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Politics

Pelosi, Khanna plead for stimulus to include VC-backed startups

In a letter, the lawmakers ask the Trump administration to include the "engine of the innovation economy" in stimulus package loans.

House Majority Leader Nancy Pelosi

House Majority Leader Nancy Pelosi convened a vote on the stimulus Friday.

Photo: Sarah Silbiger/Bloomberg via Getty Images

House Majority Leader Nancy Pelosi and Rep. Ro Khanna are asking the Trump administration to ensure that venture capital-backed startups aren't excluded from small-business loans under the coronavirus stimulus package.

In a letter sent Tuesday to Treasury Secretary Steve Mnuchin and Small Business Administration head Jovita Carranza, Pelosi and Khanna called attention to a quirk of the stimulus package that could make it impossible for venture-backed startups to be considered small businesses, and therefore, be eligible for loans under the $2 trillion CARES Act. Under the SBA's current definition, small businesses include any business with fewer than 500 employees, but some companies that have venture funding are required to count all of the employees of any other startups that VC has invested in. In a recent interview with Protocol, Khanna called the definition "absurd."

Now, he and Pelosi are urging the administration to "exercise appropriate discretion under the law" and issue guidance including VC-backed startups in the loan program.

"Startups are the engine of the innovation economy, and our districts in California's Bay Area and Silicon Valley are home to thousands of these companies," Pelosi and Khanna, wrote. "Other high-tech hubs around the country with a strong startup ecosystem will also be in need of … financing to preserve jobs and survive."

At issue is the SBA's so-called affiliate rule, which seeks to prevent large companies from getting access to SBA loans. The agency considers companies affiliates if one has control over another. That, many tech and startup advocates have argued, is an overly fuzzy definition that will lead to confusion and possibly unnecessary rejection of small startups that are part of large venture capital portfolios.

Over the weekend, more than 100 tech trade associations and lobbying groups including TechNet and the National Venture Capital Association sent a similar letter to Mnuchin and Carranza, asking for a fix. "Without clear guidance enabling startups and small businesses supported by equity investment to access the loan facility, many of these startups may be rendered ineligible," the letter read. "The confusion alone could lead to waves of preventable layoffs."

Join senior reporter Issie Lapowsky in conversation with Rep. Ro Khanna during Protocol's Virtual Meetup at noon Thursday. Sign up here.

Already, venture-backed startups have laid off and furloughed workers. Congress designed the CARES Act loan program specifically to discourage that. They designed the loans such that they turn into grants if a business doesn't lay off employees or cut wages before June 30. In his interview with Protocol, Khanna said he suspected VC-backed startups wouldn't have a problem getting the money up front, but that they might face questions when it comes to converting the loan into a grant later on.

"I would hope [the SBA] wouldn't interpret things in a way that defies common sense," Khanna said, "but there is that slight risk."

Microsoft wants to replace artists with AI

Better Zoom calls, simpler email attachments, smart iPhone cases and other patents from Big Tech.

Turning your stories into images.

Image: USPTO/Microsoft

Hello and welcome to 2021! The Big Tech patent roundup is back, after a short vacation and … all the things … that happened between the start of the year and now. It seems the tradition of tech companies filing weird and wonderful patents has carried into the new year; there are some real gems from the last few weeks. Microsoft is trying to outsource all creative endeavors to AI; Apple wants to make seat belts less annoying; and Amazon wants to cut down on some of the recyclable waste that its own success has inevitably created.

And remember: The big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Politics

Facebook’s Oversight Board won’t save it from the Trump ban backlash

The Board's decision on whether to reinstate Trump could set a new precedent for Facebook. But does the average user care what the Board has to say?

A person holds a sign during a Free Speech Rally against tech companies, on Jan. 20 in California.

Photo: Valerie Macon/Getty Images

Two weeks after Facebook suspended former President Donald Trump's account indefinitely, Facebook answered a chorus of calls and referred the case to its newly created Oversight Board for review. Now, the board has 90 days to make a call as to whether Trump stays or goes permanently. The board's decision — and more specifically, how and why it arrives at that decision — could have consequences not only for other global leaders on Facebook, but for the future of the Board itself.

