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The US VC Market Stalls Facing Uncertainty Due to Coming Elections

us-election-money大选在即,不确定性侵袭美国风投市场 While the outcome of the US presidential elections, to be held on November 8th, is still unknown, it is clear that the US markets respond badly to such states of uncertainty. Even when the election favorite is quite clear, in today’s media climate everything can change in mere minutes.

For markets seeking continuity, a departing of a two-term president creates a problem. According to a report by Merrill Lynch, the S&P-500 index has dropped an average of 2.8% in presidential election years that didn’t include an acting president seeking reelection. In the years when a sitting president sought reelection, the S&P-500 averaged returns of 12.6%.

Indeed, the US markets currently experience a decline in total deals and funding. According to a Venture Pulse report, VC funding in the US dropped to $14 billion in Q3-2016, an 18% decline from the previous quarter. Deal volume also declined by 2%, reflecting overall uncertainty and tendency of the markets to wait until stability is renewed after the election.

It is, however, clear that unless anything particularly unexpected happens, 2017 will be a strong year for VC funding and new IPO’s, in an attempt of the US market to bridge the “election year gap”. In 2017, however, uncertainty will rule the UK market, due to the Brexit negotiations planned to commence within the next months – and may be devastating for the UK economy.

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