Business: A Coalition The Center-Left Shouldn’t Lose This Election. Currently it is.

A politician cannot spout bigoted or anti-democratic rhetoric and expect to win the support of decent voters who recognize the remarkable gift of our system of governance, though imperfect and still evolving. Similarly, a politician cannot persistently demonize hard-working private sector entrepreneurs and business people and expect to gain their support. A wise democracy does not overlook key coalitions by demonizing them indiscriminately. Advancing social progress and equity is not at odds with business expansion. A thriving democracy cannot survive without a balance between these forces.

Every player in the civic value chain is essential to making an economy and democracy strong—the policymaker, the activist, the creative, the educator, the healthcare worker, the public sector employee, and, yes, the businessperson, the entrepreneur, and the supplier of capital. The Democratic Party, however, is on the precipice of losing entrepreneurs, business, and crypto community this cycle and potentially for generations to come. Complex and diverse democracies simply cannot afford intellectually lazy bifurcations of the “proletariat vs. the bourgeoisie.” Thanks to technology and social progress, which continue to flatten the world, workers are also business owners and freelance contractors in today’s America. Too much is at stake for us not to evolve by weaving together socially inclusive rhetoric and policies while incentivizing and celebrating entrepreneurs, innovators, and private sector businesses.

The Availability of Private Capital is Essential for Entrepreneurs and Small Businesses.

Interest rates for new and small businesses in the U.S. have approached 12.5%, making it difficult for this sector to grow and thrive. The affordable availability of capital is the lifeblood of any business. Small businesses account for over 46.4% of employment in this country. The availability of private capital for small and new businesses has tightened in this era of high interest rates as smaller banks have collapsed or been absorbed by giant banks. The collapse of institutions like Silicon Valley Bank, Signature Bank, and First Republic Bank had a near-fatal effect on many entrepreneurs and small businesses. While it’s convenient to blame greed and incompetence for these failures, regulators under the current administration, despite stabilizing the banking system, also tipped the scales in favor of larger institutions. A further conglomeration of the banking system does not foster innovation.

New Companies Going Public and Venture Investing are Signs of a Thriving Economy.

A robust market for Initial Public Offerings (IPOs) and alternative means of raising capital—such as venture capital, angel investors, and decentralized finance (DeFi)—is critical for the blossoming of entrepreneurs and new companies. While common-sense regulation is necessary, the barrage of enforcement actions initiated by agencies like the SEC and FTC have been unhelpful and hostile. In the last two years, FTC enforcement has been 2x its historical levels, and the SEC’s singular mission to destroy crypto and fintech has struck a near-fatal blow to this vital, innovative space. It is as important to focus on capital formation as it is to evolve and enforce the rules. One does not have to be a right-wing operative to observe this truth under this administration. Channels of private capital supply should be nurtured and incentivized to level the playing field instead of being discouraged. Entrepreneurs and innovators are vital to a thriving community but require access to capital; IPOs and venture funding are good barometers.

In recent years, venture capital investment has sharply declined from its high of $620 billion in 2021 to $445 billion in 2022. In 2023, it was $260 billion; and in the first quarter of 2024, it was $66 billion. IPO activity has similarly slowed. In 2021, over 1,000 IPOs took place; in 2022, there were 154; in 2023, there were 122; and in the first half of 2024, only 80. While I’m not advocating for a return to the unsustainable bubble of 1,000 IPOs annually, the pace of the last few years is anemic compared to healthier historical levels. When we consider the compounded cooling of other capital sources, the impact on the availability of funds for entrepreneurs and new businesses is even more devastating. The Democratic party has a sizable blind spot in this area.

IPOs in U.S. Over Time.

The Importance of Democratizing Investing and Encouraging Innovation by Tech, FinTech and Crypto Founders.

The stock market has performed well, and corporate earnings have been strong, but these benefits primarily accrue to large, established companies. Thanks to the entrepreneurs and innovators who have democratized investing with tech advances, more than 60% of American households now participate in the stock market. However, these very fintech innovators are also threatened by burdensome regulations and the high cost of capital.

Decentralized finance (DeFi), cryptocurrency, and blockchain technology can further democratize access to capital and new financial asset types. In addition to expanding investment opportunities, these innovations can reduce transactional costs. Crypto remains the most widely held asset class among people of color and young people in the U.S. and abroad. It is an essential financial technology of the future. While we must address bad actors and course-correct with relevant rules, recent years have seen policymakers and regulators create a hostile environment for this technology. Rather than shaping rules that foster innovation, they have dealt a near-fatal blow to this space. Certain government actors have cynically exploited this moment to re-center financial power in the hands of established large players, or the government itself.

Entrepreneurs, Businesses, and Sources of Private Capital: A Large Coalition at Risk.

It’s tempting to accept the collateral damage of high interest rates as a necessary evil to battle inflation. However, we must also acknowledge that hostile and costly regulations have compounded the harm and chased out innovators. When sources of capital are not scared, they lend to small and new businesses, enabling them to operate, grow, and employ more people. It is just as cynical to paint all business people as greedy as it would be to paint all government employees as lazy. Most of our country is comprised of decent, hardworking citizens who are doing their part to enrich their lives and improve their communities.

Democrats cannot afford to forget that sound business, entrepreneurship, and capital formation policies are critical to making inclusion real. Public sector policies alone cannot accomplish inclusion and prosperity. It is my urgent hope that the Democratic ticket finds a more inclusive narrative and articulates less business-hostile policies now. The party is currently ceding this important ground, squandering a potential coalition that could safeguard democracy, freedom, and prosperity.

_{Data Sources: IPO data from www.stockanalysis.com; venture funding data from PitchBook and Crunchbase; small business data from the US Small Business Administration; and household investing in stocks data from www.statista.com.}