Entrepreneurship is a significant catalyst for a strong economy, but why wasn’t this sector injected with stimulus dollars?
During Covid-19, you have probably no doubt heard in the news how different countries are/were planning to address the pandemic within their borders. The varying approaches of South Korea, Spain, Sweden, India, and the United States were discussed significantly.
Interesting to me, however, is that we haven’t often seen the comparison of how other countries have addressed the stimulus issue. Certainly, China has a very different economic engine than the United States, so the comparison is difficult.
However, in this article about (part of) the UK’s approach, it felt like a unique approach and one that the US may be overlooked as an opportunity. Without digging into the nitty-gritty details, this concept has real merit.
In May, the UK launched the Future Fund, where the government will match investments (dollar for dollar or, in this case, pound per pound) from qualified investment professionals. The investments fund startups, entrepreneurs, current venture-backed companies, and more.
So, the UK made a conscious effort to allocate funding to stimulate the section of the economy labeled as a job creator and an innovation engine that represents not only a short-term “rescue” but also a long-term investment for the country.
Here are some US stats:
The PPP was approximately $700 Billion in funding.
In 2019, the total amount of venture capital funding deployed in the US was $133 Billion.
Venture-backed companies only represent about 2.5 million employees directly, and the ripple effect is more significant.
The PPP was structured such that companies that had backing from venture firms were often ineligible for PPP funding (due to affiliate rules).
So, interestingly, the UK’s approach was to target stimulus money directly into these ventures. And the US’s approach was to disallow it purposefully. If we believe that entrepreneurship is a significant catalyst to a strong economy in the US, it feels like we might have missed this opportunity for a lasting stimulus.