Startup Funding Espresso – The Challenge of Regulation

The Challenge of Regulation

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Regulation by the government of an industry is meant to protect customers and provide a level playing field for the companies.

The downside to regulation is that it inhibits innovation.

It often favors the incumbents in an industry and makes it difficult for startups to succeed.

It makes market entry for new players more expensive.

The existing players form advocacy groups that lobby the government for their point of view.

Regulation often snuffs out competition for the existing players.

It keeps costs high, which limits the number of users in the space.

It prevents new innovations that the incumbents may not want to adopt since it would come at a high cost.

Some industries move abroad to find acceptance for the new technology, citing the challenges in the US.

In short, regulation drives the cost up and the innovation down.

As an investor in startups, consider the regulatory environment before investing in a particular industry.

Understand the impact of regulation on the startup's growth prospects.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

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