Tech, Tariffs and Taxes: Here’s What Sophisticated Investors Are Focused On For 2020
Jan 14, 2020 Thirty-plus family office executives and private wealth leaders recently gathered at the MarketCurrents Winter Edition event in New York to discuss emerging trends in the private investments landscape. On the eve of 2020, attendees said they were focused on identifying tech-enabled startups, mitigating the impacts of ongoing trade wars and working with the evolving tax frameworks for cross-border investments.
The issue of taxation on international investments was a top concern for panelists at the event. As the private investment industry expands into developing countries, such as India and Paraguay, investors must be mindful of the tax implications both internationally for their local investment vehicle as well as domestically as tax residents of the United States. Withholding taxes and the lack of double-taxation treaties in certain jurisdictions were a key concern.
Another concern with emerging markets was the lack of framework for legal recourse or due diligence in certain regions. Investing in the emerging world is fraught with risks that can be mitigated by carefully vetting the local network of partners and closely examining deal flow.
Focusing on the US, panelists said the ongoing trade war with China and the emergence of protectionist trade policies across the world were having an impact on capital flows and the investment decision-making process. With the upcoming presidential elections, US politics is likely to be a key risk throughout 2020.
Besides risks and taxes, panelists also discussed emerging opportunities. Family offices had a chance to fill funding gaps in the venture capital industry, according to one panelist. Founders are increasingly turning to newer models of funding such as private debt and revenue sharing that family offices may have more experience with.
Meanwhile, the startup ecosystem in emerging markets such as India, Africa and Latin America are rapidly maturing, expanding opportunities for global investors.