Backing Entrepreneurs While Keeping Innovation Alive: A Government Guide

A balanced approach to public-private partnerships could unlock entrepreneurial potential across America while addressing growing economic inequality.

Key Takeaways

• Government policies historically both created entrepreneurial barriers and enabled breakthrough innovations like the internet
• Venture capital concentration leaves 80% of Americans feeling anxious about economic opportunities in their regions
• Successful public-private partnerships require mutual respect, good faith collaboration, and acknowledgment of past policy failures
• Smart regulation can protect against risks while preserving the entrepreneurial culture that drives American innovation
• Geographic inequality in startup funding contributes to political polarization and economic resentment across different states
• Maryland's AI leadership strategy demonstrates how states can leverage existing assets while building appropriate guardrails
• Detroit's revitalization shows how targeted entrepreneurial investment can transform struggling communities over a decade
• Women and minorities receive disproportionately low venture capital despite representing significant population segments

Government's Dual Role in Entrepreneurship

Government occupies a complex position in the entrepreneurial ecosystem, simultaneously creating obstacles and enabling breakthrough innovations. Governor Wes Moore emphasizes that acknowledging government's role in creating problems represents the first step toward meaningful solutions. His transition from running Robin Hood, one of America's largest poverty-fighting organizations, to elected office stemmed from recognizing that government policies shaped many of the challenges nonprofits attempt to address.

• The scale difference between private philanthropy and government resources illustrates why partnership matters—Robin Hood's $25 million education commitment pales against New York City's $27 billion Department of Education budget, demonstrating government's unique capacity for systemic change.
• Historical examples prove government intervention can unleash innovation rather than stifle it, as Steve Case explains AOL's founding depended entirely on government actions including breaking up AT&T, passing telecommunications legislation, and mandating open network access.
• DARPA's creation of the internet foundation, initially limited to educational and government institutions, required subsequent government action to commercialize access for consumers and businesses, enabling the digital revolution that positioned America as the global technology leader.
• Modern AI development parallels early internet history, with artificial intelligence actually predating internet technology by 25 years but requiring recent consumer applications like ChatGPT to spark widespread attention and regulatory discussions.

Regional Innovation Inequality and Political Consequences

The geographic concentration of venture capital creates profound political and economic consequences that extend far beyond startup funding decisions. When Donald Trump defeated Hillary Clinton, the 30 states he won collectively received only 15% of total venture capital investment, while the 20 states Clinton won captured 85% of entrepreneurial funding.

• This stark investment inequality means most Americans experience technology disruption without seeing offsetting benefits from new company creation, job growth, and economic opportunity in their communities, fueling resentment toward coastal innovation centers.
• Women represent half the American population but receive less than 10% of venture capital funding, with some estimates suggesting the actual figure approaches 2%, depending on measurement methodology, highlighting systematic barriers in accessing entrepreneurial capital.
• Similar disparities affect Black and Latino entrepreneurs, who face significant challenges accessing the "friends and family" funding rounds that typically launch startup journeys, since not everyone has the same social networks or family wealth.
• The Biden-Harris administration's Build Back Better initiatives and CHIPS and Science Act allocated $10 billion for Tech Hubs designed to spread innovation beyond traditional centers, though only $500 million has been appropriated, limiting the program's immediate impact.
• Detroit's decade-long transformation demonstrates regional revitalization potential, where Dan Gilbert's investment in 103 downtown buildings, combined with public-private collaboration, helped reverse a 60% population decline and municipal bankruptcy.

Balancing Innovation Policy and Smart Regulation

Effective innovation policy requires threading the needle between enabling breakthrough technologies and protecting against potential harms, particularly as artificial intelligence development accelerates beyond traditional regulatory timelines. Steve Case's experience merging AOL with Time Warner taught him that large organization cultures prioritize risk management over innovation, creating inherent tension between entrepreneurial and regulatory mindsets.

• Government officials naturally focus on preventing negative outcomes rather than enabling positive possibilities, since regulatory failures generate congressional hearings and public scrutiny while successful innovations receive little attention, creating systematic bias toward overcaution.
• Maryland's AI leadership strategy exemplifies balanced approaches, with Governor Moore appointing a senior AI advisor and positioning the state as a global technology leader while building appropriate guardrails and bringing the public along through education.
• The state leverages existing assets including NIST, NSA, US Cyber Command, and the new FBI building location to create competitive advantages in artificial intelligence, quantum computing, and cybersecurity rather than starting from scratch.
• European regulatory approaches often over-regulate emerging technologies, prioritizing caution about potential harms over enabling beneficial innovations, providing a cautionary example for American policymakers considering AI governance frameworks.
• Senate bipartisan AI forums represent collaborative efforts to understand technology implications before crafting regulations, applying lessons learned from internet development while recognizing AI's faster pace of advancement and broader potential impact.

Political Rhetoric and Entrepreneurial Culture

The quality of political discourse directly impacts the entrepreneurial environment by either fostering collaboration or deepening divisions that prevent effective public-private partnerships. Social media's evolution from enabling diverse voices to creating tribal filter bubbles represents one of the technology sector's most disappointing unintended consequences.

• Steve Case's vision of social media democratizing information access has been undermined by algorithmic systems that reinforce existing beliefs rather than encouraging cross-pollination of ideas, contributing to political polarization that makes collaboration more difficult.
• The Dignity Index initiative, launched by Tim Shriver and adopted by various senators and governors, provides frameworks for scoring political communications to encourage consensus-building rather than inflammatory rhetoric that scores points on cable television.
• Analysis of presidential debate rhetoric using dignity index scoring revealed opportunities for improvement across candidates, with Trump's communications typically scoring as less dignified than alternative approaches, though both major candidates could enhance their discourse quality.
• Demonizing entrepreneurial success undermines the risk-taking culture essential for innovation, with Governor Moore arguing that poverty levels rather than billionaire counts should keep policymakers awake at night, refocusing attention on expanding opportunity rather than limiting achievement.
• Continued criticism of elected officials discourages quality candidates from pursuing public service, creating a self-fulfilling prophecy where negative rhetoric about government competence drives away the capable leaders needed to improve government performance.

Government backing entrepreneurs succeeds when policies acknowledge past mistakes while building frameworks that support innovation across all communities. Smart regulation protects against genuine risks without stifling the pioneering culture that drives American technological leadership.