Posted by Early Growth
January 13, 2017 | 4-minute read (762 words)
With each changing President, there are questions to ponder, especially for those in the business world and one of its most volatile sector; startups. This incoming administration and any attempt to forecast its impact are even more opaque than any previous one has been. There has been much speculation and declaration, but until the administration takes hold, and quite possibly even after, the outcomes can land for or against the interest of many. So, with that in mind we outline several key areas to focus on in the months ahead.
Immigration Trump campaigned hard on various shades of xenophobia, isolationism and insular leaning platforms. An anti-globalism bent was the one thing that has remained consistent, whether it has been lashing out at China, Mexico, American firms outsourcing, or immigration in general.
There are several ways this can adversely affect startups and tech. One of the biggest will be any changes to the number of H-1B visas allowed. While current laws limit the number of foreign nationals to 65,000 who may be issued one, the actual number granted yearly has been well over 100,000 and rising with all allowed exemptions factored in.
It is no secret that many of these “specialty occupation” positions are filled in tech, startups and cutting edge development. Any move to lower the number allowed or raise the hurdles will significantly impact STEM dependent industries. Many tech firms already have complained about the shortage of candidates.
In addition to a possible worker shortage and any brain drain that may occur in response there is also the impact of immigrants who establish startups of their own in the US. The United States has 87 startups valued at $1 billion or more. More than half of them have been launched by immigrants.
Foreign Investor Relations Lastly, besides foreign entrepreneur loss there is also the possibility of hostile policies deterring foreign investors. China and Saudi investors have contributed highly to funding US startups in recent years and it would hit hard if they focused elsewhere. Current developments have Trump taking credit for continued foreign investment but time will tell how his policies shape this new chapter.
Global Warming/Renewable Energy Another strong campaign platform was his focus on bringing back coal and dismantling federal subsidies for renewable energy. He has set himself up as the direct opposite of Obama in this arena as well as dismissed global warming as being a “concept…created by and for the Chinese in order to make U.S. manufacturing noncompetitive”. Investment in Clean Energy has been one of the biggest growing domestic arenas over the last decade, from 2004 to recently it has multiplied 6 times over.
Tax breaks Trump has said how he wants aggressive tax cuts for businesses, and with Republicans controlling both the House and Senate it is very likely that those promises can be delivered on. The main question isn’t if there will be breaks, but rather how large they will be.
Trump has called for a drop from a 35-39% business tax rate down to 15%; the House plan has asked for 25%. It will come down most likely to how hard fiscal conservatives push back on the deficit issue. Besides any breaks initiated there is already the R&D credit thanks to the PATH (Protecting Americans from tax Hikes) Act of 2015 firmly in place. This credit incentive already has tremendous potential for the years ahead.
Technology Despite being completely disconnected from the tech sector as a businessman as well as their support during the election and often appearing to barely comprehend modern electronics he has been utilizing that Trump skill of seeking out marquee names to connect with since winning.
He has Billionaire tech investor Peter Thiel advising him and has hosted discussions and calls with the heads of Apple, Uber and Tesla. In a recent announcement he has announced the creation of an advisory team drawing from them to be known as the Strategic and Policy Forum.
In conclusion, we remain highly optimistic on our outlook for startups and tech development. Despite any areas of concern the biggest driver of growth for our GDP is businesses with under 50 employees. Recent Bureau of Labor statistics report they have been responsible for 37% of net job growth over the last year. Similarly both the scope of federal powers over renewables as well as the continued cost drop of them as a source of power leads us to believe that they will continue being developed as well as attract support and investment.