⚖️ US clawing back $3.7B in funding awarded to startups and businesses

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DOE Revokes $3.7B in Clean Energy Awards, Citing “Due Diligence”

In a sweeping move that caught both major corporations and early-stage startups off guard, the U.S. Department of Energy announced it would revoke $3.7 billion in previously awarded funding for clean energy and industrial decarbonization projects. The clawbacks affect 24 projects, including cleantech startups like Skyven Technologies, Sublime Systems, and Brimstone. While the DOE hasn’t specified exact reasons for the cancellations, Energy Secretary Chris Wright framed the action as part of the Trump administration’s review of Biden-era commitments, referencing a May 15 memorandum on the department’s audit powers.

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Startups Face Heightened Political Risk in Government Funding

For founders, especially in politically sensitive sectors like clean energy, AI, or crypto, this announcement serves as a sharp reminder that non-dilutive government funding is not risk-free. Programs that appear rock-solid under one administration can be paused, rescinded, or repurposed by the next. This unpredictability introduces execution risk at a critical stage, often after a company has already begun scaling, hired teams, or signed early commercial agreements based on the expected capital. Startups depending on federal grants should build contingency plans and avoid overextending based solely on anticipated government disbursements.

Implications for Fundraising and Strategic Planning

The rescinded awards could create ripple effects in investor confidence and project timelines. Startups that had used DOE awards to validate their technology or attract private capital may now need to quickly pivot to fill funding gaps or delay milestones. Founders should also be prepared for increased scrutiny from VCs and lenders who may view reliance on federal grants as a political and financial liability. Where possible, diversify funding sources and consider staging your grant-dependent milestones to reduce exposure to shifting federal priorities. In sectors where the political pendulum swings widely, resiliency may now mean assuming volatility is part of the business model.

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