Aarish Shah’s Post

The time to exit is now -- ahead of the 2024 Presidential election. Oh really, you may say? How so? Well, colleagues . . . read on -- and weep. Early-stage startups reliant on angel investors and seed-stage VCs may face heightened vulnerability, sparking negotiations aimed at mitigating tax burdens with more favorable terms. As the 2024 U.S. elections draw nearer, they cast a long shadow over the tech realm, leaving entrepreneurs wary of potential fallout from proposed tax reforms in a potential second Biden term. President Biden's 2025 budget proposal, post-election, carries significant tax reforms that could reshape the landscape for tech entrepreneurs. Among the proposed changes is an increase in the corporate income tax rate from 21% to 28%, a move that would particularly impact tech companies already grappling with narrow profit margins due to substantial upfront R&D expenses. Of even greater concern is the plan to raise the top long-term capital gains rate from the current 20% to 39.6%, potentially reaching 44.6% with additional Medicare and Net Investment Income Tax (NIIT). For tech entrepreneurs accustomed to paying between 15% and 20% in capital gains, this could mean a staggering increase, with taxes on a $20 million sale possibly surging from $3 million to nearly $10 million, significantly diminishing proceeds. These reforms ripple into the venture capital (VC) realm, with reduced after-tax returns prompting investors to seek higher yields, placing startups under pressure for accelerated growth and profitability. Moreover, the prospect of heightened capital gains taxes could cast a pall over startup valuations, leading to recalibrated cash flow projections. Adapting to these changes, some tech entities are expanding beyond the U.S., offering tax incentives and talent pools abroad. Yet, such a trend raises concerns about the impact on U.S. interests. Given the tech sector's substantial contribution to the economy, accounting for 10% of the total GDP and nearly 19% of California's GDP, coupled with its role in job creation and innovation, the sector warrants careful consideration and incentives rather than heightened tax burdens. For entrepreneurs eyeing significant exits, the impending 2024 elections mark a critical juncture, with potential impacts not just on individual prospects but on the broader U.S. tech landscape. While some remain optimistic about policy changes fostering innovation, others may find prudence in expediting exits ahead of electoral repercussions. 😬 😱 😓

It has now been announced that the UK has a new Labour government – which also means new tax policies. So what can businesses expect from our new Prime Minister? 💼 Our Tax Partner, Thomas Adcock, shared his thoughts on Labour’s promise to close the carried interest loophole and its potential impact on UK-based talent with Startups.co.uk ➡️Click here to read the full article: https://shorturl.at/fijQl #Gravita #Labour #GeneralElection #TaxPolicy #UKBusiness #Investment #Economy #UKTalent #CarriedInterestLoophole ------------------------- 👋 We’re Gravita, we’d love to talk 🙌 Build the future together 🌐 Tech enabled, full-service firm of accountants, with global reach See more from us:  🔔 Click the bell on our profile to be notified of our posts  ➕ Make sure you’re following us 📝 Sign up to receive Gravita’s latest updates and webinar invites: https://lnkd.in/ecugk7WR

🤟A huge thanks to everyone who took part in our elections survey. 🇱🇺The results closely reflected how the country voted even though not all respondents were eligible to vote in the legislative elections. 🗳️ 👇Here are the key take-aways 🚀Outgoing government: 30% of respondents thought the support from the last government was poor. 30% found it good or excellent. 40% found it average. Half of the respondents wanted a new government. 🚀Party support: CSV was considered best-placed to understand startup challenges and most trusted to boost innovation for startups. Nevertheless, the DP garnered the most votes from startup founders (whether eligible to vote or not), followed by CSV, ADR and Pirates in joint second place. The LSAP scored zero votes from respondents. 🚀Personalities: Luxembourg prime minister Xavier Bettel (DP) was far and away the most popular political personality, followed by Luc Frieden (CSV) and outgoing finance minister Yuriko Backes (DP). 🚀Policy priorities: Investor incentives (tax breaks for business angels to invest in startups) were the top policy for respondents, followed by tax incentives for single people and effective stock options programmes for employees. #elections #Luxembourg #government #startups #survey #ecosystem #policies #investorincentives #businessangels #stockoptions #affordablehousing #startupvisa #bankaccount

