Startups · Entrepreneurship

How will Donald Trump's triumph impact the startup ecosystem?

Nidhi Verma Test Team Lead

November 9th, 2016

We all woke up to the news of Donald Trump being elected as President this morning. It seems that financial markets did not welcome the news positively.

With that been said, this could impact the fundraising environment for startups. In the short term, accredited investors may play conservative and reduce risky bets like startup investments. All companies start with friends and family rounds as well as angels before they are even ready for Venture Capital money.

In the mid to long term, the financial environment could also impact VCs as limited partners will also reduce the allocation into venture funds. This would impact follow on rounds as well as companies seeking the first institutional money.

Do you all see it differently? Are there any other issues that entrepreneurs will be facing during the next 4 years?
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Tony Ajaere Life coach, Property Broker, Government consultant and Energy Expert

November 9th, 2016

Donald Trump will increase economic value for America by doing what he promised his people.

Scott Taylor Sales & Marketing Director at Cloudia Assistant / Author: The Opportunity in Every Problem

November 9th, 2016

The markets always take a dive when an election ends. Half the people lose and get all emotional and fearful and pull their money out so the market drops. After a few days their fears subside and they realize how dumb and fearful they were then the put their money back in and the markets revive so don't worry about it. You will still have to get funding the same way you did before the election.

John Fluke Corporate governance expert

November 9th, 2016

Nidhi, No negative impacts at all. Conversely, positive impacts abound: elimination of capital gains tax surcharges, reduction in excessive regulations and corporate income tax rates (among other pro-business measures). The US small business sector will benefit from the increased in capital spending that results from this. As an aside, corporations once successfully negotiating the challenges of progressing from development stage to finally arrive at sustained positive cash flow should not be subject to any income taxation, since all expenses are charged to customers - all expenses! Add to that a major refocusing of public spending on high priority projects to restore deteriorating infrastructure that is so essential to commerce, education, public safety, police and fire protection, healthcare and national defense, will not only improve productivity nationally and expand employment, it will also increase domestic demand for goods and services. This is especially critical to the economic restoration of our nation's badly-degraded inner cities. The 1980's were the last time our nation enjoyed an episode of satisfactory economic growth (when we elected an 'outsider' to the Whitehouse - in that case, an actor). Ronald Reagan restored the nation's economic vitality then. This should be even better because this time, we have elected a business person outsider! Lastly, the 'worse-than-Brexit' predictions made be the US press was totally wrong (as was their unanimous conclusion that the nation's electorate would elect Mrs. Clinton). Not surprisingly, the DJIA was up dramatically today - not a really a durable confirmation of anything - but a stark rebuke of the insiders' wrong-headed assessment of what to expect if Trump won. In any event, entrepreneurs always face daunting challenges regardless of which party controls each house of congress and the Whitehouse. Capital formation is generally retarded by higher tax rates and more onerous regulation. The next four years should see those burdens lessened. But the other challenges entrepreneurs face have been and always be present regardless of all of the foregoing! John John M. Fluke, Jr. Fluke Capital Management, LP 6 Columbia Key Bellevue, WA 98006 Mobile 206 953 5853 jfluke@flukecapital.com This message is confidential and intended for listed adressee(s) only.

Martin Omansky Independent Venture Capital & Private Equity Professional

November 9th, 2016

Good points. On the other hand, there may be real problems because of Trump's position on trade policy. Last time we had this kind of discussion - we had the Smoot-Hawley tariff - we got the Great Depression. On another point, Mr, Trump is primarily a real estate investor - not a risk- taker or a buyer of private securities in technical innovation companies. Everyone in finance knows that real estate can be heavily leveraged, while start-ups can't (and shouldn't) borrow). I am also fearful that his ignorance of the sciences will have negative consequences for climate change measures and federal sponsorship of R&D. Sent from my iPhone

Thomas Kaled Business Development Consultant @ thomas.kaled@gmail.com

November 9th, 2016

Res ipsa loquitur

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David Martin

November 9th, 2016

Nidhi, I second John's points.  Granted we are all speculating to an extent, but from what I have seen, your viewpoint is completely backwards.  When Obama came into office, investment froze completely because of his foolish socialist agenda that cripples growth.  He talks a great game, but its usually misleading just like "You can keep your doctors."  Most I keep company with on the left and right see Obama as one of the least intelligent business and economic minds of US history.  Obamacare has been a destroyer for small business entrepreneurship and jobs in general.  Socialism does not support or encourage entrepreneurship.  There may be others here who will disagree, and they are welcome to their points.  Again, I can only speak from my experience, and Obama has been a disaster for entrepreneurship from day one.  In fact, I had a few larger $M deals back in 2012.  The qualifying factor was the investor was waiting to see if Obama would be elected again before they invested.

As long as Trump surrounds himself with a team with full competence, I think as he begins to repeal some of Obama's policies, you will see investors see a new hope for the markets and begin investing and hiring and building again.

Put in simple terms think of it like this.  You have $100.  A guy is elected who says he knows how to spend your money better than you.  Therefore, he is going to take more of your money in the form of taxes to pay for programs he believes are a better use for your money.  Then a woman comes along and says "yeh..need a little more of your money.  I too know how to better spend it than you."

Or a guy comes in and says, "You earned your $100.  I think you are smart enough to invest and spend as you see fit.  Im going to stay out of your pockets."  

Which one are you reserved because you don't know how much of your money will be taken from you?  And with which one do you feel more comfortable aligning investments?  

Thomas Kaled Business Development Consultant @ thomas.kaled@gmail.com

November 18th, 2016

Without Care and Caid about $120 Billion/annum according to the FIO. There was a Report generated in 2013 for Dodd Frank. If you Google FIO Annual Report of 2013 on page 13 of the report you'll find this estimate.




Nigel Stonham ROCKst!arist at ROCK st!artist

November 9th, 2016

While they may be risky, they often bring huge rewards, which is why people invest. People will always continue to invest. People with great teams, plans, and more will I believe always get funded. Those with crap plans or ideas will likely not! But probably tell people there is no funding out there ! "With that been said, this could impact the fundraising environment for startups. In the short term, accredited investors may play conservative and reduce risky bets like startup investments. All companies start with friends and family rounds as well as angels before they are even ready for Venture Capital money. "

Shahab Riazi Sr. Manager, Enterprise Services, SAP

November 9th, 2016

Don't worry! Give it a few days. Things will settle down. This country has seen many colorful characters in charge and will continue to thrive as long as the entrepreneurial spirit remains. I don't expect a big impact on silicon valley investment patterns unless there is specific legislation targeting the valley.

Martin Omansky Independent Venture Capital & Private Equity Professional

November 9th, 2016

Nidhi: Likely VCs, hedge funds, and private equity firms will be able to retain carried interest provisions - a very popular and lucrative feature for partners and employees of private investor firms. Changes in federal tax code also may be forthcoming, but no details yet. Probably positive, but anything could happen. JOBS Act might be reformed, which might be a good thing. Congress and administration need a proper education.