In This Newsletter, We Will Talk About

Were you worried about International conflict?, Feds Just said, Hold my coffee !!

No rate cuts anytime soon, citing persistent inflation driven by trade tensions.

Meanwhile, escalating geopolitical strains between Iran and Israel threaten global supply chains and energy prices.
This double-whammy means fundraising remains expensive, valuations compressed, and operational costs climbing, especially harsh for U.S.-based startups.

3 Major Global Ripple Effects:

Cross-border Funding: US-dollar VCs may shift toward European or Asian investments, assuming currency hedging.
Shipping and Logistics: Asian hardware startups face 7-15% extra in freight rerouting via Suez-Hormuz.
FX GainsStartups earning USD but spending in local currencies (like LatAm fintech) unexpectedly benefit.

Impact for U.S. Startups:

Cost of Capital Stays High: Expect elevated venture debt yields and SAFE discount rates. Caps set during peak markets now seem steep, raising renegotiation risks.
Valuation Pressure Intensifies: Public SaaS companies already down ~35% from 2021 highs. Without Fed relief, private valuations won’t bounce back soon—likely stalled until at least Q4 2025.
Dollar Strength = Revenue Headwinds: Stronger USD squeezes margins for startups billing internationally, but paying costs in dollars (cloud services, payroll).

Any Middle East escalation pushing Brent crude above $95 means instant hikes in data-center power and logistics.

Key Takeaway for Founders:

0-3 Months:

Secure venture debt at fixed rates immediately.
Reassess burn assuming no rate relief until late 2025.
Audit Gulf-region shipping risks; diversify supply chains.

3-6 Months:

Prep for September Fed signals; build your fundraising case now, ready to move if markets turn favorable.
Explore revenue-based financing and prepayment structures to boost cash flow.

Heads up for Founders and VCs, if you are looking at these sectors:

Favourable:

Cybersecurity, Defense & ISR Tech, Autonomous Drones
Energy-Efficiency SaaS
Supply-Chain Analytics

At Risk:

High-cash-burn Consumer DTC Importers
Capital-Intensive Biotech (without near-term wins)
Hardware Startups heavily reliant on Asian suppliers

The Fed’s "no-cut" stance coupled with geopolitical tensions means capital markets will stay cautious through 2025.
Founders who secure funding at current rates, mitigate Middle East supply-chain risks, and prioritise revenue resilience over inflated valuations will emerge strongest when markets eventually turn.

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