Thumb1

This is NOT an article to debate politics and any inappropriate comment will be removed. Instead, this is a data-driven background on five of the key stated / expected policies of President-elect of the United States Joe Biden and how it will likely affect startups. These are complex topics that a short article cannot do justice to but hopefully it can be a starting point for those wishing to explore deeper.

1) Cancer — Biden campaigned on increased scientific investment and has repeatedly called for a “cancer moonshot.” With covid cases in the US having surpassed 10M, the President-elect has also committed to a renewed coronavirus response taskforce. All of these should unsurprisingly be a big boost for digital health and biotech entrepreneurs. To put in perspective below is the National Cancer Institute’s budget over the last 20 years:

blank

2) Big Tech — Tech policy has been a smaller point in this election cycle and the biggest issue in the next few years will likely be reforms to antitrust law. Biden has run on a platform reigning in far-left calls for breaking up Big Tech and instead favoring regulation. This could mean less room for startups to succeed independently but also more room for them to partner and get acquired. What is undeniable is Big Tech was powerful and is increasingly more so in our economy, making up the bulk of the top 10 stocks in 2020:

blank
3) Climate Change — Biden is expected to shift US policy around climate change dramatically, including re-joining the Paris Agreement. Entrepreneurs excited about the prospect of more government support, along with VCs coming back in climate tech, should do well to keep the graphs below for perspective:

blank

blank

For perspective on where the US stands, the data for the graph below comes from the Emissions Database for Global Atmospheric Research of the EU:

blank

4) Immigration — The Biden administration is very likely going to be a boost for H1Bs ( temporary work Visa) and Green Card (permanent residency), which means more technical talent available for startups. We will illustrate the trends by focusing on H1B, which is how many foreign nationals obtain authorization to work in the US. For those unfamiliar with the process, at a very high level your employer has to sponsor your application and the number of petitions has historically far exceeded the cap for each year:

blankThe historical trend has been the number of petitions was increasing steadily:

blank
At the same time it has been taking increasingly less time for the cap on H1B Visas to be hit:

blank

5) Taxes — Biden has pledged to roll back some of the tax cuts, effectively bringing the corporate tax rate from the current 21% to the previous 28%. Corporates with smaller profits means more opportunities for startups to succeed. Could it also mean less M&A i.e., fewer exit opportunities? A Deloitte study at least suggests the reduced taxation hadn’t resulted in significantly more tech M&A. The graph below shows the volume of M&A increased 7% in 2018 versus 2017 and if it weren’t for a handful of megadeals in 2018 it would have remained in line with 2017.

blank


Originally published on “Data Driven Investor,” am happy to syndicate on other platforms. I am the Managing Partner and Cofounder of Tau Ventures with 20 years in Silicon Valley across corporates, own startup, and VC funds. These are purposely short articles focused on practical insights (I call it gl;dr — good length; did read). Many of my writings are at https://www.linkedin.com/in/amgarg/detail/recent-activity/posts and I would be stoked if they get people interested enough in a topic to explore in further depth. If this article had useful insights for you comment away and/or give a like on the article and on the Tau Ventures’ LinkedIn page, with due thanks for supporting our work. All opinions expressed here are my own.

1 COMMENT

  1. Re: (Biden’s increased Regulations) “could mean less room for startups to succeed independently but also more room for them to partner and get acquired.” HEY – startups need to be formed Day-1 before they are successful leading to “partner and get acquired”. Startups must have as many incentives as reasonably possible ( can argue this in another post ) in order to take risks and “startup”; else US economy will stall. startups and small companies are key to creation of new & long term & permanent jobs.

LEAVE A REPLY

Please enter your comment!
Please enter your name here