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Do startups need special privileges

Do we need a privileged class of businesses that have special rules and exemptions?

As far as coverage in the media goes, the startup rollercoaster is on a downward slope now. After months, or perhaps years when the word startup seemed imbued with some kind of business magic, we have now almost daily coverage of startups that have collapsed or are in the process of shrinking. There are also a lot of whispered discussions about which of the big (really big) stars of the e-business firmament will first start showing public signs of distress.

There's nothing very surprising in small new businesses dying out, and in the easy money environment that seems to reign in the world of technology-enabled startups, it must be easy to make expensive mistakes. However, the real problem is that we carry over some of our socialist taboos about businesses shutting down too far. Do the operational troubles of a small business which does restaurant deliveries merit breathless coverage in the national media?

The more alarming event in this startup space is the idea--which has got far too much official traction--that startups need to be recognised as a special type of businesses, and deserve special sources of funding and perhaps special rules regarding funding and IPOs. This is a dangerous idea. It conforms to the general concept instead of conditions being improved for everyone, we must have separate rules and privileges for different types of entities. In fact, it is basically the nonsense about small scale industries all over again. All that ever did were perverse incentives to stay small scale and to pretend to be small scale.

What do startups need? They need better infrastructure, freedom from petty and corrupt government processes, a legal environment where contracts get honoured and enforced, and they need that the educational qualifications of employees actually have some meaning. In other words, what every business needs.