In Support of the Start-up

In the UK, I've advocated for R&D tax credits to help ease the financial burden felt by many startups. And it's working. Small businesses often operate at a loss for the first few years. Tax credits allow these small businesses to make investments in workers, infrastructure or equipment - the freedom to build new ideas along with bottom line.
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"You've got two minutes."

"You'll never sell a vacuum cleaner without a bag."

"This project is dead from the neck up."

A heap of nos and nevers as I pitched my newly designed vacuum to old-fashioned industry execs. I wish I could say my story was unusual. Many inventors, small business owners and entrepreneurs start with an idea and fight to keep it alive. And the biggest fight is funding.

For much of the West, weakened economies, regulatory red tape, and bureaucratic bickering has hindered job growth. This has come at the expense of the small business owner. Perhaps the biggest missed opportunity.

Small businesses are the backbone of the US economy. As America's largest employer, they represent 53% of US workers. But, little has been done to nurture this low hanging fruit. In fact, the US has seen a 23% decline in small-business startups in the past few years.

It must become easier for small business owners to hire, invest and expand. Legislation has just been passed by the US Congress that will help jumpstart small businesses.

The JOBS Act contains a series of measures designed to make capital more readily available to small businesses. As I know well, a startup will stall without the funds needed to invest and grow. My company wouldn't exist without a sizeable loan. More accurately, a local bank manager who took up my cause. I was £600,000 in debt before my idea became real.

Twenty years on from that chorus of nos and we're up to 3,600 jobs. New technology is fuelled by new minds. We brought on 200 engineers in the UK last year and we're looking to add another 200 in 2012. Add that to ambitious recruitment plans around the world, including the US.

Other British companies are following a similar pattern, and the UK is adding jobs at the fastest pace since June 2011. Job growth is off to a similar clip in the US, and the legislation would help level the playing field for small businesses. By making it easier for small businesses to do business, they'll hire more workers, grow more quickly, and ultimately help strengthen the economy.

Addressing the opportunity for small business growth is a step in the right direction, but it can't be the only fix. With only regulatory reform, we risk businesses stock piling capital for a rainy day, rather than investing in the research and development that will drive the economy forward.

In the UK, I've advocated for R&D tax credits to help ease the financial burden felt by many startups. And it's working. Small businesses often operate at a loss for the first few years. Tax credits allow these small businesses to make investments in workers, infrastructure or equipment - the freedom to build new ideas along with bottom line.

These aren't tax breaks, they're not loans or grants. Companies must commit their own resources to projects that support research and development, and that still involves a healthy level of risk. Companies that invest in R&D drive economic growth with the most valuable commodity - intellectual property.

Without financial incentives, US startups will seek support abroad. An electric vehicle startup, Bright Automotive, had plans to create 300 manufacturing jobs in the US. Blaming bureaucratic hold-ups, it withdrew its loan application to the Department of Energy's Advanced Technology Vehicle Manufacturing program. Instead, the maker of a plug-in electric vehicle says it may develop its technology in China.

Losing homegrown invention to foreign investors is a real threat. Worse still, a startup fails altogether, and the promise of new technology along with it. The JOBS Act will drive investment in small businesses, which in turn will spur new ideas.