Interview
a16z Podcast | Of Policy, Capital, and the Startup Ecosystem
- Major stock market averages are expected to stabilize from their initial policy-driven gains as the pace of legislative action slows upon facing the realities of the Washington process, though unified government control is anticipated to reduce gridlock during the first two years of a new four-year presidential term, creating the most active decade-span for legislative passage while activity typically wanes in the subsequent two years as focus shifts to re-election efforts.
- Regulatory and staffing changes are projected to begin with cabinet confirmations and the selection of agency leaders, including the appointment of three likely Republican commissioners to independent bodies like the SEC, FCC, and FTC, with potential relaxations of the Volcker Rule to encourage bank investments in venture capital and startups, particularly in regions currently feeling left behind.
- Tax reform may be utilized to encourage capital formation and R&D to foster job creation and broader equality, though risks include unintended consequences where NOL limitations or policies designed to prevent zombie company acquisitions could disadvantage startups during acquisitions, and there is a concern that current tax benefits might favor established companies over future ones.
- The number of publicly listed companies is expected to remain low, having declined from approximately 7,500 to 8,000 two decades ago to the current range of 3,500 to 4,000, with public entities continuing to generate jobs at a faster pace than private firms due to broader capital access, which serves the vast majority of U.S. residents who rely on public markets for capital appreciation.
- New crowdfunding regulations under the JOBS Act aim to permit unaccredited investor participation within specific investment limits, while confidentiality provisions and "testing the waters" provisions allow companies to conduct SEC reviews and institutional conversations prior to public disclosure to mitigate competitive risks.
- Market structure initiatives include a tick size pilot designed to improve trading liquidity and constrain pricing increments, alongside proposals for a long-term stock exchange intended to align management and shareholder incentives with extended product cycles rather than minute-by-minute fluctuations.
- The period from 2017 to 2019 is identified as a critical window for significant developments following the 2016 election, prompting a call for entrepreneurs and investors to remain updated, with the overarching expectation that regardless of specific political outcomes, fundamental business building remains the primary driver of success.