as they examined key issues impacting startups’ ability to access capital. The House Financial Services subcommittee held two hearings covering multiple legislative proposals, including efforts to expand the pool of accredited investors and changes to the structure of certain investment funds. Those changes, if enacted, would bring much needed diversity to the startup ecosystem’s investor pool and boost funding opportunities for underrepresented entrepreneurs.
The Big Story: Time is running out for Congress to save imperiled immigration program. As the end of the year quickly approaches—and with it, the end of this session of Congress—the future of the Deferred Action for Childhood Arrivals Program (DACA) remains uncertain. DACA recipients play a key role in the startup ecosystem as entrepreneurs and STEM talent. Without Congressional action, the future of the program will likely end up in the hands of the Supreme Court, which could invalidate the program. Senate Democrats are pushing to provide permanent status for Dreamers before that happens.
The Big Story: Online sales tax back in the spotlight with watchdog report. A government agency is recommending that Congress address the patchwork of state laws that govern online sales taxes, an issue that has burdened e-commerce businesses, including many startups. In a new report this week, the Government Accountability Office examined the “substantial uncertainty” and complexity of the current remote sales tax landscape and recommended that Congress work with states to streamline requirements and minimize the burdens currently imposed on businesses across the country.
The Big Story: Affirmative Action cases will impact innovation ecosystem. This week, the U.S. Supreme Court heard two cases that could upend race-conscious admissions policies used by many universities and alter the pipeline for STEM talent in the innovation ecosystem. Eliminating the ability to consider race in college admissions would have an outsized impact on on-campus diversity, the racial and ethnic diversity of many employers hiring college-educated talent throughout the country, and the makeup of the startup ecosystem and the breadth of innovation it produces.
The Big Story: Engine releases report on the role of acquisitions in the startup ecosystem. Engine, in partnership with Startup Genome, released a new report this week examining the role exits play in the startup ecosystem, highlighting the importance of exits via acquisition, and emphasizing the experience of founders that have had their companies acquired. The report—“Exits, Investment, and the Startup Experience: the role of acquisitions in the startup ecosystem”—should equip policymakers with a solid foundation from which they can advance pro-innovative policies that startups need to thrive.
The Big Story: Judge strikes down Maryland tax on digital advertising. A Maryland judge struck down the U.S.’ first tax on digital advertising, which faced vocal challenges including from technology companies and would have resulted in taxed companies passing down its cost to customers, including startups. In a ruling on Monday, the court found the tax, implemented by Maryland lawmakers to raise revenue, unconstitutional and a violation of the Internet Tax Freedom Act.
The Big Story: Proposed independent contractor rule could make hiring harder for startups. This week the Department of Labor (DoL) issued a proposed rule that is likely to impact how early-stage startups build their teams. The DoL’s proposed rule on worker classification would limit who can be considered an independent contractor and comes shortly after the Federal Trade Commission (FTC) announced similar enforcement priorities for the gig economy. As we shared in a recent blog post, the rule could limit startup flexibility in their hiring decisions, which could particularly impact growing companies with lean budgets.
The following statement is attributed to Kate Tummarello, Executive Director of Engine, on the U.S. Court of Appeals for the 5th Circuit ruling in State of Texas v. United States of America.
Statement
“Yesterday’s decision by the U.S. Court of Appeals for the 5th Circuit ruling DACA illegal is a crushing disappointment for the thousands of DACA recipients living and working in the U.S., who provide meaningful contributions to our country, including our startup ecosystem. While existing DACA recipients currently retain their protections, it is clear Congress must act urgently to secure and extend protections for all Dreamers and send the message that they are valued, eliminating the constant threat of deportation.”
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