Amid political and technological transformation, President-Elect Donald Trump’s return to the White House introduces both uncertainty and opportunity for the startup ecosystem.
As displayed by NASDAQ’s record high following the election results, tech leaders see Trump’s deregulatory agenda as a welcome shift from President Joe Biden’s oversight era, which included guidelines for AI technologies and antitrust actions against Google.
On the other end of the spectrum, the current unfavorable political climate could hinder progress for many, particularly for those championing causes that fall out of alignment with shifting policy priorities.
All the general public can do is sit back and wait for his final plans to roll out. But the best indicator of future actions is past ones. So where is Trump taking the VC industry and who will benefit the most?
Trump 2.0: Celebration and Anxiety
The biggest winners of the election appear to be those in the AI and cryptocurrency fields. Trump’s return to the presidency comes as AI rapidly advances, positioning his administration to shape its trajectory. While Trump plans to repeal Biden’s AI-focused Executive Order, his deregulatory approach will likely prioritize private-sector innovation over safety guardrails.
Doug Levin, executive fellow at Harvard Business School and serial entrepreneur, notes while Trump’s exact tax policy is unclear, his current stance builds on his first administration but with a stronger focus on startups and the VC ecosystem. He has positioned himself as “very pro-business, pro-conservative economic policies, and pro-VC.”
Trump has also promised a “golden age of America,” with crypto, oil, gas, and financial services driving investor optimism. After the election, when Bitcoin broke records, Trump took to Truth Social to gloat, claiming credit in his post “CONGRATULATIONS BITCOINERS!!! $100,000!!! YOU’RE WELCOME!!!”
Congress may also look to bolster the weakened R&D tax credit in new tax reform legislation. Trump has promised to reinstate the R&D equipment expensing credit for U.S. manufacturers. Other industries that will likely prosper are transportation and space exploration.
“There have been policies in the current administration that have led to some of the challenges in this community,” Craig Saperstein, a partner at Pillsbury’s Government Law and Strategies, explains. “I think that’s probably had an effect on companies’ willingness to engage in M&A for fear that it could be subjected to, you know, regulatory scrutiny.”
But even as Big Tech displays optimism about reduced regulation, they are wary of higher costs from proposed tariffs. Additionally, his stance on immigration could have major blowbacks for accessibility to top talent from around the world.
In comparison, there are also numerous sectors that have been particularly wary of Trump’s policies and the immediate future. Businesses that operate in the sustainability and health space are now faced with an administration that is hostile to their purpose.
In move that could stall innovation and growth, this administration appears ready to bring significant cuts to the EPA and Department of Energy.
Sipra Laddha, cofounder of women’s health startup LunaJoy, is cautiously optimistic. While VC investment in women’s healthcare surged after Roe v. Wade was overturned, she is uncertain about the impact of Trump’s appointees, such as Robert F. Kennedy Jr. as HHS secretary. Kennedy’s unfounded opinions on vaccines and pharmaceuticals could create unpredictability for healthtech companies
During his first term, Trump, who has called climate change a hoax, considered challenging the findings of federal climate assessments. His EPA administrator proposed an adversarial review of these reports, but progress was reportedly halted by Trump’s then-chief of staff. Later, Trump enlisted Princeton emeritus physics professor William Happer—an advocate for the benefits of increased carbon dioxide—to help design the initiative.
“I do think people are seeing some green shoots from the new administration,” Steve Ryan, another Pillsbury Partner who focuses on emerging companies and venture capital, states. “This administration, I think, has the possibility of having some favored industries and disfavored industries…So how they craft policy and undertake enforcement could be influenced by those predispositions.”
Outside of Silicon Valley
While a lighter regulatory environment may boost venture capital funding and startup exits, Darden professor Saras Sarasvathy emphasized to The Darden Report the importance of supporting the “Middle Class of Business” – smaller, enduring companies that create jobs and sustain communities.
The 2023 Rise of the Rest report from Revolution highlights a key question: will a Trump presidency drive more venture capital into the Red States that fueled his victory?
In 2023, nearly half (48%) of venture capital funding went to California, followed by New York (12.7%), Massachusetts (9.5%), Texas (3.9%), and Colorado (2.5%). Meanwhile, the 31 states that backed Trump received just 16% of the $170 billion invested. Revolution’s Steve Case and David Hall stress delivering on promises to prioritize “innovation in the heartland” — a shift that could reshape the U.S. venture capital landscape.
As for underrepresented founders, many feel like the world is moving backwards.
On day one, Trump has pledged to revoke Biden’s executive orders on diversity, equity, and inclusion (DEI), which supported programs to diversify the STEM workforce. Maria Underwood, former head of Alabama’s Birmingham Bound, told Technical.ly that some founders will feel the election’s impact more than others.
“Women, Black, and under-resourced founders may face shifts in priorities around gender equity and diversity in venture capital,” Underwood said. “Mission-driven sectors like health tech and social impact will also face new hurdles.”
Trump also plans to leverage college accreditation to eliminate DEI administrators and expand taxes on university endowments for institutions engaging in “discrimination under the guise of equity.” This, along with his anti-immigration stance, is expected to negatively impact access to talent.
The new administration could further shift priorities by cutting initiatives like U.S. Small Business Administration (SBA) programs, Brian Brackeen of Lightship Capital told Technical.ly. Brackeen was part of the wave of Black-led venture funds launched after George Floyd’s murder.
He added that “everything changed and nothing changed,” emphasizing the need for startups to stay “laser-focused” on customers regardless of political shifts.
What’s Next?
The next four years may be rocky, but it’s not all gloom and doom.
In the face of uncertainty, entrepreneurs are known to thrive. Even now, as some chant for DEI to “DIE,” leaders in the field have already adapted.
Some more encouraging news is the demonstrated by bipartisan support for incentives like expanded tax breaks for small businesses. For example, the Biden-Harris administration’s EDA Tech Hubs, which invested $500 million into advanced research. It’s also been floated that Trump might try to roll back some of Biden’s spending initiatives, such as the Inflation Reduction Act and CHIPS and Science Act. But the programs have been embraced across the isle and won’t be easy to erase.
“I do think trying to spur increased capital formation will be a priority, not only of the Trump administration, but of Congress,” Saperstein predicts. “I do think that capital formation and perhaps, you know, spurring more crowdfunding will be a policy priority of Congress as well as the administration.”
Levin predicts a rebound for the VC ecosystem and startups in 2025, despite challenges like dormant “zombie VCs.”
“I think there’s going to be a recovery,” Levin says. He anticipates a return of major deals in 2025 through 2027, driven by a strong M&A market and renewed IPO activity, supported by potential tax incentives.
But, as Axios reports, the most telling sign of the future may come down to a single Tweet from the co-founder of VC Andreessen Horowitz: “political power >> financial power every day of the week.”
About the Author: Tess Danielson is a journalist and writer focusing on the intersection of technology and society.
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