Silicon Valley could be Biden’s funding lifeline post South Carolina

Presidential candidate Joe Biden is likely to throw a fundraising lifeline to Silicon Valley donors after his commanding South Carolina victory and heading into the next wave of primaries.

A pro-Biden super Pac, Unite the Country — whose past backers include senior tech figures — is picking up efforts to tap wealthy donors, Treasurer Larry Rasky told CNBC, after the group made several ad-buys in Super-Tuesday states (per a February 28 Federal Election Committee filing).

Past Unite the Country’s benefactors include LinkedIn founder and Greylock Partners VC Reid Hoffman (who contributed $500,000) and Angel Investor Ronald Conway ($250,000), according to FEC data.

Source: FEC filing

Biden revived his presidential-bid from life-support with a resounding 29 point win over Bernie Sanders in Saturday’s South Carolina primary.

But after flailing in the first three contests — Iowa, New Hampshire and Nevada — the former Vice-President’s campaign has reportedly been running on financial fumes.

The last Federal Election Campaign disclosures before South Carolina’s democratic primary showed Biden with $7.1 million cash on hand, compared to Sanders’ nearly $17 million.

The race to become the Democratic-nominee for president is consolidating, post South Carolina, to a Sanders-Biden match-up — after Mayor Pete Buttigieg and billionaire Tom Steyer dropped out. Mayor Mike Bloomberg, who entered the race late, will be on the ballot for the first-time on Super Tuesday, though its not clear if he’ll shift dynamics between the front-runners.

To capture Sanders, who now leads Biden in the delegate count, Biden will need to close the fundraising gap between himself and the Vermont Senator, who doesn’t accept super Pac funds and has raised a large portion of his total $126 million presidential fundraising haul from small contributions by individual donors.

Source: NBC News

For Democrats, fundraising is a big focus of campaign efforts in uncontested states (like New York and California) where they are nearly certain to win in the general-election. Areas with affluent residents, such as the Bay Area and Manhattan, have served as piggy-banks for tapping wealthy donors.

But a fundraising push by Biden and surrogates in Silicon Valley could further expose a political rift within big tech: that of founders and senior executives favoring a moderate candidate, while rank-and file workers “feel the Bern” on campaign donations.

FEC data and analysis by and the LA Times and the Center for Responsive Politics indicate Bernie Sanders has substantially outperformed all candidates in raising small-donations from workers in tech companies. By Times reporting, Sanders has raised, $1 million, or nearly four-times as much as Biden, in small donations from employees at Google, Amazon, Apple, Microsoft, and Facebook.

This preference divide within big-tech could align with the differences in each candidate’s policy platforms. Biden’s positions are generally milder on initiatives to police and potentially split up big-tech companies, such as Facebook.

Sanders has been vocal about driving policies that address the pay gap across major tech companies and has called for breaking up Facebook and Amazon.

Founders and tech-workers in California will have a non-monetary option to express their preferences in voting booths tomorrow — as the Golden State is one of 13 in the super Tuesday primary contest. Those results will roll into more primaries, more fundraising and a decision on the 2020 presidential nominee at the Democratic National Convention in Milwaukee this July.

To curb lobbying power, Elizabeth Warren wants to reinstate the Office of Technology Assessment

In a move to correct the imbalance of power between technologically sophisticated corporations and the lawmakers who regulate them, presidential candidate Senator Elizabeth Warren is proposing that Congress reinstate the Office of Technology Assessment.

It’s a move that gets deep into the weeds of how policy making in Washington works, but it’s something that Warren sees as essential to leveling the playing field between well-paid corporate lobbyists who are experts in their fields and over-worked under-staffed congressional members who lack independent analysts to explain highly technical issues.

“Lobbyists are filling in the gaps in congressional resources and expertise by providing Congress information from the perspective of their paying corporate clients. So let’s fix it,” writes Warren.

It’s one of the key planks in Warren’s latest policy proposal and an attempt to tip the scales against corporations and their lobbyists. With the move Warren clearly has her eye on technology companies and their representatives, who often are the very people Congressional lawmakers rely on to explain how rule-making would impact their industries.

“[Members] of Congress aren’t just dependent on corporate lobbyist propaganda because they’re bought and paid for. It’s also because of a successful, decades-long campaign to starve Congress of the resources and expertise needed to independently evaluate complex public policy questions,” Warren writes.

