WASHINGTON — The Obama administration on Monday launched an ambitious new campaign with the private sector to spur a new crop of innovative startups in fields such as clean energy and high tech.
The Startup America initiative builds on the theme of innovation and investment the president made a centerpiece in his State of the Union address last week, and kicks off a week of White House events where officials will highlight elements of the new policy agenda.
The administration has tapped AOL co-founder Steve Case to chair the Startup America Partnership, a broad consortium that aims to drive investment from tech companies, startup accelerators, foundations and other members of the private sector. Intel, HP, IBM and Facebook have signed on as early supporters of the initiative, each pledging to contribute venture funding or other resources to help incubate new businesses.
Senior administration officials emphasized the role of the private sector in the program at a launch event here at the White House Eisenhower Executive Office Building, explaining that in addition to contributing direct funding, the government is aiming to deliver incentives for new private investments in startup companies.
“What we see today is also a real understanding of the public-private partnership,” said Gene Sperling, director of the president’s National Economic Council. “We are announcing policy measures, but we are also seeing today the private sector coming to join us. Even today at the start there is over $400 million of private-sector commitments being made.”
Some of the policy proposals the White House announced today to spur the growth of young companies will appear in the budget the president will deliver to Congress in the next few weeks. Obama will call for permanently eliminating capital gains taxes on certain investments in small businesses, and ask to expand the New Markets Tax Credit, which promotes private investment in low-income communities.
Additionally, the Small Business Administration is pledging $2 billion in federal matching funds for private-sector investments over the next five years, split evenly between funding for growing capital available to entrepreneurs in low-income or otherwise unserved areas, and a new Early-Stage Innovation Fund to help startups secure their initial seed funding. The agency will administer the funding through its Small Business Investment Company, a program SBA Administrator Karen Mills boasted operates on a “zero-subsidy basis,” vowing that the matching funds would not entail any new costs to taxpayers.
“What we really need is to get more of the investors off of the sidelines and into the game,” Mills said this morning.
Under the new initiative, the Department of Commerce plans to expand an existing program to help commercialize clean technologies. Additionally, Secretary Gary Locke announced that the department is finalizing a plan to establish a fast-track review for patent applications. The U.S. Patent and Trademark office is currently laboring under a substantial backlog that can delay the review and approval of a patent application for as long as three years, what Locke called an “unacceptably long timeframe” that can dramatically impair a startup’s ability to raise funding.
The administration is also expanding mentorship programs for clean-energy startups, and launching a training initiative for veterans to launch their own businesses.
Carl Schramm, CEO of the Kauffman Foundation, a philanthropic and research group focused on entrepreneurship, will serve as a founding board member of the Startup America Partnership.
The Startup America initiative comes amid the administration’s continuing efforts to nurse the economy back to health and create jobs, marked recently by more conspicuous outreach to the business community. In his State of the Union address, for instance, Obama called for a reduction in the corporate tax rate, and the U.S. Chamber of Commerce, an outspoken critic of many administration initiatives, has signed onto the new Startup America program.
Today’s launch was very much in keeping with the pro-business tack the administration has taken since the November elections, with White House officials drawing a straight line between the new initiative and job growth.
“If you just go get the Fortune 400 list, it’s quite clear that some of the biggest employers in this nation, some of the fastest growing companies that employ tens or even hundreds of thousands of people, started in somebody’s garage as just an idea that they had, and they went from there,” said Austan Goolsbee, chairman of the president’s Council of Economic Advisors. “The new firms in the economy have a way disproportionate share of driving job creation.”