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January 23, 2024 | Tom Ballard

INVESTOR OUTLOOK 7 | How will election season impact entrepreneurs?

Impacts are expected, but the predictions vary on when and how they will affect start-ups.

Today’s question as posed to our experts is: “It’s an election year nationally. What do you think that portends for the start-up community?”

David Adair, Co-Founder and Managing Director, Solas BioVentures: Uncertainty is never enjoyed by the markets. This year brings uncertainty, which by its very nature leads both to risk and opportunity. The biggest impact is not what is said during the campaign season, but once elected, what does the winner prioritize. Once those priorities are known, their impact on the regulatory environment for the biotechnology space will become clear.

Gene Bressler, Chairman of the Upper Cumberland Investment Alliance: They should leverage everything, try to break through. Money and ideas will be clogged in election buzz, but everyone wants a winning connection to small business. Great ideas and businesses can win.

Eric Dobson, Managing Partner, Community Equity Partners LLC and Sheltowee Venture Fund II: I believe it will be an ugly Q3 and Q4 for the start-up community and SSBCI (State Small Business Credit Initiative) program. The final three months of the election cycle always bring the market to a halt. I hope I am wrong, but I have been raising or investing capital for 22 years and that is what I have seen in the past five election years. Great deals will still get done, and most will be oriented around existing portfolios and the SSBCI program. Great deals will still get done, and most will be oriented around existing portfolios and the SSBCI program. In my opinion, unless you have your story buttoned-up and your homework done, don’t bother launching in the second half of 2024. To all entrepreneurs I say, preserve cash, focus on sales, and be prepared to give investors a good deal. I strongly believe it will be a buyer’s market in 2024.

Tony Lettich, Managing Director, The Angel Roundtable: We anticipate efforts by the party in power at the national level to deploy policies to enhance macro-economic performance and thereby stronger economic conditions as the year progresses. Assuming this occurs in practice and is not restricted to dialogue, we are optimistic about a much-improved economy toward year-end and approaching 2025!

Grady Vanderhoofven, President and Chief Executive Officer, Three Roots Capital: If elections affect economic policy, tax policy, fiscal policy, and monetary policy, then elections affect availability of capital and velocity of capital. Next year’s election (Federal and State) will impact the start-up community, but I don’t think it’s possible yet to know what the effects will be.

Ken Woody, President and Partner, Innova Memphis: The federal government has not done a good job of picking winners historically but national/regional focus on key areas can drive technological innovation and adoption (e.g., electric vehicles, solar, conservation). I think it’s more about where the focus of the new administration is and how companies can develop around that.

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