- The tech industry is anticipating an upswing thanks to Trump's election this week.
- VCs expect possible deregulation to boost innovation, with Musk potentially influencing government policies.
- Biden's administration faced criticism for strict tech regulations, hindering M&A.
Some venture capitalists expect US President Donald Trump to dial back regulation, potentially making it easier to develop new technologies and do business in Silicon Valley. Many of these hopes are pinned on Elon Musk's involvement in the new administration.
"The most exciting thing of all will be putting Elon in charge of government efficiency," Ben Narasin, founder and general partner of Tenacity Venture Capital, told BI of the election outcome. "He's going to take a chainsaw through calcified butter, and it's going to be awesome to attack the bloat and overreach that we've had in the government."
Trump is reportedly considering Musk for White House roles, including ones that would audit various federal programs and organizations.
Musk, in turn, has proposed creating a "Department of Government Efficiency" — cheekily nicknamed DOGE, a nod to the cryptocurrency Dogecoin — that he said would remove dealmaking regulations that have slowed M&A in the tech sector in recent years.
While many in Silicon Valley dislike Trump, many VCs and startup founders crave more freedom to pursue riskier new technologies unburdened by regulation. In short, tech is stoked about this.
"Trump-Vance ticket is the first unabashedly pro-tech presidency in our Nation's history," said Augustus Doricko, CEO and founder of cloud seeding startup Rainmaker. He expects an onslaught of tech innovation during the Trump administration.
In conversations with more than a dozen VCs and Silicon Valley executives following the election, many have echoed this sentiment — including those who supported Kamala Harris in the election.
"With a major push to remove unnecessary red tape and over-regulation in key areas, we could really have a century of crazy building, innovation, and acceleration," Aaron Levie, the CEO of cloud company Box and a Harris supporter, posted on X Wednesday. "Excited for Elon's efforts here."
Mark Pincus, an early Facebook investor and the founder of Zynga, responded on X, "Effective accelerationism! E-acc," referring to the recent Silicon Valley movement that wants technological advancements in AI to move as fast as possible, without any guardrails.
Regulation has held Silicon Valley back in recent years
VCs during Biden's presidency have complained about how tough it's been to get deals done. The outgoing administration was an antitrust enforcer and put many tech mergers and acquisitions on hold that it deemed anti-competitive. This is particularly galling for VCs because they rely on selling startups in M&A deals for many of their exits and returns.
Limits on tech M&A have "caused the rate of venture capital return of distributed proceeds to fall drastically, making new capital formation near impossible," said Louis Lehot, a top tech lawyer at law firm Foley & Lardner. Silicon Valley is looking for a relaxation in the government's stance here "to enable exits and new capital formation, which is the cycle of innovation," he added.
For example, regulatory pressure had dampened deal-making at Google, with the tech giant abandoning two potential purchases this year, including cybersecurity startup Wiz, which would have been one of the tech giant's biggest-ever 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 probing Microsoft's aqui-hire of Inflection AI, and the Department of Justice is investigating Nvidia's acquisition of Israeli AI startup Run:ai.
While some lawmakers say that allowing a few companies to influence the majority of AI research, development, and monetization poses an economic risk, many VCs have cried foul and accused FTC commissioner Lina Khan — who has frequently sued to block mergers — of an anti-business bent and say it's tricked down to closing fewer startups deals, too.
Investors were also critical of what they call unclear rules for cryptocurrency under the Biden regulation. Many VCs and founders in the space donated to Trump and other Republican candidates, which they consider more favorable toward crypto technologies and markets.
VCs are now hopeful that Trump could roll back some antitrust and crypto policies that a Harris administration may have continued, although nothing is certain about the new administration's approach.
Trump's running mate and former VC JD Vance has publicly said that Khan is "doing a pretty good job," referring to her antitrust enforcement for Big Tech companies. At the end of 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 startup M&A and investment," said Mason Angel, general partner at Industrious Ventures. "We may see new acquisition efforts by big tech with a new FTC director."
Musk's influence could also help slim down the government's involvement in tech deals, these VCs told BI.
"Elon is a positive force who's had to run multiple companies that are heavily regulated, so he has a realistic view; since he's lived it, he can be influential," Narasin said of Musk's track record of building Tesla, SpaceX, and xAI. "He's pro-startup, pro-business, pro-everything that will help the US population. A good, healthy economy is good for everybody."
VCs anticipate an innovation boom
America is a country of entrepreneurs, and that's especially true in Silicon Valley. Some VCs and founders say that having an entrepreneur like Musk influencing the Trump administration and potentially wiping away regulations will bring prosperity to the industry.
Indeed, the stock market responded exuberantly to Trump's decisive win on Tuesday night, which could eventually be a boon to venture firms seeking investments. Limited partners such as pensions and endowments have been choosier recently thanks to high interest rates and few exit options for startups. But their return to funding venture firms would, in turn, mean that more founders are building and getting funded.
"I would like to see the President given the power to unilaterally remove, or at least streamline, 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 needs to be a way to cut through all of the red tape that has accumulated."
"I think the next four years will be imbued with aspirational mega-projects and visionary initiatives without precedent," Rainmaker's Doricko said. "New cities. Lunar and Martian colonization. Free electricity. Weather control."
Angel, whose VC firm invests in the space, industrial, and defense sectors, says that those industries will experience strong growth.
"Trump created the Space Force in 2019, and his close relationship with Elon Musk will bring renewed attention and government investment into the field," Industrious Ventures' Angel said. "Same goes for the US industrial and defense bases."
As various sectors within the tech industry ebb and flow, VCs say they're optimistic about the idea of having one of their own helping to call the shots at the federal level.
"Elon's going to be an enormously positive monster who delivers a cleaned up, slimmed down, pro-business government, and there will be prosperity for everybody," Narasin said.