The heartbeat of America’s technical and industrial progress pulses through dozens of innovation hubs nationwide. From Miami to Milwaukee and from Albany to Albuquerque, these communities launch game-changing ideas and products by merging savvy entrepreneurs with talent, capital, expertise and supportive legal climates.
Yet, these vital local ecosystems, crucial in America’s tech race, face threats from a rising tide of global regulatory actions. While these risks may seem distant, they promise damaging consequences for America’s innovators.
The Technology Councils of North America (TECNA) and its 64 regional members across the United States and Canada support these innovation hubs and the 22,000-plus technology companies they collectively serve, aiding their growth and success. In addition to providing members with benchmarking and best practices, TECNA advocates for policies that accelerate innovation, including expanding access to investment capital and restoring tax credits for research and development. Over the years, we’ve seen some incredible success stories.
For example, after Google bought reCAPTCHA, a system that protects websites from bots, in 2009, founder Luis Van Ahn co-created the Pittsburgh-based language learning app Duolingo, which today employs more than 700 people and has almost 100 million users globally.
Ohio saw its first unicorn exit in recent years when CoverMyMeds was acquired by McKesson Corp. CoverMyMeds simplifies the process of obtaining medications by offering tools that improve access, affordability and convenience for patients, healthcare providers and pharmacists, ensuring individuals get the necessary treatments they need.
The successes of America’s local innovation engines have captured interest from the investment community. Data from PitchBook show that the last decade saw venture capital funding for top local tech ecosystems increase sevenfold to $19.5 billion in 2022, funding 11,000 new deals and creating tens of thousands of jobs in regions like Philadelphia; Indianapolis; Spokane, Wash.; Des Moines, Iowa; Fort Myers, Fla.; Dayton, Ohio; and other innovation hubs.
A growing wave of regulatory efforts at the federal, state and international levels poses a significant threat to the growth and innovation of America’s domestic tech industry and our competitive stance against China. These include stringent antitrust legislation, overly aggressive enforcement by the Federal Trade Commission and Department of Justice, restrictive rules on mergers and acquisitions, and one-sided European Union restrictions on U.S. tech companies.
Restrictions on mergers and acquisitions hurt innovation hubs. A recent study found that 73 percent of venture capital-backed exits in states came through acquisitions. Onerous new rules could significantly impede growth, capital formation and job creation by slowing startups’ ability to raise capital, expand and hire.
State legislatures are also enacting regulations that could inhibit technological innovation. In 2023, 65 tech policy changes were enacted, primarily focusing on internet usage, artificial intelligence and online privacy. The introduction of more than 745 artificial intelligence-related bills by federal and state lawmakers threatens to surrender America’s edge in a transformational technology.
These challenges include international threats, especially from China, whose relentless cyberattacks consistently endanger local innovation by stealing critical business trade secrets and technologies. In 2023, there were more than 2,200 cyberattacks daily, with China’s hacking efforts leading to annual losses exceeding $500 billion in U.S. technology and intellectual property.
To safeguard the vitality and dynamism of local tech ecosystems and secure America’s technological leadership, we need a bipartisan embrace of policies that accelerate innovation. These include preserving and expanding tax credits for research and development, ensuring favorable tax conditions for venture capital investments; fostering science, technology, engineering and mathematics education partnerships; and scrutinizing foreign investments for intellectual property security.
Such measures will protect and stimulate local tech ecosystems. We also need to harden our cyber defenses against attacks.
Supporting local tech ecosystems is essential for America’s success. These hubs are incubators of innovation and play a vital role in maintaining America’s global leadership in technology and innovation, driving economic growth, sustaining our competitive edge, and ensuring that American values are embedded in critical technologies.
