Startups Are Not Small Businesses: A Texas Startup Policy Blueprint for Unlocking Capital

Published in collaboration with the TexCap Policy Institute, this new white paper is more than another call for “more startup support.” It’s a public policy intervention – one Texas desperately needs if we want to lead the nation in innovation, venture capital, and the next generation of job creation.

We titled it plainly:
Startups != Small Businesses
Because the policy makers, cities, and economic development offices tend conflate the two. And in doing so, it continues to fund the wrong things, regulate the wrong way, and misdirect every resource intended to make Texas the best place to build something bold.

Why This Startup Policy Paper Had to Be Written

The “small business” designation is a catch-all that means everything and nothing. I tend to get uppity in the same way about someone saying they work in SaaS, AI, or even “tech” (Tech for what??). In Texas, it means you’re eligible for certain grants, procurement preferences, and development programs. But whether you’re launching a scalable tech company or opening a second dry cleaner, government tends to treat it all the same; funneled through the same lens.

That’s a problem. It’s a problem I’ve been tackling federally.

Startups are not smaller versions of businesses that already work. They are experimental. Risk-driven. Capital-intensive. They create net new markets, often before the market exists. They don’t need loans – they need early-stage equity. They don’t need storefront foot traffic – they need policy environments that encourage innovation, acquisitions, and reinvestment in talent.

Yet the ecosystem we’ve built doesn’t understand that. Or worse – ignores it.

Economic development programs continue to reward job counts over growth velocity. Bank loans are promoted over investment vehicles. And our workforce development initiatives remain focused on legacy industries or established company needs rather than emergent ones.

This is not just ineffective – it’s damaging.

What We Recommend for Texas Startups

In collaboration with the team at TexCap Policy Institute, we outline a specific, implementable framework for distinguishing between startup policy and small business support:

• Legislative recognition that startups are a unique category of enterprise, requiring differentiated treatment in statute and funding.
• Reforms to how economic development boards evaluate ROI – emphasizing long-term impact, not just short-term job creation.
• Capital formation strategies that align with startup stages: friends and family rounds, pre-seed and seed investment incentives, and access to accredited networks.
• Clarifying eligibility for programs like JETI, SBIR/STTR, and CAPCOs to prioritize high-growth intent over general business survival.
• Data and research initiatives that measure what startups actually need – not just what Main Street businesses say is “helpful.”

These aren’t theoretical ideas. They’re modeled on what’s working in cities like Nashville, Salt Lake, and Boulder – and based on direct input from startup founders, venture investors, and economic development leaders across the state.

What’s at Stake for Startups

We can keep pretending that one-size-fits-all entrepreneurship policy works – or we can get serious about being the best place in the world to start something new.

We can keep writing checks to businesses that will never scale – or we can build an innovation economy that brings outside capital into Texas, creates generational wealth, and trains the next workforce in real economic mobility.

The cost of inaction is falling further behind. The cost of confusion is watching our talent and capital flow to places that actually get it.

Texas is almost there. But almost doesn’t get us the exits, the IPOs, the seed-to-series C pipelines, or the global innovation reputation we claim to want.

What You Can Do

• Read the white paper ? Startups ? Small Businesses (TexCap)
• Share this post with policymakers, economic developers, or anyone running a startup support organization.
• Invite me to speak to your board, committee, or council about how Texas can realign its startup policy. We’ve built the blueprint – now it’s about execution.
• Push your region to differentiate startups from businesses in every incentive, grant program, and procurement process it runs.

One more time, here’s the paper

Download Here

This paper is a call to arms: for chambers of commerce, for capital allocators, for legislators who still think “entrepreneurship” means selling cupcakes from a food truck.

The future of our startup economy depends on whether we treat it like a future, or just a hobby for people too risky to get a loan.

Let’s stop confusing “starting a business” with building a startup. One is noble and important. The other is how we change the world.