GDP shock: Venture Capital's government bailout begins

[daedrdev]

I really dont understand why this article is waxing about long term economic-philospohical trends when the gdp decline is clearly due to tariffs. Like this is not a pattern, its bad government policy that did not have any guarantee of happening.

[unsnap_biceps]

Tariffs have a huge hand in it, but the government shuttering large amounts of programs and firings is also GDP declining.

[zevets]

I think it's operating on the assumption that the VC donor money, and the valley's pivot to defense spending is the VCs getting "ahead" of the problem that "AI" isn't going to produce trillions in _profits_ for investors.

[CurtHagenlocher]

"A new innovation model emerges where political connections matter more than business fundamentals."

There's nothing new about this business model. It's just shocking that anyone thinks this will produce better results.

[dpc_01234]

Any sort of "investing" and "wealth building" makes sense only if the given economic agent is not in huge debt, or that debt is very cheap.

At current 4.50% borrowing costs ... I guess it might not be entirely stupid to just pile on investments instead of paying off the debt, especially if your plan is to keep the inflation well above 4.50%.

Now, what exactly would be the composition of such an "investment" is another story, and I'm afraid it's not going to be entirely objective and fair.

[rich_sasha]

It is usually very different entities that invest in investment products vs those in debt. By far the largest owner of shares worldwide are pension funds and insurance companies. Larger still if you add the somewhat indirect savings via products for individual savers, like mutual funds. I suppose this might include sovereign funds - these are often styled as pension funds.

The pension/insurance funds themselves may have debt for their own corporation, not sure - but the capital "surplus" they invest isn't their own money, rather, more or less directly, their clients' money.

There must be some people that choose between repaying debt and investing surplus in 3rd party investments, but surely a minority. Much smaller still for VC which is crazy illiquid.

[Hizonner]

If the whole VC world does start trying to live off of the US government, and specifically off of this sovereign wealth fund thing, then it actually seems unrealistically optimistic to think that connections with the traditional military/intelligence/national security establishment will be the connections to have.

Except for small, unusual elements, that's all "deep state". Definitely any parts that have any real, deep expertise would get sidelined as obstructionist fossils or whatever. They're already purging the military officer corps to put in loyalists who will do the things MAGA wants without asking too many questions. And I'm sure they're purging intelligence to put in people who not only do what they're told, but say what the boss wants to hear.

The connections you'd need to have would be with Trump cronies and only with Trump cronies. I'm sure they have some Grand Vision(TM) to offer for where the money should end up.

[andsoitis]

Unable to generate returns that attract private investment, they now seek capital that can't walk away

The grift begins.

[zevets]

The grift began a while ago - when "startups" like SpaceX started using EBITBDA to claim profitability on starlink. But the depreciation costs of LEO are substantial, and starlink satellites have an empirical MTBF of ~5.5 years.

And at a depreciation rate of 15-20%, that "D" term starts to get pretty expensive, pretty darn quick.

[tobias3]

Article started with the GDPNow chart which is broken because of tariff front-running. Stopped reading there.

[gyanchawdhary]

Prompt: write a long rant on US VCs aligning/hunting alpha in Trumps America

[blackeyeblitzar]

Exactly. This article covers too many different angles at low depth. You could just as easily view the government funding startups as a positive development, like how the CCP helps develop young companies in different sectors that are often difficult to break into.