Facebook created its Oversight Board for such a time as this — a time when it would face a controversial content moderation decision and might need a gut check. Or a fall guy. There could be no decision more controversial than the one Facebook made on Jan. 7, when it decided to muzzle one of the most powerful people in the world with weeks remaining in his presidency. It stands to reason, then, that Facebook would tap in its newly anointed refs on the Oversight Board both to earnestly review the call and to put a little distance between Facebook and the decision.

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Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
Protocol | Enterprise

Why Oracle and SAP are fighting over startups

Did someone mention a chance to burnish reputations and juice balance sheets?

New cloud-based offerings and favorable contract terms are convincing startups to switch to software from Oracle and SAP earlier in their lives than your might expect.
Jane Seidel

In the hunt for their next big-ticket customers, SAP and Oracle are trying to cast off reputations as stodgy tech providers by making a huge push to provide their software to startups.

Both companies have found themselves in choppy waters recently as potential customers have turned to the cloud, shunning the on-premises solutions SAP and Oracle are known for. That's coupled with a global pandemic that dried up demand for the expensive enterprise-grade software that drives profits at the vendors.

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Joe Williams

Joe Williams is a senior reporter at Protocol covering enterprise software, including industry giants like Salesforce, Microsoft, IBM and Oracle. He previously covered emerging technology for Business Insider. Joe can be reached at JWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

Politics

'Woke tech' and 'the new slave power': Conservatives gather for Vegas summit

An agenda for the event, hosted by the Claremont Institute, listed speakers including U.S. CTO Michael Kratsios and Texas Attorney General Ken Paxton.

The so-called "Digital Statecraft Summit" was organized by the Claremont Institute. The speakers include U.S. CTO Michael Kratsios and Texas Attorney General Ken Paxton, as well as a who's-who of far-right provocateurs.

Photo: David Vives/Unsplash

Conservative investors, political operatives, right-wing writers and Trump administration officials are quietly meeting in Las Vegas this weekend to discuss topics including China, "woke tech" and "the new slave power," according to four people who were invited to attend or speak at the event as well as a copy of the agenda obtained by Protocol.

The so-called "Digital Statecraft Summit" was organized by the Claremont Institute, a conservative think tank that says its mission is to "restore the principles of the American Founding to their rightful, preeminent authority in our national life." A list of speakers for the event includes a combination of past and current government officials as well as a who's who of far-right provocateurs. One speaker, conservative legal scholar John Eastman, rallied the president's supporters at a White House event before the Capitol Hill riot earlier this month. Some others have been associated with racist ideologies.

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Emily Birnbaum

Emily Birnbaum ( @birnbaum_e) is a tech policy reporter with Protocol. Her coverage focuses on the U.S. government's attempts to regulate one of the most powerful industries in the world, with a focus on antitrust, privacy and politics. Previously, she worked as a tech policy reporter with The Hill after spending several months as a breaking news reporter. She is a Bethesda, Maryland native and proud Kenyon College alumna.

Is this a VC bubble, or just the new normal?

Huge deals, little diligence and hyper-fast follow-on rounds have become commonplace. For now.

Things are looking awful frothy, aren't they?

Photo: Drew Beamer/Unsplash

The VC industry is "frothy," "overheated" or "bonkers," investors say. Whether this is the new normal or unhealthy signs of an overheated market depends on your point of view — and how well your portfolio is doing.

There are signs that VC has changed all around. In recent months, deal sizes and valuations have spiked in hot deals; due diligence on startups has evaporated as investors compete to get into hot deals first; venture firms are investing much more than they normally do; there are hyper-fast follow-on rounds; and more non-traditional investors are backing early-stage startups.

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Tomio Geron

Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. Before that, he worked as a staff writer at Forbes, covering social media and venture capital, and also edited the Midas List of top tech investors. He has also worked at newspapers covering crime, courts, health and other topics. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.

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