Will demographics change start-up investment?

There is a growing understanding that as baby-boomers retire, western equity markets will be under pressure as this market segment draws on their lifetime savings (Source: McKinsey April 2005). So what will this mean to start-ups that are looking for new capital? Actually it is quite good news. First off, as most US, Japanese and European investors are most heavily into listed stocks and bonds, these will be the ones most under pressure. One trend that is expected to offset this withdrawal of funds is the increase in savings from the Chinese and Indian middle classes. Will these new investors take the place of the retiring ones? Time will only tell, but this instability should cause institutional investors to think twice about staying in most common equities. Secondly, those remaining investors, faced with an uncertain (at best) market in traditional vehicles, will look for high growth opportunities to offset poor performance by established equities and debt. Obviously emerging economies will be high on the list, but foreign exposure will come into play as investors look to get local high growth to reduce the exchange issues. Investments in start-ups are net-new, and don