Another interesting webinar from the BIA today - this time on the New Labour Government. If there were 3 policies that I think would make a difference to our tech startup clients, it would be: 💡Sort R&D Tax Credits and properly resource HMRC. 💡Encourage investment in climatetech and the Green Economy. 💡Sort the funding gap and availability of lab space for life sciences start-ups which need much more significant investment to get started than other tech companies. Early signs are that the new Government is at least considering these with mention of a business taxation roadmap, the formation of Great British Energy and the new National Wealth Fund aligning the UK Infrastructure Bank and British Business Bank that was announced yesterday, as well as promises of further reform of pension funds so that they invest more in innovative growth areas of the economy. I also feel that the new Government are more accessible than the previous one was. We can't really expect to influence them as individuals but we can through organisations that we are members of such as, for us at Accountech: ICAS - The Professional Body of CAs Enterprise Investment Scheme Association (EISA) The R&D Community Ltd And others that we follow and support who act in our clients' interests and produce very relevant content: Startup Coalition BioIndustry Association (BIA) Being accessible also applies to LinkedIn - as well as the obvious ones of Keir Starmer, Rachel Reeves and David Lammy, all of whom have active LinkedIn accounts with regular posts, here are some others to follow: Jonathan Reynolds MP Secretary of State for Business and Trade Peter Kyle Secretary of State for Science, Innovation and Technology Steve Reed Secretary of State for Environment, Food and Rural Affairs Wes Streeting Secretary of State for Health Also, to see what it is like being a newly elected MP, I recommend following Samantha Niblett MP who is a very regular poster on LinkedIn. I particularly enjoyed her video with Feargal Sharkey on addressing the pollution of our rivers and am looking forward to the promised follow up on the banks of the River Thames - see link in comments. Some say that it is best to avoid politics on LinkedIn but making it so that we feel that we all have more of a say than just being able to vote in a General Election every 5 years seems like a good start. We will know more about the extent of the change in store after the King's Speech next week (17 July) and especially after the Autumn Budget in October/November. What do you think of the new Government so far? #generalelection #ukgovernment #techstartups Click and follow #techaccountantscotland To see all of my LinkedIn posts

🎂 Was the most exciting part of the Autumn Statement that it's Jeremy Hunt's other half's bday??!!!! 🌍 From a #tech perspective, we were comforted to be told that the UK is the 3rd largest tech sector in the World and specifically that #ai will be at the heart of future growth plans with further innovation centres (AI Powerhouses) to be rolled out over the UK. Mr Hunt talked a good game about the future growth of tech companies but that did not translate into new measures being addressed in the Budget. The summary as I see it was as follows: 📈 The economy is back on track, incomes rising but there is still work to be done 🚀 The Statement centred on "Reducing Debt, Cutting Taxes and Rewarding Work" 💰 There is more momentum to get more investment from UK pension funds in venture capital and private tech companies - always positive! 🤦♂️ Another change to the R&D regime (as expected) leading to a single 'simplified' scheme starting from next April 👍 Extension of EIS/VCT to 2035 - removing the sunset clause providing much needed certainty for investors and qualifying businesses. 💯 Reduction in ER rates impacting from Jan 24 Could or should the Government done more to bolster the UK tech eco-system? Let's see if there is more details to follow... Steve Leith Asif Ahmed Tom Watts Andrew Holloway

Change of government is a great time to make some improvements to equity incentives schemes to keep the UK competitive on the global scale. Tom makes some great points about how the EMI share option plan could be improved, let’s hope politicians listen to those sage suggestions. #2024elections #EMI

