I don’t know about you, but I’m getting ready for 2020 to be over. Between the prospect of a vaccine and the new $5 million crowdfunding limit, I think next year has a lot going for it. Of course, next year will see the Biden presidency begin too. And it’s worth considering what that might mean for startup investors like you and me (there’s some potentially positive news — and some potentially negative outcomes)…
COVID-19: The pandemic will be managed more effectively under Biden. This will help startups get back to business-as-usual — along with the legacy companies they’re disrupting. But business-as-usual doesn’t mean we’re returning to January 2019. Industries like retail, travel and hospitality, healthcare and remote work have been deeply changed by the pandemic. And startups, being more nimble and innovative, will take far better advantage of our changed society (and business environment) than bigger, mature companies. That’s a big positive.
The economic cycle: Biden is inheriting an economy that’s making the transition from healthy growth to flattish growth. You can expect more government spending and more taxes to pay for the increased spending. And interest rates could go even lower than they already are. That means startups that need capital can easily borrow money or raise cash from venture funds (or crowdfunders). That’s another positive.
Immigration: Expect Biden to open things back up. He’ll likely start with removing country-based caps for employment-based visas. And he’ll support legislation to fast-track green cards for foreign students at American colleges who receive a doctorate-level degree in a STEM field and a job offer in the U.S. upon graduation. More immigration means a deeper pool of highly skilled professionals. That’s a huge positive for startups.
New crowdfunding rules: It’s certainly not a bad thing that Biden’s designated Chief of Staff, Ron Klain, now serves as EVP at venture investment firm Revolution. He will have a keen understanding of the value of tech innovation and disruption. But any appreciation the Biden administration has for Silicon Valley probably won’t be extended to the crowdfunding community. In this, I think Biden could follow in the footsteps of the Obama White House — possibly implementing overly restrictive rules that make crowdfunding unwieldy. A negative.
Environment/clean tech: The Biden White House is eager to board the clean tech train and will be looking for ways to support and encourage private-sector initiatives. Tax incentives, grants, public-private sector partnerships and other forms of collaboration are all on the table. Early in his campaign, Biden talked about more pedestrian-friendly infrastructure, electric cars and other clean tech areas. Startups are driving exciting innovation in all of these sectors. Both sides will be seeking help from each other. A huge positive.
Antitrust: There’s lots of activity from the legislative and executive branches right now to reign in Big Tech — including discouraging large companies (like Google and Facebook) from buying smaller companies. And I think that’s likely to continue under Biden. It’s going to curtail the buyout of startups by large legacy companies — a main avenue for a successful exit. A negative.
The final tally: Four positives and two negatives. January 20th will bring some big opportunities alongside new challenges to the startup and crowdfunding space. I think the positives — better COVID-19 management, access to cheap capital, more immigration and an emphasis on clean tech — will have a bigger impact than the negatives. I’m not saying that all problems will disappear. It’s not going to be perfect — no presidency is. I’m concerned about how Biden and his administration will handle crowdfunding regulations in particular. But I expect startups and startup investors to do well overall.