Fear of Trump presidency led start-up vArmour to raise money now

vArmour says Trump presidency fears help raise money

Security start-up vArmour announced Tuesday that it raised $41 million for global expansion and to accelerate distribution. Well, that's what the press release said.

CEO Tim Eades said there was another reason: Donald Trump.

VArmour is based in Silicon Valley and generates 60 percent of its revenue overseas, working with government agencies, large banks and telecom companies.

In his travels, Eades said every conversation with every investor and prospective client, whether in Australia, the U.K., Japan or Dubai, has included a lengthy discussion about the uncertainty of what a Trump presidency would mean for international business.

Donald Trump
Why Donald Trump's poll numbers are surging right now

"It really does matter what people think of the U.S. as we lead up to the election," said Eades, a native of the U.K. who moved to the U.S. 18 years ago. With Trump, "the conversation he's had around Mexico, trading abroad, his position on immigration — everybody outside America looks in and says, `What's going to happen?'"

Trump, the presumptive Republican nominee for president, has focused his campaign on the promise to build a wall at the Mexico border, rewrite existing trade laws, temporarily ban Muslims from entering the country and deport 11 million undocumented immigrants.

Hillary Clinton, who leads the Democratic race, has raised $8.1 million from the communications and electronics industry, more than twice the amount raised by top challenger Bernie Sanders, according to the Center for Responsive Politics. Trump, who declared that his primary campaign is self-funded, has brought in $41,000 from the sector.

With Trump having closed the gap on Clinton in the polls less than six months before the election, Eades said it's definitely time for start-ups to be padding their cash positions. He isn't comforted by the fact that Trump is a businessman himself.

Tech IPO drought is sign of investor reality check

"If the rhetoric doesn't change a little bit, it's going to be a very interesting fundraising climate," Eades said. "You will see people just pushing things onto the balance sheet and sitting and holding it."

Politics is adding to an already challenging environment. After a six-year bull market in start-up financing, venture capitalists are sharply pulling back in 2016, forcing companies to show greater market traction and a path to profitability. The IPO market for tech companies has been dead, with not a single venture-backed company debuting this year in the U.S.

Still, Eades said vArmour tripled its valuation from the previous funding round in 2014. The company is growing rapidly by selling perimeter security for businesses moving to the cloud.

"It makes it easier when you're doing real stuff and for real people to get a valuation that's appropriate," he said.

Just don't wait until November.