The startup industry is to a large extent the cornerstone of the \u2018Information Age.\u2019 To launch a company, one needs a great idea. But, to have it executed, companies need to attract venture capitalists (VCs). A weekly index measuring the health of the U.S. technology startup industry is at its lowest point in three years. Does that mean venture capitalists\u2019 confidence in Silicon Valley is wavering?<\/p>\n
The Bloomberg U.S. Startups Barometer plunged -37% from its mid-December 2016 peak \u00a0to reach 522.53 in the week of February 27. The index has fallen -23.7% on a year-over-year basis, and is at its lowest level since April 2014.<\/p>\n
This lower number of exits compared to previous years may have contributed to the drag in startup funding.<\/p>\n
The new administration could have also played a role in giving venture capitalists cold feet. Conjectures about Trump\u2019s policy proposals and uncertainties on their implementation could have caused investors to hold off on big stakes in fledgling companies until there\u2019s better clarity on policy action.<\/p>\n
Trump\u2019s emphasis on stricter immigration policies could have also raised concerns among investors, as immigrants have played a major role in shaping the American start-up landscape. A March 2016 report from the National Foundation for American Policy used data on 87 U.S. startups valued at over $1 billion and yet to be traded publicly, as of January 2016. The study reveals that immigrants are among the founders of more than 50% and hold important positions in management and product development teams in over 70% of these firms. The immigrant-founded U.S. startups had an aggregate value of $168 billion, and were responsible for creating an average of 760 jobs per company in the nation, as reported by the same study.<\/p>\n
But there are aspects of Trump\u2019s proposals which, if implemented, could offer tailwinds to the startup industry. If Trump\u2019s promises of corporate tax cuts and tax holiday on U.S. companies\u2019 repatriated earnings gain legal approvals, companies could have extra cash at hand to invest in new ventures and acquisitions.<\/p>\n
Bottom Line for Investors<\/strong><\/p>\n In all, it would be too presumptive at this point to suggest that the recent lull in startup activity portends doom for Silicon Valley\u2019s new blood. Moreover, the year 2016 marked more of \u2018normalization\u2019 and less of a \u2018decline in venture capital investment activity, following a 2015 peak, as suggested by a report from the National Venture Capital Association.<\/p>\n Nevertheless, VCs reportedly have a pile of cash, which should ease concerns regarding funding channels for Silicon Valley. According to the National Venture Capital Association, U.S. venture funds raised a total of $41.6 billion in 2016 – the largest amount in the last ten years.<\/p>\n We\u2019re hopeful for more startup deals in the future, possibly once venture capitalists have more clarity on Trump\u2019s policies in the next couple of years and as budding entrepreneurs continue to innovate \u2013 something we don\u2019t think there\u2019s going to be a dearth of in coming years, given the rapidly evolving trends in the tech-landscape.<\/p>\n And, as technology evolves, so does its industry\u2019s growth prospects. To get a sneak peek into this sector\u2019s latest developments and future potential, check out our Stock Market Outlook report. This 22-page briefing discloses the latest facts and forecasts on various sectors and asset categories that can help you get an edge over other investors. To download your free copy, click on the link below:<\/p>\n","protected":false},"excerpt":{"rendered":" The startup industry is to a large extent the cornerstone of the \u2018Information Age.\u2019 To launch a company, one needs […]<\/p>\n","protected":false},"author":1,"featured_media":4124,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,72],"tags":[],"class_list":["post-5057","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investor-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/5057","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=5057"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/5057\/revisions"}],"predecessor-version":[{"id":11069,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/5057\/revisions\/11069"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=5057"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=5057"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=5057"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}