Unlike some, I feel yesterday was predictable and similar to other general elections during or soon after a meaningful recession. The major difference was a branding effort (“the tea party”) aided by extraordinary media attention to that effort. “Throw the bums out” has a rich tradition, and the economic woes accelerated the insistence of style over substance. Many incumbents of both parties who lost their seats actually were working for many or most of the very issues voters seemed convinced were being ignored … but, I digress.
The issue today is what will this next cycle mean for venture and angel investors. I think it is a good time. The economy will rebound rapidly in Q4, Q1 and 2 of FY 2011. Tax treatment of venture and higher risk investments will remain relatively positive.
So, there will be more enthusiasm by smaller venture firms and high-net worth angels for new ideas and riskier start ups. BUT, expect some “woe is me” moments as those groups realize that some of the HOT areas of recent months (“green”, “ad networks”, “Groupon clones”) are shown to be longer-term and lower-yield environments than early enthusiasm predicted.
But, without wild early enthusiasm, where would we all be?