Does D.C. know startups?

This is a guest post by Flybridge Capital Partners’ Jeff Bussgang.

[Editor’s note: VentureBeat originally published this story with a headline that badly miscast the author’s meaning. We apologize to our readers and the author for the mistake.]

The short answer is no, but perhaps there’s hope.

The day after President Obama was inaugurated for a second term, I was invited to speak at the inaugural meeting of the newly formed Congressional Caucus on Innovation and Entrepreneurship.  The caucus is a bi-partisan group, created by Rep. Jared Polis (D-CO), Darrell Issa (R-CA), Vern Buchanan (R-FL) and Gary Peters (D-MI), to focus federal policy efforts on supporting startups and innovation.

I have to admit my expectations were pretty low.  After my euphoria over the passing of the JOBS Act last year, the latest fiasco over the fiscal cliff have me pretty down on Washington’s ability to get anything done that will help create a more robust business environment.

I have been to DC a few times with the policy business group I helped co-found, The Alliance for Business Leadership, and every time I’m there, I’m struck by the contrast with the more thrilling, action-oriented world of startups and venture capital.

That said, the House Members and staffers seemed genuinely interested in the components of a vibrant start-up ecosystem.  I gave them a briefing of why Boston and NYC have such vibrant start-up environments, with the former being in the midst of a renaissance and the latter emerging from nowhere over the last five to 10 years to legitimately become one of the world’s major start-up centers.

I cited a few elements, which echo a presentation I have given in the past aboutBoston’s Start-Up Scene and that my NYC-based colleague, Matt Witheiler, has written about NYC.  Specifically, here are four important ingredients for a start-up ecosystem to thrive:

• Intellectual capital: Universities, young people, creative, whacky people with expertise in multiple disciplines.
• Angels, Advisors and Accelerators: The first source of capital and they can offer mentorship and good advice to transition an idea to reality.
• Venture capital: Startups need the necessary capital to scale, as well as guidance from those who have “seen the movie.”
• Successful companies: For inspiration, to partner with, poach from, sell to, and so on.
• A welcoming culture: Successful start-up ecosystems are are open, diverse, inclusive of outsiders/immigrants and creative types, and rich in information exchange.

Today, Boston and NYC are shining examples of these elements.  Boston has always had rich intellectual capital, but was historically weaker in the cultural characteristics than it is today.  The angel community has also stepped up in a more meaningful way recently, which has been very positive.

NYC has historically fallen short on intellectual capital, but that has changed dramatically in recent years with the talent streaming out of Wall Street and Madison Avenue into start-ups.  There’s been an explosion in NYC’s angel community.  This has led to an environment that has never been more promising.

With the audience being a policy one, I gave some simple advice to policy makers:  avoid getting involved in areas where government doesn’t have a role (such as picking winners with targeted tax breaks) and focus instead on fundamentals like education and infrastructure, as well as policy issues that matter to entrepreneurs, including immigration reform, education reform to fit the needs the start-up employers, and capital formation issues like crowdfunding.

I gave a nod to local government leaders like Governor Patrick and Mayor Bloomberg who have been terrific champions in their respective communities. When you ask local business leaders, they will all tell you that those two politicians totally “get it”.

I can’t predict whether this new caucus will have an impact, but clearly comprehensive immigration reform is on Congress’ short list for important initiatives in 2013 and Rep. Polis was one of the co-sponsors of the Start Up Visa Act.

If every entrepreneur reached out to their House Representative and encouraged them to join this Caucus, perhaps it would have a small impact.  Meanwhile, I was happy to leave Washington DC and get back to action-oriented Start Up Land!

This post originally appeared on Jeff Bussgang’s personal blog.