A group representing U.S. venture-capital investors is leading a lawsuit against the Trump administration, claiming it took illegal steps to prevent an immigration policy that would have helped foreign-born founders stay in the U.S. to build startups.
In a legal complaint filed Tuesday, the National Venture Capital Association, along with other plaintiffs, claims the Department of Homeland Security violated rules around administrative procedures when it delayed the start of the International Entrepreneur Rule one week before the regulation was scheduled to go into effect in July, according to a copy of the complaint reviewed by The Wall Street Journal.
Stamping out sexual harassment has become the top priority of the National Venture Capital Association, said NVCA President and CEO Bobby Franklin. The NVCA on Tuesday took the unusual step of holding a special board meeting to address the issue — the first time the association has called an unscheduled meeting in at least 10 years.
“We are spending lots of time and attention on this,” Franklin said.
The NVCA last month put out a public call for suggestions, and since then has received dozens of responses, Franklin said. At Tuesday’s meeting, the board agreed to seek expert input on those ideas, and pursue partnerships with organizations who want to be involved, such as the Institutional Limited Partners Association.
The National Venture Capital Association (NVCA), a trade group representing startups and venture capital, voiced a similar position in a letter it wrote, calling for a research and development tax credit.
“A typical startup will still be quite early in the process of development when the size/age limits eliminate their ability to benefit from the R&D credit,” the group wrote.
“This creates a strange dichotomy where startup companies cannot access the benefits of the R&D credit when they need it the most,” the NVCA’s letter continued. “We believe that these improvements to the R&D credit will provide a fair and material benefit for American startups and will be a strong step forward in shoring up our leadership in entrepreneurship.”
“Today’s announcement is extremely disappointing and represents a fundamental misunderstanding of the critical role immigrant entrepreneurs play in growing the next generation of American companies,” Bobby Franklin, the president and chief executive of the National Venture Capital Association, a trade association for start-up investors, said in a statement.
He added that even as other countries are going all out to attract entrepreneurs, “the Trump administration is signaling its intent to do the exact opposite.”
Seventy-eight groups representing startup founders, investors, economic development organizations and civic leaders sent a letter in May, to the White House urging the administration to not roll back the International Entrepreneur Rule before it goes into effect on July 17. The letter is set to be released on Friday.
The National Venture Capital Association (NVCA), a D.C. trade association representing venture capital and entrepreneurial interests, who organized but did not sign the letter, also met with administration officials on Thursday to advocate for the rule.
A new letter from more than 100 investors and entrepreneurs is calling President Trump’s executive order on immigration “morally and economically misguided” and urging him to reverse his decision.
The Tuesday letter, spearheaded by the National Venture Capital Association and Engine Advocacy, two groups representing startups and entrepreneurs in tech, warns that the orders “will inflict irreversible harm on the startup community and America’s ability to compete globally.
The first comprehensive look at the demographics of venture capital from its own trade association is a sobering snapshot of what decades of exclusion of women and minorities have wrought.
Women, African Americans and Latinos are significantly underrepresented in venture capital, with few holding decision-making positions, according to the report to be released Thursday by the National Venture Capital Association and Deloitte University Leadership Center for Inclusion.
In the past, NVCA has argued that a change to carried interest tax treatment would result in a significant decrease of venture capital investments to U.S. startups. It was always specious, given that not a single VC would say on the record that they’d stop being a VC if the law was changed.
So Franklin has abandoned that claim, acknowledging that “current VCs will continue to invest.”
His new tack is to argue that a tax treatment change would discourage the next generation of VCs from emerging, particularly in geographic regions outside of VC hotbeds like Silicon Valley, Boston and New York.
The National Venture Capital Association took aim at Donald Trump’s plan to end the special tax treatment for carried interest, saying Monday the Republican presidential candidate misunderstood the role it played in the U.S. entrepreneurial ecosystem.
“Despite the populist uproar, carried interest has been an important feature of the tax code that properly aligns the long-term interests of investors and entrepreneurs to build great companies together, and is only realized after our country receives the benefit of greater economic activity,” NVCA President Bobby Franklin said in a statement.
On Wednesday, the NVCA task force released its inaugural report highlighting the steps the association and its member firms have taken toward that end. The NVCA hasn’t set specific diversity goals, nor does it hold its member firms accountable to promises to include more women and minorities, the report illustrates a shift in the conversation and a growing realization that the status quo must change.
“To change the ratio of the business will take a fair amount of time, and that’s why, to me, this is the beginning,” Venky Ganesan, chairman of the NVCA board and managing director of Menlo Ventures, said in an interview. “This is the opening of the discussion. But what I think is gratifying is people recognize its importance.”