- The tech industry is anticipating a boost thanks to Trump’s election this week.
- VCs expect deregulation that could spur innovation and think Musk can influence US policy.
- The Biden administration faced criticism for strict technology regulations, which hindered M&A.
Some venture capitalists expect Donald Trump to reject the regulation when he is president again, which could make it easier to develop new technologies and do business in Silicon Valley. Many of these hopes are tied to Elon Musk’s involvement in the new administration.
“The most exciting thing of all will be putting Elon at the helm of government efficiency,” Ben Narasin, founder and general partner of Tenacity Venture Capital, told Business Insider about the election outcome. “He’s going to go through a chainsaw of calcified butter and it’s going to be great to attack the bloat and overreach we’ve had in government.”
Trump is reportedly considering Musk for roles in the White House, including those that would audit various federal programs and organizations.
Musk, on the other hand, has proposed the creation of a “Department of Government Efficiency” – cheekily nicknamed DOGE, a token for the dogecoin cryptocurrency – which he said would remove deal regulations that have slowed M&A in the sector. technology in recent years.
While many in Silicon Valley dislike Trump, many VCs and startup founders want more freedom to pursue riskier new technologies unencumbered by regulations. In short, technology is concerned about it.
“The Trump-Vance ticket is the first pro-tech presidency in our nation’s history,” said Augustus Doricko, CEO and founder of startup Rainmaker. He expects an onslaught of tech innovation during the Trump administration.
In conversations with more than a dozen Silicon Valley VCs and executives after the election, many echoed that sentiment — including those who supported Kamala Harris in the election.
“With a big push to remove unnecessary bureaucracy and overregulation in key areas, we could really have a century of building, innovation and crazy acceleration,” Aaron Levie, CEO of cloud company Box and a Harris supporter. posted on Wednesday X. “Excited about Elon’s efforts here.”
Mark Pincus, an early Facebook investor and founder of Zynga, responded on X, “Effective acceleration! E-acc,” referring to Silicon Valley’s latest move to want technological advances in AI to move as fast as possible. if possible, without any handrails.
Regulation has held Silicon Valley back in recent years
VCs during the Biden presidency have complained about how hard it has been to get deals done. The outgoing administration was an antitrust enforcer and put on hold many mergers and technology acquisitions it deemed anticompetitive. This is especially bitter for VCs because they rely on selling start-ups in M&A deals for many of their exits and returns.
Restrictions on technology M&A “have caused venture capital’s rate of return on distributed income to drop dramatically, making the formation of new capital almost impossible,” said Louis Lehot, a high-tech lawyer at the law firm of Foley & Lardner. Silicon Valley is looking for a relaxation of the government’s stance here “to enable exits and the formation of new capital, which is the cycle of innovation,” he added.
For example, regulatory pressure had dampened deals at Google, with the tech giant abandoning two potential acquisitions this year, including cybersecurity startup Wiz, which would have been one of the tech giant’s biggest acquisitions.
The US also opened antitrust investigations into Microsoft and Nvidia earlier this year over their dominance in the hot AI space. The Federal Trade Commission is investigating Microsoft’s acquisition of Inflection AI, and the Department of Justice is investigating Nvidia’s purchase of Israeli AI startup Run:ai.
While some lawmakers say allowing a few companies to influence most AI research, development and monetization poses an economic risk, many VCs have cried foul and blamed FTC Commissioner Lina Khan — who has often sued for blocked mergers – for an anti- business bent and says it has come to closing fewer deals for startups.
Investors were also critical of what they call vague cryptocurrency rules under Biden’s rulemaking. Many VCs and founders in the space donated to Trump and other Republican candidates who they consider more favorable to crypto technologies and markets.
VCs are now hopeful that Trump may undo some antitrust and crypto policies that a Harris administration may have continued, though nothing is certain about the new administration’s approach.
Trump’s running mate and former VC JD Vance has said publicly that Khan is “doing a pretty good job,” referring to her antitrust enforcement of Big Tech companies. Late in Trump’s first term, regulators under his administration launched antitrust investigations into Big Tech companies, including Amazon; and filed antitrust lawsuits against Google and Meta.
“At a high level, we expect Trump to cut corporate taxes and regulations, helping M&A and startup investment,” said Mason Angel, general partner at Industrious Ventures. “We may see new takeover efforts by big tech with a new FTC director.”
Musk’s influence could also help reduce government involvement in tech deals, these VCs told BI.
“Elon is a positive force who has had to run multiple companies that are highly regulated, so he has a realistic view; because he lived it, he can be influential,” Narasin said of Musk’s track record in building Tesla, SpaceX and xAI. “He’s pro-startup, pro-business, pro-anything that will help the American people. A good, healthy economy is good for everyone.”
VCs predict an innovation boom
America is a nation of entrepreneurs, and this is especially true in Silicon Valley. Some VCs and founders say having an entrepreneur like Musk influence the Trump administration and who can sweep away regulations will bring prosperity to the industry.
Indeed, the stock market responded strongly to Trump’s decisive victory on Tuesday night, which could ultimately be a boon for venture firms seeking investment. Limited partners such as pensions and foundations have been more selective recently thanks to high interest rates and few exit options for startups. But their return to funding venture firms, in turn, would mean more founders are building and getting funded.
“I would like to see the President be given the power to unilaterally remove, or at least improve, regulations around major projects or economic areas that will make it possible to actually build new things. ,” tech blogger Ben Thompson wrote after the election. “There has to be a way to cut through all the red tape that has piled up.”
“I think the next four years will be filled with aspirational mega-projects and unprecedented visionary initiatives,” said Rainmaker’s Doricko. “New Cities. Lunar and Martian Colonization. Free Electricity. Weather Control.”
Angel, whose VC firm invests in the space, industrial and defense sectors, says those industries will experience strong growth.
“Trump created the Space Force in 2019, and his close relationship with Elon Musk will bring new attention and government investment in this area,” said Angel of Industrious Ventures. “The same goes for the US industrial and defense bases.”
As various sectors within the tech industry ebb and flow, the VCs say they are optimistic about the idea of having some help calling the shots at the federal level.
“Elon will be a tremendously positive monster that will bring clean, lean, pro-business government and prosperity for all,” Narasin said.