On Monday, July 16th, Donal Trump announced his selection of J.D. Vance as Vice President. Never before has a former venture capitalist attained such high political rank. What could Vance’s experience in the Silicon Valley startup scene mean for the administration? Here’s our top ideas of what may for small businesses in a Trump/Vance administration.
1. Anti-Big Tech and Support for Small Businesses
Vance’s venture capital experience made him vocally critical of big tech and he has routinely advocated for anti-monopolistic action. He believes Big Tech exerts undue influence on the economy and politics, stifle competition and innovation, making it challenging for smaller businesses to thrive.
On the other hand, Vance is a strong advocate for small, local businesses.
His policies would likely include increased funding for the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to enforce antitrust laws more effectively, along with supporting legislative efforts to update these laws for the modern digital economy.
He has also argued for tax reform that favors small business at the expense of large, international business. Amongst other actions, this would likely include increasing protectionist tariffs.
Although Vance’s policies may be beneficial for the smallest small businesses, they could spell trouble for the startup tech market which relies on Big Tech acquisitions as an exit strategy. With fewer profits and stronger regulatory pressure, large tech companies may acquire fewer firms, leading to slower exits and near-term cash flow challenges.
Startups should manage this risk by developing contingency plans in the event they are unable to exit on-time. How can you secure additional funding or pivot to cash flow positive? Is there an opportunity to sell to private equity instead of a large strategic tech company? Exploring these possibilities will equip you to handle any change in capital markets.
2. Data Privacy Regulations and Digital Marketing
Vance has been critical of Big Tech’s handling of user data, suggesting he would advocate for comprehensive data privacy legislation to protect consumers’ personal information.
Under Vance’s administration, new regulations could be introduced to give consumers greater control over their data. This might include requirements for explicit consent before companies can collect or share personal information, the right for consumers to access and delete their data, and stringent penalties for companies failing to protect user data from breaches.
Increased privacy hurts the performance of digital marketing since tech companies are less able to target ads and content. Small businesses who rely on paid advertising would be most hurt by this change.
Your business can mitigate this risk by diversifying marketing efforts. Check out our article on the downfall of SEO to see how financial portfolio theory can help your marketing strategy.
3. Investment in American Manufacturing
Vance and Trump have been vocal advocates for revitalizing American manufacturing, a stance likely influenced by Vance’s venture capital experience and economic nationalism. He argues that outsourcing manufacturing jobs overseas has harmed American workers and communities, aiming to reverse this trend through targeted policies.
To incentivize domestic manufacturing, Vance’s administration might propose tax breaks and subsidies for companies that build factories and create jobs in the U.S. Additionally, he could support punitive tariffs on companies that outsource production to countries like China, encouraging them to keep their operations domestic.
These policies would mainly impact product companies who manufacture or purchase from overseas: ecommerce, IoT, and some clean tech. Such companies should consider nearshoring or reshoring production to mitigate tariff risk.
Resilience Through Planning
The election is not a sure thing and, even if elected, Vance’s position may evolve, or his influence may be muted. Still, contingency planning is a useful exercise for every business. Take time to consider how a Trump/Vance administration may impact your small business, forecast strategic adjustments, and determine if you need to proactively mitigate risks. Engage your Fractional CFO and other managers for these discussions to ensure the highest probability of success for your small business.
