The Rise of Regulatory Affairs in Innovative Startups

Forthcoming in The Handbook of Law and Entrepreneurship in the United States, Cambridge University Press 2017, D. Gordon Smith & Christine Hurt, eds.

Loyola Law School, Los Angeles Legal Studies Research Paper No. 2016-43

21 Pages Posted: 10 Dec 2016 Last revised: 16 Dec 2016

Elizabeth Pollman

Loyola Law School Los Angeles

Date Written: December 5, 2016

Abstract

What explains the growing number of collisions and collaborations between law and entrepreneurs? How is the startup community responding? What are the implications for regulatory governance of innovative technology? This chapter explores these questions, demonstrating the growing importance of regulatory affairs and political activity for many startup companies, how politically savvy experts have become a part of the startup ecosystem, and the impact these developments may have on law and entrepreneurship.

Beginning with recent history and startup culture, the chapter identifies four developments contributing to the rise of regulatory affairs in innovative startups. First, with mature technology and widespread Internet connectivity, recent startups have focused on innovations in the physical world, disrupting industries that are situated in webs of regulations. Second, a generation of engineers has grown up in a culture of “hacking” problems and pursuing “permissionless innovation,” which has fostered a willingness to create technology that challenges existing legal frameworks. Third, leaders in the technology industry have demonstrated increasing political engagement, normalizing such activity in an industry that had not previously been known for it. Fourth, changing market trends and regulations have helped startups raise millions, even billions, of dollars that can be used to fund efforts to change laws, engage experts, and battle incumbents and regulators who stand in their way. Further, the chapter examines how the startup community has responded to these developments by bringing in and creating new opportunities for individuals with government and policy expertise and connections. Finally, the chapter takes up one of the fascinating implications of startups colliding with regulations and having the expertise to navigate politics and policy — that the story of legal change is not as simple as sometimes portrayed, with the law always lagging behind technology. This chapter contends the “lagging law” story is worth reexamining in light of private and public collaboration in the governance of innovative technology.

Keywords: Startup, entrepreneurship, innovation, regulation, regulatory affairs, corporate political, lobbying, new governance, startup companies, unicorn, regulatory entrepreneurship, Uber, Airbnb, fintech

JEL Classification: L26, M13, A33, G38, K20, K22, P16

Suggested Citation

Pollman, Elizabeth, The Rise of Regulatory Affairs in Innovative Startups (December 5, 2016). Forthcoming in The Handbook of Law and Entrepreneurship in the United States, Cambridge University Press 2017, D. Gordon Smith & Christine Hurt, eds.; Loyola Law School, Los Angeles Legal Studies Research Paper No. 2016-43. Available at SSRN: https://ssrn.com/abstract=2880818

Elizabeth Pollman (Contact Author)

Loyola Law School Los Angeles ( email )

919 Albany Street
Los Angeles, CA 90015-1211
United States

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