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Startups and the U.S. government: The relationship is becoming more complex

Startups and the U.S. government: The relationship is becoming more complex

Bitget-RWA2025/10/05 03:27
By: Bitget-RWA

In recent years, the connection between startups and the U.S. government has grown stronger, fueled by a desire to leverage AI, automation, space exploration, robotics, and climate technologies for defense purposes. While this has opened up new funding opportunities, the partnership is becoming increasingly complex.

An increasing number of startups now count the U.S. government among their clients or are seeking permits and contracts related to defense. When the government is functioning normally, these relationships can provide crucial support and income for startups. However, when government operations are suspended, as happened on October 1, these close ties can actually hinder or even completely stall startup progress.

On this week’s episode of Equity, Anthony Ha, Max Zeff, and I (Kirsten Korosec) discuss why an extended government shutdown in the U.S. could pose greater challenges for startups than before — and potentially slow down a busy IPO period. We also explored other topics, such as the ways AI companies are working to generate revenue and the government’s recent efforts to secure equity positions in technology and industrial companies.

Listen on Apple Podcasts Listen on Spotify

“This also seems to highlight how the startup ecosystem has evolved over the past decade, and especially in recent years,” Ha commented on the Equity podcast, noting that consumer internet startups were the main focus for a long time. “Now, there’s clearly much more activity in defense technology and deep tech, where various regulatory approvals are often necessary,” he added. “It appears that a much wider range of startups now rely on the government in different ways, which wasn’t necessarily the case a decade ago.”

But it’s not only startups being affected. The Trump Administration has also continued to expand its influence and ownership within the tech sector.

Recently, the Trump Administration renegotiated another federal loan — its third in recent months, following similar deals with Intel and rare earth miner MP Materials — and secured an equity position as part of the new agreement.

The U.S. government acquired a 5% ownership stake in Canadian mining company Lithium Americas, as well as a 5% share in a joint venture between Lithium Americas and GM to extract lithium in Nevada. These stakes will be obtained through no-cost warrants, which allow the government to buy shares at a predetermined price. The updated terms resulted from a renegotiation with the DOE’s Loan Programs Office regarding a $2.26 billion loan that was originally granted to Lithium Americas during the Biden Administration.

Tune in to the full episode to learn more about how the government is interacting with startups and technology firms, the entertainment industry’s response to AI-created actress Tilly Norwood, and the remarkable seed funding round for Periodic Labs.

Equity is TechCrunch’s main podcast, produced by Theresa Loconsolo, and is released every Wednesday and Friday. Subscribe on Apple Podcasts , Overcast , Spotify and all major podcast platforms. You can also follow Equity on X and Threads at @EquityPod.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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