Semaphore's 2018 Confidence Survey Highlights
Could it be possible that there be near universal confidence in the national economy, our own skills, the ability to earn more and more and hate president Trump, Congress generally and its leaders? Well, in our Alice in Wonderland PE world, it is not only true but seems quite normal - continuing the trend expressed in last year’s survey. Note that we also live in the real world. In this #MeToo moment our industry at least recognizes it is wildly deficient with 80% recognizing, (self-admitting?) that sexual misconduct, harassment and gender bias is an industry problem. The question left hanging is what to do about it. You obviously disagree, thankfully, with the respondent who wrote “It's being blown way out of proportion. The end result now is men will fear doing business with women.” Many suggested that transparency was the prescription but most believing that it will only ease with a generational change in leadership and more women participants in the industry. If this survey is a guide it will take a very long time as only 14% of our 589 respondents were women. One bluntly stating, “I have had a front row seat. It is destabilizing, demoralizing, divisive and completely unacceptable behavior…” Accompanied by another comment noting, “It is an industry of big egos with little regard for others.”
Big egos indeed. The 10th annual Semaphore Confidence Survey clearly notes we are Uber Confident (not necessarily confident in Uber but more the original meaning of that now spoiled word) with 93% confident in themselves. While some fear exigent existence, “The Dow will climb but the stock exchange will no longer exist once Trump chooses to press his Big Nuclear Button to show the world how big his…” well, you’ll have to go to the comments section to read the unexpurgated rest of the comment.
Last year’s survey had 76% fully expecting to earn more money. Congratulations - 73% of you did with 74% expecting to continue that upward trend this calendar year. And your personal taxes and corporate taxes will go down too, as 57% and 70% correctly predicted last year with 55% of you agreeing that the personal income tax rates will advantage you and about the same number believing the tax rate cuts will spur the national economy.
You were equally correct in that 78% predicting that the currently favorable tax treatment of Carried Interest income would not be at risk and 88% certain there will be no change in 2018, despite the fact that nearly half of you believe it should be changed.
That confidence continues not to be shared with few other people or institutions. While President Obama fared extremely well last year (78% on the confidence scale) his successor only had a 18% confidence score, with 74% not confident. President Trump even outscored our perennial last place finisher in the confidence polls with Congress (71% no or little confidence) with Speaker Ryan and Senate Majority Leader “enjoyed” a 25% and 16% confidence vote, respectively. They won’t have to worry about those poor ratings much longer as 72% of our respondents believe that either the House or Senate become Democratic in the 2018 mid-term elections. Makes me wonder if Nancy Pelosi and Chuck Schumer read our blogs?
For the third year in a row sectors of investment remained essentially static. Health Care, Enterprise Software, and Financial Services are #1, #2 and #3. Those three sectors remain the top three targets of investment in 2018 with Crypto Currency and Entertainment in the top 5
The distribution of respondents in the US changed only slightly from past years - the top six states were 33% California, 22% Massachusetts, 21% New York, 6% Texas and 5% Connecticut (the last two swapping places). Washington DC, Pennsylvania and Illinois came in at 4% each.
The UK represented 31% of international respondents, 14% Canada, 7% Germany, 6% China (up from 2%), and 2% from both France and Italy, with multiple respondents from Australia, Singapore, the Philippines, Taiwan, Brazil, Russia, Japan, Peru, Spain, Viet Nam and single responses from10 other nations.
Of those who participated this year 15% were from PE shops (half last year’s number); 31% were VCs; 14% were LPs (double last year); 13% were operating executives; 7% were Investment Bankers; and 20 % were third party vendors/advisors to the industry (lawyers, accountants, etc).
I have no idea what our dog’s breakfast of results means but we’ll all find out in the next 11 months and we’ll be sure to be asking once again next year. If you can take the time away from gazing at your burgeoning net worth or from fears of political apocalypse please review and analyze the full results and read many of the comments by clicking here
Mark S. DiSalvo is the President and CEO of Sema4 Inc., dba Semaphore, www.sema4usa.com, is a leading global professional services provider of troubled Private Equity, Venture Capital and Hedge funds under management. Semaphore currently holds fiduciary obligations as General Partner for nine funds, is a New Markets Tax Credit provider and advises General and Limited Partners as well as corporations around the world. Semaphore’s corporate offices are in Boston with principal offices in New York, London and Dallas.