190. Immigration, Privacy, and Foreign Investment — The Biggest Threat to Venture is in Washington D.C. (Bobby Franklin)

Nick Moran Angel List

Bobby Franklin of NVCA joins Nick to discuss Immigration, Privacy, and Foreign Investment — The Biggest Threat to Venture is in Washington D.C.. In this episode, we cover:

  • Backstory/path to Capitol Hill.
  • You served as the Executive Vice President of CTIA –tell us a bit about that experience and how it led to NVCA.
  • At NVCA – what’s the mandate?
  • What specific actions does the organization take in order to deliver on this mandate?
  • You just wrapped up NVCA’s annual VC’s to DC conference this month– What were the three most critical issues that Venture Capital is facing?
  • I came across your article on TechCrunch about FIRRMA (the Foreign Investment Risk Review Modernization Act) and CFIUS (the Committee on Foreign Investment in the U.S.). Can you talk a bit about the issue the industry is facing and the key players?
  • What suggestions do you have for VCs and high growth companies — with exposure to FIRRMA and the expanded power of CFIUS?
  • At the VCs to DC conference there was a panel on the rise of populism…Trends from trade to immigration, tax policy and cross-border financial flows, that are rapidly impacting global commerce – Can you talk a bit about these issues and their impact on the ecosystem?
  • Currently large tech companies are under increased scrutiny in DC and policymakers are cracking down on data privacy regulation, antitrust enforcement, etc. Do you think this “techlash” is appropriate or not?
  • What guidance or insight would you give entrepreneurs to ensure that their companies are operating within regulatory boundaries?
  • Any other suggestions for the audience — a mix of VCs, LPs, Angels and Founders — on specific things we all can do to support this asset class in D.C.?

Guest Links:

Key Takeaways:

  1. Bobby currently serves as the President and CEO at the National Venture Capital Association (NVCA).  Prior, he served as the Executive VP of the Cellular Telecommunications Industry Association (CTIA) for eight years and worked on Capitol Hill.
  2. The NVCA helps “to empower the next generation of American companies that will fuel the economy of tomorrow” by representing emerging companies in the face of public policy change.
  3. Specific policy issues include tax issues, immigration, health care, regulatory issues, drug pricing, and blockchain/cryptocurrencies.
  4. Thematically, the NVCA anticipates needing to engage on policies regarding “the techlash” and privacy but is still forming their opinion on how to do so.
  5. On immigration, the NVCA supports the need for a way to enable foreign innovators to come to the US.  In fact, half of today’s unicorns have an immigrant founder/co-founder.
  6. The Foreign Investment Risk Review Modernization Act (FIRRMA) of 2018 came out of the Defensive Innovation Unit (DIU)’s study proving that foreign investors can access key innovation technologies in the U.S.  Its intent is to protect nonpublic information from being taken outside of the US.
  7. The Committee on Foreign Investment in the United State (CFIUS) is the enforcement mechanism of FIRRMA, chaired by the US Treasury Agency.
  8. The NVCA is lobbying to ensure that the law is not misconstrued to implicate the venture industry.  While timing is still flexible, the rulemakings on FIRRMA implementation most likely will begin at the end of 2019 and continue through 2020.
  9. 20 years ago, 90% of venture capital investment was made in the U.S.  Today, this figure sits at 50%, with foreign and domestic investment dollars at an all-time high. With the rise of unicorns, later stage investment has skewed venture investment data.
  10. The NVCA is trying to build on the 2012 Jumpstart Our Business Startups Act (JOBS) to make it easier for companies to go public, so that entrepreneurs and investors have more of a choice in their financial future.
  11. The NVCA is lobbying to the SEC to update the registered investment advisor requirements to include secondary investments, fund of funds, and cryptocurrencies/blockchain as qualified investments.  This is to align incentives so that venture investors are the ones making risky investments in emerging technologies.
  12. In 2014, the NVCA took action to address equality in venture capital.  These measures include their ongoing diversity task-force and diversity survey, which can be found here.
  13. Venture firms, angels, and founders should engage with the NVCA to ensure that their best interests are represented through policy.  The more details and education of the industry, the better.