The Big Story: Startup policy outlook under second Trump term
The outcome of Tuesday’s elections will touch every aspect of life in the U.S., including how startups in all communities and states raise capital, hire, develop their products, and grow. In addition to former President Donald Trump winning a second term in office, Republicans won enough Senate seats to control the upper chamber, and, although a few House races are still considered too close to call, Republicans are on track to keep control of the House.
Making predictions about the actions of an incoming administration is especially fraught when the president-elect’s positions appear influenced by shifting populist sentiments, pursuing his own interests, and retribution for perceived slights. Below we focus on how startup-specific policy could look under Trump, given his priorities during his first term, the things he said on the campaign trail, and the issues that are likely to come up during his next term.
Access to Capital: Several proposals that would make it easier for startups to access capital could see a smoother path forward under a Trump administration and a likely Republican-controlled Congress. In early 2024, the House passed a Republican bill that would, among other things, amend the accredited investor definition, reform 3(c)(1) fund limits to encourage broader participation, and make crowdfunding more accessible. Sen. Tim Scott (R-S.C.), the likely chair of the Senate Banking Committee, has introduced his own sweeping legislative package with many of the same goals.
On the other hand, programs supporting startup founders from underrepresented communities—especially Black founders—have seen increased attacks in the wake of the 2023 Supreme Court decision gutting affirmative action. A Trump administration is likely to continue rolling back federal programs, as well as nominate conservative federal judges that rule against private programs supporting founders from specific communities. Founders from underrepresented backgrounds face considerable barriers navigating the startup ecosystem, and efforts to eliminate programs aiming to create equitable capital access risk the strength of U.S. innovation.
Artificial Intelligence: Trump has vowed to roll back the Biden administration’s executive order on artificial intelligence, which controversially used the defense production act to regulate large models and compute, tasked federal agencies with issuing guidance on their own use of AI, sought to bolster the talent pool, and opened up government resources for AI research. The likely retreat from AI policy at the federal level is sure to continue the flurry of disparate activity in state governments. To keep the AI ecosystem competitive, policymakers at all levels of government should promote a regulatory environment conducive to AI innovation, grow the AI workforce, and invest in AI resources accessible to startups.
Connectivity: A Trump administration is likely to put broadband rules and programs advanced by the Biden FCC on the chopping block. In April, the Federal Communications Commission (FCC) reinstated net neutrality rules, ensuring startups’ equal access to an open Internet. The rules, however, have yet to go into effect, pending a decision by the U.S. Court of Appeals for the Sixth Circuit on whether the FCC has the legal authority to enforce them. During his first term in office, the FCC repealed the net neutrality rules that had been put in place in 2015, so the next Republican majority at the FCC is expected to again roll back net neutrality protections, opening the door to the blocking and throttling of Internet data.
Republicans—including current Commissioner Brendan Carr, who is seen as a top contender for agency chair under Trump—have also been critical of programs aimed at making Internet access more affordable, including the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) Program, making it likely a Trump FCC will cut BEAD’s low-cost service options provision. A Trump administration is also unlikely to support the Affordability Connectivity Program (ACP), which ran out of funding earlier this year, and the Universal Service Fund, which is currently being challenged in court. Policymakers should continue to work towards closing the digital divide through affordable broadband, ensuring startups are not shut out of the innovation ecosystem.
Content Moderation: During his first term and while running in the 2024 election, most of Trump’s grievances about Internet policy have focused on supposed anti-conservative bias in Internet platforms’ content moderation decisions. In 2020, he issued an executive order directing several agencies to regulate how Internet platforms host and moderate user content, and he attempted to pressure Congress into repealing a foundational Internet intermediary liability framework as part of an unrelated legislative package. (Since his first term, Trump has launched his own social media network, and during his 2024 campaign, he worked closely with X owner Elon Musk, which could, theoretically, give him perspective on the importance of limits on liability for companies hosting user content.)
A second term of a Trump presidency will also mean more Trump-appointed judges reviewing legal cases dealing with content moderation in the future. A Trump-appointed judge was part of the decision from the U.S. Court of Appeals for the Fifth Circuit allowing Texas’s law requiring Internet companies to host politicians’ content to stand despite constitutional challenges. (The Supreme Court has since ordered lower courts to reexamine the decision with instructions on how the First Amendment’s protections extend to what third party speech a company decides to—or not to—host.) And two Trump-appointed judges were part of the U.S. Court of Appeals for the Fifth Circuit decision denying Internet intermediary liability protections to content on TikTok’s algorithmically sorted feed, a major departure from how Internet law has historically treated websites and services that host user content. As states continue to pass content moderation legislation, and as plaintiffs attorneys continue to test the bounds of foundational Internet legal frameworks, courts will have an outsized role in deciding Internet policy governing startups that host user content.
Talent: Trump’s positions on talent policy will likely be a mixed bag for startups. On the one hand, the Trump administration had a more flexible approach than the Biden Federal Trade Commission (FTC) on independent contractors, which startups often rely on especially as they grow, to manage irregular and inconsistent workloads—including for project-specific tasks like graphic design—without having the added expenses of administrative burdens associated with full-time employees. At the same time, the FTC under Trump would likely abandon the agency’s current push to ban overbroad non-compete agreements, which unnecessarily keep employees at established companies from launching or becoming an early employee at a competing startup. Trump has also been critical of the Biden administration’s efforts to forgive student loan debt, debt that keeps many people from taking the risk of founding a startup or joining an early-stage company.
Additionally, Trump’s pledged immigration philosophy—“the largest deportation program in American history” starting “on day one”—does not bode well for the potential of reforms that encourage foreign-born entrepreneurs to build their companies in the U.S. and help fill the much-needed gaps in the STEM pipeline. Moves by the Biden administration to expand immigration pathways, including for high-skilled workers, could be undone by the incoming president, and the fate of the Deferred Action for Early Childhood Arrivals program will be determined by ongoing litigation. One surprising bright spot could be Trump’s stated support for green cards for foreign-born graduates of U.S. universities, as many would-be founders are forced to choose between returning to their home country or taking a job with an employer that can support their visa to stay in the U.S.
Tax: As Congress heads into a major tax rewrite in 2025, a Republican president and likely Republican control of Congress means that the party will have unilateral control over what gets enacted, especially because the Republican-controlled Senate is able to use the “budget reconciliation” process, which—unlike most things in the Senate—only requires a simple majority to pass. Many of the tax proposals critical to the startup ecosystem, including a return to immediate expensing for R&D costs, enjoy bipartisan support and are likely to be considered. Trump has indicated a desire to implement more tax cuts for individuals and corporations, including potentially further lowering the corporate tax rate to 15% for companies that produce their products in America.
Trade: Trump’s pledged hardline stance on trade will likely raise costs for startups and make it more difficult for them to compete abroad. His isolationist tendencies will likely see the country step back from global trade engagement in favor of country-specific negotiations, removing U.S. interests in global trade conversations and contributing to a fracturing environment around digital trade. For example, the global tax deal negotiated in 2021 is unlikely to see U.S. participation under Trump, opening the floodgates for foreign countries’ digital services taxes, which will increase costs of the digital services that startups use. Additionally, the United States-Mexico-Canada Agreement negotiated during Trump’s first term will be up for review in 2026, opening the door to increased tension with our closest trading partners and important markets for U.S. startups.
If he follows through on his campaign trail promises, his indiscriminate threats to impose tariffs on imports will raise prices for U.S. consumers, including startups, and lead to retaliatory trade barriers from other countries, increasing costs and closing off foreign markets to U.S. startups.
