New York State has one of the country’s most dynamic innovation ecosystems. From 2017-2021, 7,321 New York-based startups raised a whopping $116.5 billion in private venture capital to fund their innovative ideas and to grow their businesses. New York’s state agencies are also critical players, investing more in research and development than any other state in the country.
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All totaled, the Empire State is a powerhouse for American innovation, which is critical because our country is in a high-stakes competition with authoritarian regimes determined to undermine our values and institutions – and overtake America’s technological edge.
To continue to outpace our totalitarian rivals and reduce dependence on foreign made technology, elected officials – including President Biden and Senate Majority Leader Charles Schumer (D-N.Y.) – must focus on policies that will boost America’s world-leading technology companies, not stifle them.
The reality is that tech isn’t just another sector of the economy. It’s the very backbone of our national security, economic prosperity and the free flow of information across borders. Increasingly, technological power is geopolitical power.
China understands the power and importance of technology. That’s why it has invested trillions in developing its own innovation capabilities. As a result of these investments and China’s outright theft of technology, the United States’ advantage over China has slipped in key areas. The other part of its strategy is to make Western countries increasingly dependent on China, including on its technology. In fact, in a 2020 speech, President Xi Jinping explicitly said, “we must tighten international production chains’ dependence on China.”
Unfortunately, instead of fighting back against China’s dependency strategy, some lawmakers are unwittingly assisting this effort by championing anti-innovation policies. In Washington D.C., populist politicians – on the right and left – introduced a series of bills that would chill innovation, reduce capital investments and impede entrepreneurship. Worse, many of the toughest restrictions in these bills would not apply to foreign technology companies, including Chinese companies.
These same lawmakers also want to limit merger and acquisition by America’s top tech companies. This would severely damage the innovation ecosystem because, for the vast majority of startups, being acquired by a larger firm is the preferred exit strategy. If investors can’t get a reasonable return through acquisition, their capital will flow away from startups, undermining innovation and reducing job creation.
Over the past several decades, shortsighted policy decisions have cost New York more than 300,000 manufacturing jobs. We can’t make that same mistake with technology. It matters which country builds the future. U.S. tech companies have a global reach and help advance Western values of an open and accessible internet. Washington and New York should stay focused on incentivizing innovation, not scaring it away. The stakes are too high, and we need to get this one right.
Doug Kelly is CEO of the American Edge Project, a coalition of nearly two dozen organizations, including major technology companies and trade groups, dedicated to advancing and protecting American technology and innovation.