U.S. Sen. John Thune (R-S.D.), chairman of the Subcommittee on Communications, Technology, Innovation, and the Internet, today led a hearing titled “Betting on the Rest: Expanding American Entrepreneurship Outside Traditional Hubs” to examine the venture capital gap that exists between different geographic regions in America, how COVID-19 could redefine this gap, and what the private and public sectors are doing to address it. The hearing featured testimony from Ray Hespen, co-founder and chief executive officer of Property Meld in Rapid City, S.D., as well as other industry experts.
Thune’s full remarks (as prepared for delivery):
“Good afternoon and welcome to today’s subcommittee hearing to review the state of entrepreneurship in America.
“I would like to welcome everyone joining us today - both in-person and virtually.
“For much of our nation’s history, entrepreneurship has enabled both American progress and American prosperity.
“It is the bedrock of the American dream and has led to the economic mobility of millions of citizens.
“Over the course of the last fifty years, venture capital has played an increasingly important role in the continuation of America’s entrepreneurial spirit.
“The venture capital model has led to tremendous economic growth in recent decades, and venture capital investment has resulted in some of America’s most profitable and consequential companies.
“Many of these venture capital-backed businesses have enabled the technology we have come to rely on during the COVID-19 pandemic, from food and grocery delivery services to virtual health care applications.
“Today, it often feels as if entrepreneurs and venture capitalists go hand-in-hand - the former depending on the latter to scale and realize their full impact.
“However, we are here to not only talk about the relationship between venture capital and entrepreneurship, but also where this relationship is occurring and, more importantly, where it is not.
“In 2019, California-based companies received roughly 50 percent of all venture-backed investment in the United States.
“That same year, just three states - California, New York, and Massachusetts - accounted for almost 75 percent.
“There are many valid reasons why this is the case, which I look forward to exploring with our witnesses today.
“However, this geographic imbalance also means that a majority of regions within the United States are often shut out from the kind of investment that creates jobs, revitalizes communities, and enables the pursuit of the American dream.
“Fortunately, this is a problem the private sector is primed to solve, and we have already benefited from the work of many individuals including those on the panel with us today.
“In addition, initiatives like the expansion of reliable broadband services to businesses across America, including many in my home state of South Dakota, have already begun to provide greater connectivity between these communities and the larger economy which helps spur more venture capital investment and entrepreneurial support.
“While we have made progress, the impact of COVID-19 makes solving the investment gap all the more important and all the more urgent.
“At a time when there has been economic uncertainty, entrepreneurs are the ones building businesses that will in-turn create jobs.
“It is likely that many of these new businesses will continue to focus on innovation and technology, an industry historically supported by venture capital.
“Without greater access to capital in underserved regions, the flow of talent, wealth, and opportunity will continue to move to only a handful of coastal cities, and the full reach and diversity of American ingenuity will go unrealized.
“I’ve seen firsthand what rural America has to offer.
“In my home state of South Dakota, we have entrepreneurs working on therapeutics and other services to combat the COVID-19 pandemic.
“We have technology companies delivering the next-generation of precision agriculture.
“And against increasing competition from countries like China, I believe more investment in American entrepreneurship in all regions of the United States will better position us in the long run.
“At the end of the day, it is not going to be politicians and regulators driving the next wave of American innovation.
“It will be the private sector that will ultimately expand economic opportunities across the United States.
“And it is my view that the best the government can do is to fully recognize this and then actively try to not stand in the way.
“Today, I hope this panel will shed light on this important topic and bring to Congress’s attention the diverse voices of the American entrepreneurs - the entrepreneurs who live in San Francisco and New York as well as the ones who call places like Boise, Atlanta, or Rapid City home.
“To explore this topic, we are excited to have a panel today representing the full geographic range of American entrepreneurship.
“We are joined by Mr. David Hall, who serves as the Managing Director of Revolution’s Rise of the Rest Seed Fund, which is based here in DC, Ms. Jan Garfinkle CEO of Arboretum Ventures in Michigan, Mr. Ray Hespen, CEO and Co-Founder of Property Meld, a technology startup in South Dakota, and Ms. Dawn Lippert, CEO of Elemental Excelerator, a startup accelerator based out of Hawaii.
“Thank you all for joining us today.
“I look forward to hearing your testimony, and I now recognize Ranking Member Schatz for any opening remarks he may have.”