The "Cost of Equity" Pivot - Why Structure Now Matters More than Rates

Send us Fan MailOur guest for this Flashcast edition is Shawn Severson, CEO and Co-Founder of Water Tower Research, and Head of Market Commentary and Thematic Research. Shawn breaks down his latest research, “The Cost of Equity Pivot: Why Structure Now Matters More Than Rates,” which challenges the traditional small-cap playbook heading into 2026. While falling interest rates have helped fuel a recent rebound in small caps, Shawn explains why the true driver of the innovation economy in 2026 is the cost of equity, not the cost of debt. He outlines the market’s structural shift from “survival financing” to “growth financing,” why markets are now rewarding solvency over dilution, and how investors should position around clean cap tables, funded innovators, and a barbell strategy as the small-cap equity window reopens.