Today was Budget Day in the UK. In this article by Cristina Gallardo for Financial Times backed European Tech news site Sifted, our CEO Emma Sinclair MBE discusses the swift actions of the UK government and in particular HM Treasury, fixing legislation impacting angel investment and the ability of women to angel invest. On January 31, the UK government increased the annual income threshold that defines high net-worth individuals. You have to be a high net worth to receive investment opportunities in unlisted equities (so all start ups and scales ups) in the UK so the increase effectively reduced the number of women eligible to back businesses - and reduced the pool of people businesses can seek out to finance them. Now, just 2 months later, the government has reversed its decision. Emma said: “My hope is that we channel this momentum to continue pushing for real change in favour of women both in terms of funding and revenue growth.” https://lnkd.in/eZG-JFAp

Voters head to the polls in the UK #generalelection today, with the The Labour Party widely tipped for a landslide victory after 14 years of Conservative rule. But whoever leads in Westminster, UK businesses are crying out for stability – and that means taking decisive action to support them and the wider economy. VenturePath – the UK’s scaleup investment community – is recommending targeted intervention from the new government in late 2024. In an open letter signed by the likes of techUK, Beauhurst and Barclays – and BusinessCloud – it highlighted the technology sector’s role as a leveller across regions aiding productivity while creating jobs, wealth and tax. However in 2023 less than 300 startups accessed venture capital funding in a Series A round – the first institutional investment. Meanwhile an open letter signed by Julian David, CEO at techUK, Chris Combemale, CEO at the DMA (Data & Marketing Association) UK, Stephen Woodford, CEO of the Advertising Association, and Bojana Bellamy, president of the Centre for Information Policy Leadership (CIPL) urged the next government to recommit to introducing critical data protection measures for UK businesses. Jeff Watkins, chief product and technology officer at CreateFuture, is calling for a more definitive strategy as to how the UK will harness and regulate #AI, while Kit Cox, CTO and founder of Enate, says the lack of candidates with a STEM or technology background is a significant cause of concern in this area. Despite Keir Starmer's new stance on Europe, the policy small business owners would most like to see introduced is the easing of trade barriers with the EU, according to a survey from Moore UK, with chair Matthew Meadows saying many are still struggling as a result of #Brexit. Bionic's own survey calls for an overhaul of the current tax system, with Les Roberts claiming the current system is overly complicated and not designed to promote SME growth. Dr Henry Balani, global head of industry and regulatory affairs at Encompass Corporation, hails Labour’s promise to create a new Regulatory Innovation Office to bring together existing innovation-related regulatory functions across government. DeepTech community TechWorks and CEO Charles Sturman has called for several measures to support chip-making companies and the strengthening of UK supply chains. The views from the US are represented by Rupal Karia and James Hall, UK country leads at Celonis and @Snowflake respectively. https://lnkd.in/ezZ5P-j6

Here's our roundup of all the key Autumn Statement announcements affecting UK tech. Tweaks to the R&D tax credits scheme are the biggest surprise. Also announcements on AI, climate tech, open banking and pension reform. Full story on UKTN 👇 #AutumnStatement #UKtech #startups

All eyes are on Jeremy Hunt this week, as the Chancellor of the Exchequer reveals his Spring Budget announcements in an attempt to woo voters in a crucial election year, writes Richard Parris Allye is one of the UK business voices calling for bolder action and concrete policies to deliver long term economic growth and enable long-term innovation. I provided my thoughts to Startups.co.uk about what could be done to support deeptech startups, particularly those focused on #hardware 💚 “The UK government needs to do more to support cleantech startups, a sector that is predominantly hardware (plus software) based. This is more capital intensive, requires larger facilities, more people with hands-on skills and other challenges which software only startups don’t have. 🔋 “The government needs to recognise the challenges of deep-tech hardware startups and incentivise R&D much further and faster. Currently, the bias to software only helps other sectors like fintech, consumer etc. but it won’t shift the needle for the planet. At an early stage we need R&D credits, business rate changes and mechanisms to lower early-stage costs. 📈 “As hardware businesses scale we need greater support for production tax credits and a clear skills strategy that develops the practical, technical capabilities we need for clean-tech. The UK is behind the US, Europe and will find it harder to catch-up without dramatic change now.” Ben Kilbey https://lnkd.in/eHQ_cfqa