The Innovation Imperative for the New Administration

In a historic election, Americans have voted to send Donald Trump back to the White House for a second term. Throughout his campaign, President Trump pledged to create the greatest economy in the world — a promise that I believe hinges on reigniting entrepreneurship in cities across America. After all, innovation and entrepreneurship aren’t blue state issues or red state issues; they are embedded in the very fabric of our nation. Indeed, making sure everyone has access to the benefits of that innovation is something that I know vice-president-elect JD Vance cares about from his work with us at Rise of the Rest and others in the tech and venture community.

In his New York Times column, David Brooks noted that four decades ago, the “educated class” began championing social policies that aligned with their information-age worldview and their self-approved roles within it. One of these unwritten policies was a wholesale dismissal of the places the information age left behind. The educated class moved swiftly to build the technologies and companies of the future in a few select cities — with little concern for the economies of the places left behind.

I saw firsthand the impact of this regional divide when I started traveling the country in 2014 with my Rise of Rest bus tour, an effort to invest in — and shine a spotlight on — great founders building promising companies outside the traditional tech hubs. As I traveled across America’s heartland to more than 50 cities over the last decade, it was clear that people in places like Indianapolis, Pittsburgh, and Detroit were fighting for economic revitalization. Some were energized, some were hopeful, and some pressed on with doubt that they could really turn the tide. But all believed that no one outside of their city cared and certainly no one in the federal government was likely to help them.

When President Trump won in 2016, I was not shocked like others. That campaign led with messages that tapped into the fear and resentment people felt in much of the country — a growing sense that the American dream was slipping away for their families. These sentiments largely track with the geographic regions that have lacked access to capital, and consequently had fewer opportunities to launch and scale businesses. Eighty-five percent of venture capital went to states that Hillary Clinton won, while only 15% went to the 30 states President Trump won. And this time? Eight years later, the split remains roughly the same: blue states received 84% of 2023 VC dollars, leaving red states with the remaining 16%.

This is not to say there hasn’t been progress. In 2013 (the year before we launched Rise of the Rest), states outside of California, Massachusetts, and New York received a total of $7.6B in seed- and early-stage funding. As of last month, that number was $16.8B for 2024 — adjusting for inflation, that’s a $5B increase over a 10-year period. Beyond the numbers, the impact of that capital has also translated into jobs, economic growth, and success stories that have inspired others to start or back companies in their hometowns.

Of course, AI has tipped the scales further back in favor of Silicon Valley. For all the exciting advances it’s likely to bring, I worry that we’re (once again) losing sight of how the tech economy should be structured.

When we hear about how policy intersects with tech, the conversation tends to focus on the Big Five or Magnificent Seven, but guess what? There are more than 55K venture-backed companies in the United States. We need more policymakers looking out for small tech. As co-chair of the National Advisory Council on Innovation & Entrepreneurship, I’ve partnered with founders, investors, and economic development leaders to improve pathways to entrepreneurship.

Working with Congress, here’s how I believe the new administration can continue to bolster America’s entrepreneurial spirit:

1. Support Regional Innovation & Fully Fund the Tech Hubs: While the CHIPS and Science Act designated $10B to tech hub grants, the Department of Commerce has only received 5% of that funding to date. The investment, intended for overlooked areas, would spur regional innovation in sectors such as clean energy and personalized medicine. Many of these communities already have industry expertise and willing corporate and university partners in place, but the funding is needed to springboard the outcomes.
2. Address Immigration to Win the War on High-Tech Talent: We can’t innovate without talent. Yet, the current immigration laws hinder our ability to compete for highly skilled workers globally. The H-1B visa program, created to help U.S. employers fill high-skill jobs when there is a shortage of domestic talent, makes up a large part of the tech industry. If a worker with an H-1B visa is terminated, they have 60 days to find a new sponsor, or they are forced to leave the country. I was pleased to hear President Trump express his support for issuing green cards to noncitizen graduates of U.S. colleges and universities earlier this year. Forcing out the world’s top engineers and data scientists is antithetical to building the strongest economy. We need a system that allows the strongest students who come to the U.S. for their education to stay and help build the companies, and economies, of tomorrow. After all, more than half of the most valuable startups in America were founded by immigrants, including perhaps the most prolific founder of all: Elon Musk.
3. Enable Open-Source AI platforms: A broad and inclusive community of innovators can work iteratively and quickly to build and improve upon underlying AI technology. There are undoubtedly risks with open-source AI, but it’s even more dangerous to allow Big Tech to be the sole proprietor of the most transformative technology of our time. A diverse network of developers, including people who live outside of Silicon Valley, could identify transformative use cases — across vital sectors such as education, healthcare, and finance — and increase transparency into complex issues such as inherited bias from training data or the lack of understanding in AI decision-making.
4. Restore and Expand Federal R&D: The U.S. federal investment in R&D remains far below what it was post-WWII when American innovation helped create much of the technologies that we rely on today. If we want the United States to continue to serve as the model for innovation moonshots, Congress and the administration should increase federal R&D funding as a percentage of U.S. GDP to 2% by 2030 — creating a foundation for future investments as needed. Only then could we begin to start addressing the current shortfall.

In two years, America will celebrate its 250th birthday. It’s worth remembering that our country began as a startup — a risky idea that raised skepticism around the world. But America led the way in the agricultural, industrial, and digital revolutions — constantly reinventing itself. That reinvention was the work of entrepreneurs with bold new ideas and a policy environment that allowed them to flourish. We can — we must — continue that work and maintain America’s lead. That’s the opportunity in front of us — and the opportunity I hope the new Administration and Congress will embrace.