Statement: New Business Preservation Act Provides Much Needed Capital to Startups
Today, Senators Amy Klobuchar (D-MN), Chris Coons (D-DE), Tim Kaine (D-VA), and Angus King (I-ME) introduced the New Business Preservation Act. The legislation would create an Innovation and Startups Equity Investment Program in partnership with states and private investors, providing vital capital during the coronavirus pandemic to new startups.
Startups play a critical role in the American economy, powering productivity gains and creating nearly 3 million jobs annually. Unfortunately, due to their nature, many new businesses do not have adequate assets on hand to survive an emergency such as coronavirus, with an average time to turn a profit of nearly three years.
The New Business Preservation Act would provide much needed financial resources to startups during the pandemic. Specifically, the New Business Preservation Act would allocate an initial $2 billion to the program for participating states to invest alongside private venture capital companies in new businesses outside of the Silicon Valley, New York, and Boston venture capital hubs. Importantly, special consideration is given to businesses created by women and persons of color, who face additional barriers in accessing investment capital.
As the U.S. economy continues to suffer due to the coronavirus pandemic, the New Business Preservation Act provides relief to America’s startups. The Progressive Policy Institute urges Congress to swiftly pass this legislation.