Under the plan, which had previously been floated by President Joe Biden, investors would have to pay taxes when their portfolios increase in value – even before any gains are actually realised.
“This would be a tax on paper gains, which may or may not ultimately materialise,” Jasper said. “Investors would have to find the money from other sources, as the investments being taxed are not liquid.”
Leigh Jasper says Harris’ plan to tax unrealised capital gains could be a handbrake on investment in technology and venture capital.Credit: AFR
Jasper, who sold his technology company Aconex to US software giant Oracle for $1.6 billion in 2017, is back at the helm as the co-founder of Firmable, a business data start-up. He also serves as chair of LaunchVic and SecondQuarter Ventures, and invests through his family office, Saniel Ventures.
“Governments that introduce these kinds of taxes may receive a short-term sugar hit, but ultimately, it is to the detriment of long-term economic growth,” he said.
“It is a handbrake on investment in innovation and moonshots that could transform the American economy, such as AI, robotics and deep tech. Australia would do well not to follow their lead.”
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Inflation implications
Another Australian start-up founder closely monitoring the US election is Ben Buckingham, founder of Primary, a Sydney-based fintech that helps small businesses and scale-ups optimise the yield they make on idle cash, including funds raised from venture capital investors.
For Buckingham, interest rates are the single biggest driver of availability of venture capital funding.
A number of economists predict that heightened inflation may persist under certain administrative policies. Trump’s plan to introduce new tariffs on imports, for example, could increase the cost of consumer goods and keep inflation stubbornly high.
“Over the past two years, we’ve observed an inverse correlation between the Reserve Bank’s cash rate and investment in venture capital,” Buckingham said.
Primary founder Ben Buckingham (left), chief of staff Finn Blake and chief product officer Will Freeborn.Credit: Dominic Lorrimer
“A high interest rate environment makes investments in risky asset classes with long-time horizons less appealing.”
Buckingham noted that optimism about impending rate cuts in both the US and Australia had led to increased deal volume, which should ramp up even further after the Fed’s move to cut rates.
“We’re witnessing the result of increased confidence and optimism. More deals, and sizeable ones, are getting done.”
Giant Leap’s Will Richardson says a rebounding economy will help Australian start-ups scale up.Credit: Manda Ford
Will Richardson, managing partner at venture capital firm Giant Leap, is also watching the elections closely.
He says that while the outcome will influence the local sector, with both candidates offering opportunities and challenges for Australian start-ups, it won’t have as significant an impact as Australia’s elections and political environment.
“The market will respond positively to a leader who is predictable and reliable. Additionally, a preference for supporting global trade would benefit Australian start-ups looking to expand internationally and attract world-class talent,” said Richardson.
“At a macroeconomic level, we expect that as inflation normalises and central banks gain confidence to lower interest rates, investors will increase their allocation to growth assets like early-stage venture capital. This increase in liquidity will provide a much-needed boost to the local tech scene.”
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Eric Gao is the CEO of Boman Group, an institutional investor that manages funds of Chinese high-net-wealth individuals. For him, the US election will have profound consequences for the entire Australian business community, from large corporates to start-ups.
Crossborder hopes
“Changes in trade policy under either administration could affect market access for Australian start-ups, especially those looking to expand or raise capital in the US,” Gao said.
“A more favourable financial and capital market environment in the US is generally positive for Australian start-ups. While Australia has seen significant deals, particularly in the private equity space – like the historic Airtrunk deal – early-stage companies and start-ups have not experienced the same level of deal flow, aside from government policy-driven investments.
“Any favourable shifts in the US could indirectly benefit Australian start-ups by boosting sentiment and cross-border investment opportunities.”
Eric Gao says the US election outcome will have a profound impact on the entire Australian business landscape from large corporates to small start-ups.
He added that the Australian start-up and VC market had long suffered from underfunding, making it an opportune moment for local companies to consider looking abroad for funding options.
“Tapping into overseas markets, especially in the US, could provide the much-needed capital injection to fuel growth and innovation in Australia.”
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However, some in the tech scene take the view that Silicon Valley will remain just as innovative – no matter who sits in the Oval Office – and that it will always be a fertile ground for Australian technology companies.
‘Resilient land of dreams’
Paul Naphtali, co-founder of Australian venture capital fund Rampersand, said he has lost count of the number of times the ‘death of Silicon Valley’ has been predicted.
“It is the most resilient, incredible land of dreams and opportunity,” Naphtali said.
“That doesn’t mean you love everything that happens there, but the US is an amazing country that’s resilient beyond its leadership.
“People love to decry the failures of Silicon Valley and the rest of America, but … there’s a reason it’s the global epicentre for innovation.”
That’s a view shared by Patrick Collison, the CEO of America’s largest scale-up, payment processing platform Stripe, which is worth an estimated $US70 billion ($103 billion).
Stripe chief executive Patrick Collison on stage in Sydney.
After growing up in Ireland, Collison is now based in San Francisco and is confident America’s innovation pedigree will live on, regardless of who’s in charge.
“I’m not a citizen, but I think the US will be OK either way,” he said.
“You know, I think there’s always a temptation to say every election is kind of the most important election of our lifetime. There’s always a bias where it’s getting kind of hyperbolic about it … but no, the US will be OK.”
David Swan travelled to San Francisco as a guest of Salesforce.
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