Does US Startup Funding Rise In Post-Election Years?

U.S. startup traders don’t base funding selections on who’s within the Oval Workplace. Besides, election yr uncertainties do seem to affect funding tallies.

That was the broad discovering from a Crunchbase survey of U.S. startup funding for the previous six presidential election cycles. Information confirmed that complete funding throughout phases rose reasonably to sharply in 4 post-election years.

For example, we charted complete funding for the previous six election cycles under, displaying each election yr and post-election yr tallies.

Put up-election positive factors

The largest soar was in 2021, the primary yr of the Biden administration, when international funding greater than doubled yr over yr to hit an all-time excessive of $345 billion. That yr’s investment frenzy coincided with a red-hot IPO market, hovering tech valuations, and a few societal return to regular as pandemic-era disruptions eased.

The subsequent-biggest soar was in 2017, the primary yr of the Trump administration, when funding rose 26% yr over yr to succeed in a complete of $98 billion. That was additionally the yr for some huge late-stage rounds for distinguished startups together with WeWork, Uber and Lyft.

A not-too-distant third was 2013, the primary yr of President Barack Obama’s second time period, when funding elevated 20% to hit $48 billion. That was the yr billion-dollar startups more and more turned a factor. This culminated within the introduction of the time period “unicorn” to explain the group, which included well-known names akin to Pinterest, Yelp and Palantir.

Put up-election declines

There have been two post-election years in our survey during which funding declined: 2001 and 2009. This coincided with two main shocks to the monetary system: the bursting of the dot-com bubble and the Great Recession.

The largest decline was in 2001, when funding plummeted in tandem with a market selloff for tech and web corporations. Shares declined additional within the wake of the Sept. 11, 2001, terrorist assaults. Whereas it was additionally the primary yr of President George W. Bush’s first time period, it seems that market dynamics reasonably than a change in presidential administration drove declines.

The identical appears true for 2009, when Obama started his first time period within the wake of an actual property crash and shocks to the monetary system that despatched markets spiraling decrease. That yr, startup funding fell 13% yr over yr and totaled round $26 billion.

Often, funding goes up

Traditionally, up years do outnumber down years for enterprise capital funding.

This is sensible, as complete U.S. enterprise funding has gone up over time. Whereas there are some declines throughout financial tough patches, most years we see an increase in funding.

Given this backdrop, it’s not shocking that we see greater complete funding tallies in post-election years. We may generally see further momentum after an election, as these durations can sign a cultural vibe shift in addition to the introduction of coverage priorities that favor extra funding specifically sectors or asset varieties.

As we glance to 2025, one doesn’t should be a loopy optimist to ascertain funding will rise. Specifically, if the still-dormant tech IPO market revives, we will anticipate to see extra giant pre-IPO rounds. Though we might not retrace the 2021 highs for some time, there’s nonetheless loads of room for progress forward.

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Illustration: Dom Guzman