Investors and entrepreneurs alike are hoping that today’s election will lift the cloud of uncertainty that has hung over financial marekts and get funds flowing again. “There are record levels of cash just sitting on the sidelines,” says Tracy Lefteroff, global managing partner, Venture Capital & Private Equity Practice, PwC. PwC and Thomson Reuters produce the quarterly MoneyTree Report, which found that third quarter venture capital investment was down 11% from the second quarter. But Lefteroff sees the wireless sector as a potential bright spot. “The wireless area is still an area where innovation can happen,” he says. “Some people are willing to put a little money to work to explore it.”
Within wireless, mobile apps and M2M are two of the hottest areas. “M2M and the broader mobility space is an area that we have actively pursued,” says Michael Morrisey, managing principal at Inverness Graham, a Philadelphia private equity firm. Morrissey says that while his firm has found some good opportunities this year, he hopes more companies will come to the market after the election. “If you look at what’s holding back the market I think that the lack of companies’ ability to forecast where they are going to be a quarter or two out has really held back companies going out and either raising money or looking to do something like a controlled recapitalization,” he says. Morrissey says uncertainty about taxes is holding companies back. PwC’s Lefteroff says the same uncertainty is affecting investors, who he says are “waiting for macroeconomic factors,” to encourage investment.
“When I look at the political factors, that’s the key driver to me relative to the marcroeconomic factors,” says Morrisey. “The worst thing they can do is come out and look to raise capital for growth or look to get a partner for acquisition if they’re not certain where their numbers are going to be.”
Seasoned investment professionals say the worst possible outcome for the markets would be a continuation of the uncertainty beyond Tuesday’s election.