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What the US Presidential Election Could Mean for Private Market Investors
Richard Hadler here from Founders Capital. We scour Europe for the top 1% of Start-ups led by epic Founders, giving them access to our world-class investor & partner network to scale their ventures to heady heights.
Kamala vs Trump
Before we kick off… I think it's important starting by saying…
I am by no means an expert in politics, especially not US politics.
I’d rather stick to the world of private markets, where my comfort level is slightly higher.
But as the 2024 US Presidential election draws closer, it’s hard to ignore the potential ripple effects the outcome might have on the broader economy—and, by extension, on investment opportunities. With President Biden stepping down, Vice President Kamala Harris has emerged as the Democratic frontrunner, squaring off against a resurgent Donald Trump, who’s gained some renewed momentum.
Against this backdrop, investors are left wondering how various potential policies might play out in the macroeconomic landscape, particularly in areas close to home for us—private assets, alternative investments, and the rapidly evolving cryptocurrency market.
Economic Growth
A Republican win could see a return to lower taxes and deregulation aimed at accelerating economic growth. Policies like corporate tax cuts and tariffs might bring short-term boosts in domestic manufacturing and job creation. But this may also increase national debt and could prompt trade tensions, making long-term benefits less certain.
In contrast, a Democratic victory under Harris would likely see a focus on expanding social programmes to support low- and middle-income families, which could encourage broader economic participation. While this could help with economic stability in the long run, it would likely bring more modest growth and may slightly increase national debt due to spending on social initiatives.
Equities
In the case of a Republican victory, sectors sensitive to tax cuts—like energy, transportation, and financial services—may see gains from reduced tax burdens and lighter regulation. However, increased tariffs could bring some volatility, especially for companies with global supply chains.
On the other hand, a Democratic win would focus on continuity, strengthening programmes like the Affordable Care Act and ramping up clean energy investments. This could help keep confidence steady in sectors that are primed for growth, offering a more predictable outlook for equities.
FX
The foreign exchange markets could see significant shifts, depending on the election outcome. A Republican victory may drive up the USD in the short term, with expected fiscal spending and tariffs raising inflation and interest rates. This could put pressure on the GBP and EUR relative to the USD, potentially influencing trade.
Alternatively, a Democratic administration might seek to stabilise the USD, particularly if Harris opts for a more gradual approach to interest rates. For the GBP, a continued focus on global trade and diplomacy could boost prospects, especially if US-UK trade ties are reinforced in the coming years.
Private Assets and Alternative Investments
The election outcome could have substantial implications for private assets and alternative investments. Under a Republican administration, private equity and venture capital might benefit from enhanced tax incentives, likely attracting more capital into these areas. However, any protectionist policies could present challenges for international ventures, including UK investors with global portfolios.
Conversely, a Democratic win could favour investments in sustainable and impact-focused assets, aligning with their green and social policy initiatives. This would likely support infrastructure and renewable energy projects, creating opportunities for UK investors interested in socially responsible investing.
Cryptocurrency Markets
The 2024 election will also be pivotal for cryptocurrency markets. A Republican win may bring a more relaxed regulatory stance, which could encourage further innovation in the crypto space. It’s even rumoured that Trump’s family has launched a crypto venture called World Liberty Financial, aiming to create a “crypto banking platform.”
A Democratic administration, however, has traditionally taken a more cautious view on crypto, with Biden’s term marked by increased regulatory scrutiny. Harris hasn’t shared any specific crypto policies yet, so there’s still some uncertainty around how this might develop.
What This Means for Private Market Investing
Given the high-stakes environment of the 2024 US election, investors in late-stage tech companies should stay alert to policy shifts that could affect regulation and capital flows in private markets. A Republican administration might reduce regulations and offer tax incentives, creating a favourable environment for high-growth tech firms. This could mean higher valuations and more late-stage funding activity, with investors banking on a business-friendly atmosphere that fuels rapid scaling and exit opportunities.
On the flip side, a Democratic victory might lead to stricter oversight, especially on data privacy, antitrust issues, and corporate accountability—all of which affect large tech companies. Although this may create compliance and operational challenges, it could also drive tech firms to adopt more sustainable, long-term growth strategies. For private market investors, this might open doors to tech sectors aligned with sustainability and social responsibility, such as clean technology, healthcare innovation, and AI.
In any scenario, late-stage tech investors should adopt a flexible strategy, staying nimble as these political developments unfold. Agility in capital allocation will be key to capturing potential upside while managing risk exposure across various policy landscapes.
Getting to the point...
As we approach the US elections, the potential impacts on the investment climate are substantial. Regardless of which way the result leans, investors must stay vigilant and adaptable - things could get dicey!
It’s clear that navigating this landscape will require a careful and flexible approach to evaluate opportunities in private assets, alternative investments, FX trends, and even the cryptocurrency space.
Here at Founders Capital, we’re committed to consistently evaluating the market dynamics to ensure our investors see the right investments at the right time. We’re all about keeping an eye on these developments and finding the best paths forward, so we can bring you opportunities that truly make a difference.
Until next time!
Cheers,
Rich