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Politics

A bipartisan House bill would extend COVID-19 aid to more VC-backed startups

Some of the rules for small-business loans have deterred startups from applying, and even prompted some to retract applications.

Anna Eshoo

Rep. Anna Eshoo, a Silicon Valley Democrat, co-introduced a bill that seeks to help more startups get small-business loans under coronavirus relief packages.

Photo: Win McNamee/Getty Images

A pair of lawmakers from both sides of the aisle introduced legislation Monday in the House that would ensure that more venture-capital-backed startups are eligible to receive small-business loans under federal stimulus, following a weekslong lobbying blitz from the VC and startup world.

The bill, co-sponsored by seven other lawmakers, would waive "affiliate" rules for startups that have no majority shareholder, fulfilling the wish of tech trade groups including the National Venture Capital Association. Startups for weeks have complained they are being denied the government's small-business loans, or not applying altogether, because the rules require companies to count investors and their other affiliates under the employee headcount, which is capped at 500.

The rules, meant to ensure that larger firms do not exploit Small Business Administration loan programs like the new Paycheck Protection Program, deem a company an affiliate of another when one controls, or has the power to control, the second. That has left many startups, which are frequently backed by VC firms, unable to receive the loans.

"Startups, like all small businesses in our country, are experiencing a trying time. Unfortunately, many have laid off employees while others have shuttered their businesses completely," said Rep. Anna Eshoo, the Silicon Valley Democrat who co-introduced the bill with Republican Rep. Cathy McMorris Rodgers, who represents a part of Washington state that includes Spokane. "My legislation ensures that startups can access the Paycheck Protection Program to keep employees on payroll or rehire those they've recently laid off."

The Caring for Startup Employees Act of 2020 would bar startups from using money they received under the new waiver to pay their investors.

Since the PPP launched in March, the Department of the Treasury and Small Business Administration have issued a stream of sometimes confusing guidelines for who can seek the money; the loan is forgivable if certain criteria is met. Some of the rules deterred startups from applying for loans — and even prompted a wave of startups to retract applications. A number of startups have asked to change investors' voting and control terms to make them eligible for the grants.

In a report last month, the National Venture Capital Association predicted that startups will continue to do mass layoffs, with up to 80% cutting between 10% and 50% percent of employees over the next few months. The group says roughly 300 U.S. startups have laid off more than 30,000 employees.

"Startups and small businesses are the engines of our economy, but right now, they are being hit hard through no fault of their own," McMorris Rodgers said in a statement. "In order to support American ingenuity, we need to ensure these startups can weather this storm so they can continue to grow, innovate, and enrich our communities."

House Speaker Nancy Pelosi, who has continuously called for a startup-friendly fix to the PPP, is expected to unveil the Democrats' proposal for the next COVID-19 economic stimulus package later this week. Pelosi's office did not immediately respond to an inquiry about whether the package will include a fix to the PPP for startups.

Protocol | China

China’s era of Big Tech Overwork has ended

Tech companies fear public outcry as much as they do regulatory crackdowns.

Chinese tech workers are fed up. Companies fear political and publish backlashes.

Photo: Susan Fisher Plotner/Getty Images

Two years after Chinese tech workers started a decentralized online protest against grueling overtime work culture, and one year after the plight of delivery workers came under the national spotlight, a chorus of Chinese tech giants have finally made high-profile moves to end the grueling work schedules that many believe have fueled the country's spectacular tech boom — and that many others have criticized as exploitative and cruel.

Over the past two months, at least four Chinese tech giants have announced plans to cancel mandatory overtime; some of the changes are companywide, and others are specific to business units. ByteDance, Kuaishou and Meituan's group-buying platform announced the end of a policy called "Big/Small Week," where a six-day workweek is followed by a more moderate schedule. In early June, a game studio owned by Tencent rolled out a policy that mandated employees punch out at 6 p.m. every Wednesday and take the weekends off.

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Shen Lu

Shen Lu is a reporter with Protocol | China. She has spent six years covering China from inside and outside its borders. Previously, she was a fellow at Asia Society's ChinaFile and a Beijing-based producer for CNN. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. Shen Lu is a founding member of Chinese Storytellers, a community serving and elevating Chinese professionals in the global media industry.

Over the last year, financial institutions have experienced unprecedented demand from their customers for exposure to cryptocurrency, and we've seen an inflow of institutional dollars driving bitcoin and other cryptocurrencies to record prices. Some banks have already launched cryptocurrency programs, but many more are evaluating the market.

That's why we've created the Crypto Maturity Model: an iterative roadmap for cryptocurrency product rollout, enabling financial institutions to evaluate market opportunities while addressing compliance requirements.

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Caitlin Barnett, Chainanalysis
Caitlin’s legal and compliance experience encompasses both cryptocurrency and traditional finance. As Director of Regulation and Compliance at Chainalysis, she helps leading financial institutions strategize and build compliance programs in order to adopt cryptocurrencies and offer new products to their customers. In addition, Caitlin helps facilitate dialogue with regulators and the industry on key policy issues within the cryptocurrency industry.
Power

Brownsville, we have a problem

The money and will of Elon Musk are reshaping a tiny Texas city. Its residents are divided on his vision for SpaceX, but their opinion may not matter at all.

When Musk chose Cameron County, he changed its future irrevocably.

Photo: Verónica G. Cárdenas for Protocol

In Boca Chica, Texas, the coastal prairie stretches to the horizon on either side of the Gulf of Mexico, an endless sandbar topped with floating greenery, wheeling gulls and whipping gusts of wind.

Far above the sea on a foggy March day, the camera feed on the Starship jerked and then froze on an image of orange flames shooting into the gray. From the ground below, onlookers strained to see through the opaque sky. After a moment of quiet, jagged edges of steel started to rain from the clouds, battering the ground near the oceanside launch pad, ripping through the dunes, sinking deep into the sand and flats.

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Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

People

Facebook’s push to protect young users is a peek at the future of social

More options, more proactive protections, fewer one-size-fits-all answers for being a person on the internet.

Social media companies are racing to find ways to protect underage people on their apps.

Image: Alexander Shatov/Unsplash

Social media companies used to see themselves as open squares, places where everyone could be together in beautiful, skipping-arm-in-arm harmony. But that's not the vision anymore.

Now, Facebook and others are going private. They're trying to rebuild around small groups and messaging. They're also trying to figure out how to build platforms that work for everyone, that don't try to apply the same set of rules to billions of people around the world, that bring everyone together but on each user's terms. It's tricky.

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Power

Who owns that hot startup? These insiders want to clear it up.

Cap tables are fundamental to startups. So 10 law firms and startup software vendors are teaming up to standardize what they tell you about investors' stakes.

Cap tables describe the ownership of shares in a startup, but they aren't standardized.

Illustration: Protocol

Behind every startup, there's a cap table. Startups have to start keeping track of who owns what, from the moment they're created, to fundraising from venture capitalists, to an eventual IPO or acquisition.

"Everything that happens that is a sexy thing that's important to the tech world, it really is something having to do with the cap table," said David Wang, chief innovation officer at the Wilson Sonsini Goodrich & Rosati law firm.

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Biz Carson

Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.

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