Mergers, Antitrust, and the Interplay of Entrepreneurial Activity and the Investments that Fund It

This paper addresses the potentially negative implications of proposed antitrust legislation on the entrepreneurial ecosystem in general and particularly focuses on the Venture Capitalists (VCs) that fund it. First, it offers a review of how antitrust merger law currently works and how proposed legislative changes to antitrust may threaten the innovative VC-backed ecosystem that has made the United States the center of global innovation across many different industries. Accompanying this review are some empirical observations. Second, recognizing that understanding innovative entrepreneurial activity calls for a deep appreciation of those who back it, the paper provides an overview of the entrepreneurial ecosystem and the motivations of VCs. In so doing, it identifies the drivers of entrepreneurial innovation and explain why changes to merger law may threaten these models of facilitating innovative growth-orientated entrepreneurs. Lastly, the paper concludes that changes to merger law may have negative effects on the entire entrepreneurial ecosystem and hinder US innovation.