The U.S. has received the highest foreign direct investment compared to any other country in the world. The U.S. has the right ecosystem for innovation which has created new global players.  However the growth can be explosive if the following five factors were not working against the innovation economy :

Immigration Reform
It is high time we change the immigration policy which should be based on meritocracy. Thousands of entrepreneurs around the world would like to start their companies in the US. Senator Kerry and Senator Lugar introduced a bill for Startup Visa in 2010. It had bipartisan support but it has now become a part of an overall immigration reform. Thousands of foreign scientists and engineers gets their education in the best universities and they have to deal with the lottery system of employment visas to stay back in the US. It is time we open up the country for people who will not only create local jobs but, by default, will open up international markets.

Accredited Investor Definition for Angel Investment 
In the US one has to be an Accredited Investor to become an business angel investor. The definition of an Accredited Investor is described on the SEC’s web site. Now, the SEC is thinking about changing the definition, raising the requirement of assets from $1 million to $2.5 million or have an income from $200,000 to $450,000. If this becomes the new requirement then 60% of the current business angels will not qualify. This is totally counter productive. Today the companies can be formed, grown and exited with much less capital than 10 years back. The crowd funding is generating a lot of leads for business angles. Even the current definition is set in the time of a brick and mortar world. Around the world, alternative exchanges are coming up to lower the bar for raising capital. For domestic investors, this definition is taking away the great opportunity for growth investment. Entrepreneurs do lean start-ups and create much more capital efficient ventures. The Government should get out of this marketplace!

Outdated Economic Development
US has one of the largest pools of economic development organizations. Their job is to stimulate local economy and create jobs. In the last 20 years, everything local has become global. Economic development at a local level, without applying global context, generates less productive outcomes. Many counties around the world are focused on the local service industry. Many cities lack the vision and knowledge to become a global hotspot. These organizations are still following the business model of match making and exhibitions which are outdated in an age of instant information availablity to anyone anywhere. Many cities around the country are trying to set up innovation avenues or districts. The focus is still on real estate. Silicon Valley did not happen by the Government’s plan to create one. All these efforts are good but the economic development organizations lack the understudying of the lean start-ups.

Process to change the process is bureaucratic
The US has become the most powerful country due to various reasons. Among them, the most critical is one is establishing and following processes. For every industry, there exit is best practice. We have association to manage associations!! The country is on the same page even without some of the regulatory standards which exist in other countries. Best practices establish a market oriented, self-regulatory, organizations. However we are now the victim of our own processes. In the fast paced digital world, some of the processes are outdated particularly in education, healthcare, politics and local Governments. This has created a culture of preserving the interest of shareholders by leveraging old technologies and business models at the cost of delaying use of new technology. No wonder Washington DC has more then 10,000 lobbyists spending close to $3 billion in lobbying!! The new innovative products and ideas suffer because not only does everyone have to deal with customer adoption but everyone has to fight the companies who are entrenched in the marketplace with old technology. This increases the sales cycle. In many cases the cost of development of the technology is lower than establishing the first paying client.

Cities do not leverage new phenomenon of innovation in urban areas
The new innovation economy attracts people who like to work in the collaborative and interactive environment.  Millennial’s like to walk to work and buy local products. Unlike the earlier generation, they plan to raise their families in cities and not pursue the “Suburban American” dream life style. They do not want to be part of “familyville” or become “soccer” moms or dads. Cities are nor meeting with these new demand. They still have outdated zoning laws. Their process of any change is fought by existing landlords or activist citizens who may shun the new tech savvy millennial. San Francisco is a good example. More than 60% of residents are rented which means that less than 40% live in their own homes. In last the two years, rent has gone through the roof making the city impossible for a new start-up entrepreneur to live. The creative class, the triple bottom economy stakeholders and the young professionals are being driven out of the city. Every effort of the city to increase the number of homes is being fought. The status of real estate inventory is one of the main reason that we have a boom and bust economy. Controlling the process of permits for new real estate development does not bond well for the real market economy.

If you look at all the five factors, there is a common theme, a dysfunctional congress. No wonder the 113th Congress of United States has less then 15% approval rating!!