NewDEAL Monthly Spotlight - Spurring Entrepreneurship and Innovation

Check out the Monthly Spotlight as a PDF

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To see ideas from NewDEAL Leaders on a wide range of topics, visit the NewDEAL Ideas Portal, and visit our new Ideas Challenge Hub for more resources.

Following up on NewDEAL's Ideas Summit and in setting the stage for this year's New Ideas Challenge, we are continuing to spotlight NewDEAL Leaders' efforts to expand opportunity. Across the country, Leaders are working to encourage innovation and entrepreneurship, which are key to growing the new economy. This month's Spotlight highlights a few of those efforts. 

Spurring Entrepreneurship and Innovation

 

Innovation Vouchers for R&D

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David Buchwald
Assemblymember,
White Plains, NY

Access to Capital

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Seth Magaziner
State Treasurer,
Rhode Island

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Eric Johnson
Representative,
Dallas, TX

Reducing Fees that Impact Entrepreneurs

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Bob Duff
Senate Majority Leader,
Norwalk, CT

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Caroline Simmons
Representative,
Stamford, CT


 

Innovation Vouchers for R&D

When the Governor signs New York Assemblymember David Buchwald’s Innovation Voucher program into law, the state’s community of small businesses and entrepreneurs will have new opportunities to pursue research initiatives required to create new products and grow existing businesses. The program allows the state to provide dollar-for-dollar matching funds for proposals that link businesses with experts from higher education, government laboratories, and public research institutes.

Why It's Important

Small businesses have many great ideas, but typically do not have research budgets. Meanwhile, higher education and other research institutions have the expertise and resources to provide scientific and technological help that many talented entrepreneurs can’t afford. This model has worked around the world, including in Austria, Belgium, Canada, Denmark, Germany, Ireland, and Sweden. Through a similar program in the Netherlands, 80 percent of vouchers have produced tangible results and 80 percent of their new research and development jobs since 2005 are attributed to vouchers.


 

Access to Capital

Rhode Island has deposited $15 million in state cash into eight local banks and credit unions under the Bank Local program established by State Treasurer Seth Magaziner to encourage small-business lending. The program supports loans to companies with 100 employees or less, matching funds from local lenders with deposits from some of the millions of dollars state agencies hold in cash at any given time.
 
In Texas, Representative Eric Johnson authored legislation that has established more flexible crowdfunding regulation requirements for small businesses, which can now receive capital from nonprofit community development financial institutions, or nonprofits with federal authority to distribute housing and community development block grants. The Dallas Morning News highlighted the effort as a way to allow government and nonprofits agencies to attract capital from a wide range of private investors for business development in poorer neighborhoods.

Why It's Important

Capital has become increasingly difficult to come by for small businesses and startups, with ten of the largest banks lending $44.7 million in 2014 compared to a peak of $72.5 million in 2006. Meanwhile, a report last year found a drop in entrepreneurial activity nationwide. As a result of the barriers to starting a company in today’s environment, the rate of new firms has been slow to bounce back to pre-recession levels. Studies have found that "new and young companies are the primary source of job creation in the American economy."


 

Reducing Fees that Impact Entrepreneurs

NewDEAL Leaders in Connecticut have passed legislation to remove barriers erected by unnecessary fees. Senator Bob Duff has spearheaded a successful effort to phase out occupational licenses for jobs that don’t have educational or professional prerequisiteslike Residential Flat Glass or Automotive Glazier, making it easier for people to enter the workforce and start a business in these fields. In addition, the Entrepreneurial Learner's Permit, created by Connecticut Representative Caroline Simmons, provides up to $500,000 in statewide funding for reimbursements for state licensing and permitting costs to first-time entrepreneurs in the information services, biotechnology, and green technology industries.

Why It's Important

The Kauffman Foundation has found that about 29 percent of jobs require a government-issued license -- a dramatic increase from just forty years ago when only 10 percent of workers were licensed. Over time, the number of licensed professions has grown and expanded to industries that pose little or no threat to public safety. These licensure requirements result in fewer practitioners, who can demand higher wages, while also stifling new business creation and innovation. Research shows lower rates of entrepreneurship in states that license more low-income occupations.

 

 


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