“For every bad faith actor in Congress bought off by the big banks, there are others who are genuinely trying to grapple with the technical aspects of financial reform. But as the issues facing Congress have grown more complex, resources to objectively and independently analyze them have been slashed. Republicans eliminated an independent office of experts dedicated to advising Congress on technical and scientific information,” the Senator says.

The lack of independent analysis stymies Congressional oversight in areas from banking and finance reform, to the oversight of technology companies, to the potential to effectively pass laws that will respond to the threat of climate change. Committees that oversee science and technology have seen their staff levels fall by over 40 percent in the past decade, according to Warren and staff salaries have failed to keep up with inflation, meaning that policymakers in Washington can’t compete for the same level of talent that private companies and lobbyists can afford several times over.

Sen. Warren saw this firsthand when she worked at the Consumer Financial Protection Bureau .

“Financial reform was complicated, and the bank lobbyists used a clever technique: They bombarded the members of Congress with complex arguments filled with obscure terms. Whenever a congressman pushed back on an idea, the lobbyists would explain that although the congressman seemed to be making a good point, he didn’t really understand the complex financial system,” she writes. “And keep in mind, the lobbyists would tell the congressman, that if you get this wrong, you will bring down the global economy.”

The inability of lawmakers to understand basic facts about the technologies they’re tasked with regulating was on full display during the Senate hearings into the role technology companies played in the Russian interference in the 2016 election.

Issues from net neutrality to end-to-end encryption, or online advertising to the reduction of carbon emissions all rely on Congress having a sound understanding of those issues and how regulation may change an industry.

Right now, it’s case of which multi-billion dollar company can buy the best lobbyists — as is the case with Alphabet and Yelp or Facebook and Snap.

Under the auspices of Warren’s anti-corruption plan, the Senator is calling for the reinstatement and modernization of the Congressional Office of Technology Assessment, a significant increase to salaries for congressional staffers and stronger funding for agencies that support congressional lawmaking.

The OTA was created in the seventies to help members of Congress understand science and technology issues that they’d be regulating. Over the tenure of the agency, it created over 750 reports — including two landmark studies on the impacts of greenhouse gas emissions and global warming in the 90s, which brought it to the attention of conservative lawmakers that defunded it in 1995.

At the time, House Speaker Newt Gingrich, said the agency was “used by liberals to cover up political ideology.”

Under Warren’s plan the OTA would be lead by an independent director to avoid partisan manipulation. The newly re-formed agency would have the power to commission its own reports and respond to requests from lawmakers to weigh in on rule-making, help congressional legislators prepare for hearings, and write regulatory letters.

Warren also calls for funding to be increased for the other congressional support agencies — the Congressional Research Service, the Congressional Budget Office, and the Government Accountability Office. Combined these agencies have lost half of their staff.

Money for the increased activities of the agencies would come from a tax on “excessive lobbying”. The . goal would be “to reverse these cuts and further strengthen support agencies that members of Congress rely on for independent information,” according to the Warren plan.

“These reforms are vital parts of my plan to free our government from the grip of lobbyists – and restore the public’s trust in its government in the process,” Warren writes.

U.S. security experts concede China’s 5G dominance, push for public investment

U.S. security experts are conceding that China has won the race to develop and deploy the 5G telecommunications infrastructure seen as underpinning the next generation of technological advancement and warn that the country and its allies must develop a response — and quickly.

The challenge we have in the development of the 5G network, at least in the early stage, is the dominance of the Huawei firm,” said Tom Ridge, the former US Secretary of Homeland Security and governor of Pennsylvania on a conference call organized recently by Global Cyber Policy Watch. “To embed that technology into a critical piece of infrastructure which is telecom is a huge national security risk.” 

Already some $500 million is being allocated to the development of end-to-end encryption software and other technologies through the latest budget for the U.S. Department of Defense, but these officials warn that the money is too little and potentially too late, unless more drastic moves are made.

(You can also hear more about this at TechCrunch Disrupt in SF next week, where we’ll be interviewing startup founders and investors who build businesses by working with governments.)

The problems posed by China’s dominance in this critical component of new telecommunications technologies cut across public and private sector security concerns. They range from intellectual property theft to theft of state secrets and could curtail the ways the U.S. government shares critical intelligence information with its allies, along with opening up the U.S. to direct foreign espionage by the Chinese government, Ridge and other security experts warned.

