⚖️ Government's impact on startups

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Startups Leaning on Government Face New Risks

The U.S. government has become a critical partner for startups, especially in AI, robotics, space, climate tech, and defence. Many young companies now rely on federal contracts, permits, or funding to scale, which can provide a vital revenue boost and credibility. But when government operations stall, as during the October shutdown, these same ties can stall projects, delay approvals, and create uncertainty around IPOs or fundraising, turning a once-strategic partner into a potential bottleneck.

The Startup Landscape Has Shifted

Today’s startups are more entangled with government processes than ever. Deep-tech and defence-focused companies, unlike consumer internet startups of the past, often require multiple approvals and regulatory checks to progress. Delays in government operations can ripple across product roadmaps, revenue forecasts, and investor confidence, forcing founders to think strategically about timelines, compliance, and contingency plans.

Government Expands Its Footprint in Tech

The U.S. government has not just become a customer, but also an equity partner. Recent moves include taking a 5% stake in Lithium Americas and a joint venture with GM through no-cost warrants, tied to a $2.26 billion loan. Similar arrangements have occurred with Intel and rare-earth miner MP Materials. Founders should recognize that loans or equity stakes from the government can change ownership dynamics, influence exit strategies, and introduce new operational oversight, making government relationships both an opportunity and a strategic risk.

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