David here.
Startups just got some of their best news of the year, from one of the most unlikely sources… the Federal Reserve.
Now, we almost never talk about the Fed here, and why would we? It traditionally has little impact on us.
But this time is very different.
Late last month, the Fed announced a major policy shift that will allow inflation rates to go above their usual 2% target, all without raising interest rates.
So interest rates will remain low for the foreseeable future… especially as employment numbers continue to creep higher.
This means money will be cheaper, easier to borrow, and ultimately, easier to spend.
When people are encouraged to spend their money, it impacts labor markets – including the startup landscape – in a fundamental way.
Here’s exactly what that means for you…
1. Startup investing will become even MORE appealing.
Because lower interest rates lead to “cheaper” money, it’s about to become much more appealing for angel investors and venture capitalists to invest in startups.
Some investors choose to invest in startups using leveraged – or borrowed – funds to increase the potential return of their investment.
However, this strategy is only worth it when interest rates are lower and money is easier to borrow.
Lower interest rates encourage this type of investing because the opportunity cost and the required rates of return are very low. That means investors are now in a better position to see larger gains than ever before… and even more investors are likely to flood the startup market.
2. Startup valuations will skyrocket.
Naturally, with more money “available,” more people want to invest.
But there’s only so many places to invest. At some point, a company will have to limit the amount of people on their cap table.
It’s a simple supply and demand situation.
When more people want a piece of a limited pie, it drives the valuation of a startup through the roof.
3. Founders will have even more value-add resources.
Now, the more investors a startup has, the more support and “value add” they receive.
These value-adds vary based on each investor’s unique connections, skills, and expertise, but they can be virtually anything that helps a company grow and succeed.
And when more people invest in startups, it means founders will have a larger pool of resources to pull from for guidance.
That’s why the smartest founders choose to sell percentages of their own equity in exchange for more investors who can provide that crucial value-add in other areas of their business.
4. There will be even more exit opportunities.
There are multiple ways to exit a startup investment, including IPOs, mergers, acquisitions, and even private offerings.
The Fed’s new policy shift could really boost the number of acquisitions we see.
Because lower interest rates lead to lower borrowing costs, we may see more leveraged buyouts of smaller startups in the future.
Larger private and public companies may be more willing to borrow money to buy value-add startups that can fuel their own company’s growth.
In short… cheaper money will lead to more acquisitions and more opportunities for investors to exit.
Make no mistake, this is all great news for startups and angel investors.
I’m positive that this policy shift will drive even more capital into the labor markets, creating more successful startups and ultimately, more profit opportunities for folks like you.
And speaking of profit opportunities, I have some special news coming your way very shortly.
I’m teaming up with Neil Patel and the Angels & Entrepreneurs team to host a special deal showcase on Wednesday, September 16 at 11 A.M.
I’ll be running through six incredible companies with the potential to deliver massive returns… and you’ll learn how to invest in each deal recommendation yourself.
You definitely don’t want to miss out on this event, so click here to RSVP now.
Have a great weekend, and I’ll be back soon.
Very best,
David Weisburd
Startups just got some of their best news of the year, from one of the most unlikely sources… the Federal Reserve.
Now, we almost never talk about the Fed here, and why would we? It traditionally has little impact on us.
But this time is very different.
Late last month, the Fed announced a major policy shift that will allow inflation rates to go above their usual 2% target, all without raising interest rates.
So interest rates will remain low for the foreseeable future… especially as employment numbers continue to creep higher.
This means money will be cheaper, easier to borrow, and ultimately, easier to spend.
When people are encouraged to spend their money, it impacts labor markets – including the startup landscape – in a fundamental way.
Here’s exactly what that means for you…
1. Startup investing will become even MORE appealing.
Because lower interest rates lead to “cheaper” money, it’s about to become much more appealing for angel investors and venture capitalists to invest in startups.
Some investors choose to invest in startups using leveraged – or borrowed – funds to increase the potential return of their investment.
However, this strategy is only worth it when interest rates are lower and money is easier to borrow.
Lower interest rates encourage this type of investing because the opportunity cost and the required rates of return are very low. That means investors are now in a better position to see larger gains than ever before… and even more investors are likely to flood the startup market.
2. Startup valuations will skyrocket.
Naturally, with more money “available,” more people want to invest.
But there’s only so many places to invest. At some point, a company will have to limit the amount of people on their cap table.
It’s a simple supply and demand situation.
When more people want a piece of a limited pie, it drives the valuation of a startup through the roof.
3. Founders will have even more value-add resources.
Now, the more investors a startup has, the more support and “value add” they receive.
These value-adds vary based on each investor’s unique connections, skills, and expertise, but they can be virtually anything that helps a company grow and succeed.
And when more people invest in startups, it means founders will have a larger pool of resources to pull from for guidance.
That’s why the smartest founders choose to sell percentages of their own equity in exchange for more investors who can provide that crucial value-add in other areas of their business.
4. There will be even more exit opportunities.
There are multiple ways to exit a startup investment, including IPOs, mergers, acquisitions, and even private offerings.
The Fed’s new policy shift could really boost the number of acquisitions we see.
Because lower interest rates lead to lower borrowing costs, we may see more leveraged buyouts of smaller startups in the future.
Larger private and public companies may be more willing to borrow money to buy value-add startups that can fuel their own company’s growth.
In short… cheaper money will lead to more acquisitions and more opportunities for investors to exit.
Make no mistake, this is all great news for startups and angel investors.
I’m positive that this policy shift will drive even more capital into the labor markets, creating more successful startups and ultimately, more profit opportunities for folks like you.
And speaking of profit opportunities, I have some special news coming your way very shortly.
I’m teaming up with Neil Patel and the Angels & Entrepreneurs team to host a special deal showcase on Wednesday, September 16 at 11 A.M.
I’ll be running through six incredible companies with the potential to deliver massive returns… and you’ll learn how to invest in each deal recommendation yourself.
You definitely don’t want to miss out on this event, so click here to RSVP now.
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| Date: Wednesday, September 16 Time: 11:00 a.m. EST Google Calendar iCal Calendar Outlook Calendar |
Have a great weekend, and I’ll be back soon.
Very best,
David Weisburd
Follow @angelsandentrepreneurs