VCs are failing diverse founders; Elizabeth Warren wants to step in

Elizabeth Warren, who earlier this year confirmed her intent to run for president in 2020, has an ambitious plan to advance entrepreneurs of color.

In a series of tweets published this morning, the Massachusetts senator proposed a $7 billion Small Business Equity Fund to provide grants to Black, Latinx, Native American and other minority entrepreneurs, if she’s elected president. The initiative will be covered by her “Ultra-Millionaire Tax,” a two-cent tax on every dollar of wealth above $50 million the presidential hopeful first outlined in January.

The fund would be managed by the Department of Economic Development, a new government entity to be constructed under the Warren administration. With a goal of creating and defending American jobs, the Department of Economic Development would replace the Commerce Department and “subsume other agencies like the Small Business Administration and the Patent and Trademark Office, and include research and development programs, worker training programs, and export and trade authorities like the Office of the U.S. Trade Representative,” Warren explained.

The Small Business Equity Fund will exclusively issue grant funding to entrepreneurs eligible to apply for the Small Business Administration’s existing 8(a) program and who have less than $100,000 in household wealth, aiming to provide capital to 100,000 new minority-owned businesses, creating 1.1 million new jobs.

Founders of color receive a shocking disproportionate amount of venture capital funding. There’s insufficient data on the topic, but research from digitalundivided published last year suggests the median amount of funding raised by black women, for example, is $0. According to the same study, black women have raised just .0006% of all tech venture funding since 2009.

Startups founded by all-female teams, despite efforts to level the playing field for female entrepreneurs, raised just 2.2% of venture capital investment in 2018.

VCs are a majority white and male. Plus, they have a proven tendency to invest their capital into entrepreneurs who look like them or who resemble founders that were previously successful. In other words, VCs are continuously on the hunt for the next Mark Zuckerberg .

“Even if we fully close the startup capital gap, deep systemic issues will continue to tilt the playing field,” Warren wrote. “86% of venture capitalists are white, and studies show that investors are more likely to partner with entrepreneurs who look like them. This tilts the field against entrepreneurs of color. So I plan to address this disparity head on too. I will require states and cities administering my new Fund to work with diverse investment managers—putting $7 billion in the hands of minority-and women-owned managers.”

Warren this morning also announced plans to “direct” federal pension and retirement funds to recruit diverse investment managers and to require states and cities administering the Small Business Equity Fund to work with diverse investment managers. Finally, Warren, again, if elected, will triple the budget of the Minority Business Development Agency, which helps entrepreneurs of color access funding networks and business advice .

Warren, throughout her campaign for the presidency, has made a number of critiques of the tech industry.

In March, the senator announced her plan to break up big tech.

“Twenty-five years ago, Facebook, Google, and Amazon didn’t exist,” Warren wrote. “Now they are among the most valuable and well-known companies in the world. It’s a great story — but also one that highlights why the government must break up monopolies and promote competitive markets.”

Facebook’s ad team shoots itself in the foot by pulling Elizabeth Warren campaign ads

Facebook’s gang that couldn’t shoot straight advertising department has made another blunder, this time by pulling Elizabeth Warren campaign ads touting the Senator’s proposal to break up big tech.

The offending ads were pulled, according to Politico, over their use of the Facebook brand in their copy.

Meanwhile, other ads that the Senator’s Presidential campaign had run which addressed the plan to unwind various acquisitions by Facebook, Amazon, and Alphabet (the parent company of Google) were not removed from Facebook.

Indeed, the removal appears to be short-lived, but has given the Warren campaign ammunition for their argument and numerous headlines, tweets, and retweets.

“We removed the ads because they violated our policies against use of our corporate logo,” a Facebook spokesperson told Buzzfeed’s Ryan Mac. “In the interest of allowing robust debate, we are restoring the ads.”

That’s a good move for the Facebook public relations team, especially since the ads reportedly didn’t include Facebook’s logo.

But the damage has already been done. It provides fodder to Warren’s argument that big tech has too much power and control over the way information is disseminated — especially on its own platforms.

This incident may be a tempest in a teapot, but it will calcify positions on the left and the right about the self-interest of big technology and these companies’ ability to regulate content on their own platforms to the detriment of free speech — even in advertising.