SUPPORT | June 9, 2020

Startup Nations Policy Journal - Q2 2020

Photo Credit: Pixabay

These past few months have been a roller-coaster ride for entrepreneurs and startup policy stakeholders.

Experiences from across the globe highlight the critical role that startup-savvy policy advisors play in ensuring that new and young businesses do not fall through the cracks. Policies designed without considering this vital entrepreneurial sector inevitably fail to stimulate or remove barriers to new, job creating businesses– a vital task these days. 

For example, Australia's wage subsidy program was meant to help businesses of all kinds and sizes keep their employees on their payroll. The subsidies were only available to businesses with a 30% year-on-year drop in revenue. As such, the scheme did not help early-stage, pre-revenue (but high-potential) startups nor businesses less than a year old. The StartupAUS entrepreneurship advocacy organization mobilized to give a voice to startup entrepreneurs, and policymakers reacted attempting to expand the eligibility requirements. 

While governments across the development spectrum met several policy design and implementation challenges, the pandemic also sped-up the adoption of healthy processes of policy experimentation and ecosystem feedback loops. During a regional forum hosted by the Inter-American Bank and PRODEM, Startup Nations member Ignacio Gaitán of InnPulsa Colombia said, “we are now coordinating more closely than ever with entrepreneurs via a streamlined, four-pronged portfolio of policy instruments to remove the most pressing barriers they are facing.”

Similarly, Germany's government officials adjusted their approach when they received feedback that emergency funding programs were not helping entrepreneurs who, faced with rapid business downturn, were required by law to enter bankruptcy proceedings well before they could hear back about their application for emergency funding. The government responded quickly by coordinating across agencies to enact an exemption to the three-week filing obligation. As a result, businesses that have reasonable prospects of receiving emergency funding or restructuring debt, could apply before shutting down.

We have captured several of these policy lessons via the "challenges, criticisms and lessons" section of recent entries into the Startup Nations Atlas of Policies (SNAP). You can filter for COVID-19 policy responses to find these entries, which include:  

  • Liquidity support for startups: Switzerland provides a guarantee scheme to support promising startups encountering liquidity problems caused by the coronavirus, swiftly implemented in collaboration with the cantons.
  • Temporary Relief from Crowdfunding Rules: The United States' Securities and Exchange Commission (SEC) is providing temporary, conditional relief to established small businesses impacted by COVID-19 in order to expedite the offering process.
  • The 'Future Fund' Scheme: The United Kingdom made available to non-listed start-ups convertible loans ranging between £125,000 and £5 million, with private investors matching government financing. The loans will automatically convert to equity in a start-up’s next funding round, or at the end of the loan if the debt hasn’t been repaid.

We encourage entrepreneurship policy stakeholders to contribute policy information. Doing so: a) documents government's efforts; b) allows stakeholders to gather feedback through a form developed in collaboration with the World Bank; and c) helps ecosystem-builders around the world build on existing knowledge as they seek new and better ways to support entrepreneurs. Furthermore, contributors to the compendium can continuously update their SNAP entries to record new information as the policy moves through the processes of approval, implementation and impact evaluation. 

To facilitate learning, GEN Policy has been partnering on various Startup Nations Policy Dialogues to bring policymakers and entrepreneurs closer together, particularly at a time when entrepreneurs are seeking clarity on which government programs could help them. Steering Committee member Minister Alzayani from Bahrain kick-started this COVID-19 series of Policy Dialogues.

The next Policy Dialogue will take place on June 25th, 2020 as part of the The Next Web - Financial Times' Ecosystems Couch Conference. We will discuss "How to Design a New Business Plan for the Economy". Guest speaker Jason Wiens from the Kauffman Foundation will share the process and underlying principles that led the Start Us Up Coalition to launch America’s New Business Plan– a community-curated policy roadmap to expand access to entrepreneurship at the federal, state and local levels in the United States.

The full program will also feature Techleap.NL, Tech Nation UK and other key policy stakeholders.  To register as a GEN member, please contact sarolta@genglobal.org.

The Coronavirus has wreaked havoc on the startup sector. We look forward to continuing to lend our platform to contain as much of the impact as possible, and help save a generation of entrepreneurs.

 

 

Cristina Fernández focuses on integrating policymakers into startup ecosystems across the world, creating platforms for them to exchange ideas… About the author