Experts interviewed by TechCrunch warn that a U.S. government shutdown could disrupt deal activity, halt visa processing for employees, and trigger additional complications for startups and the tech industry at large—especially if the shutdown extends beyond a week.
This government shutdown, which started on Tuesday, marks the first in seven years. The unpredictable nature of the Trump administration, combined with a deeply divided Congress, makes it difficult to foresee when the shutdown might conclude. Since 1990, there have been eight shutdowns, with four occurring during Trump’s terms; the most recent one lasted 35 days, making it the longest in recent memory.
TechCrunch reached out to investors, company founders, and legal professionals, who all highlighted concerns about slowed deal activity and visa processing delays for employees. The visa system was already shaken up after President Trump recently revealed that the H-1B visa application fee would jump to $100,000—a figure that shocked many in the industry.
A primary worry is that the immigration process for startups will slow dramatically, since the Department of Labor—which is responsible for the initial approval of H-1B visas and green cards—is currently not operating. Immigration lawyer Sophie Alcorn explained that this means the entire process for hiring and renewing visas for highly skilled workers has come to a standstill.
“This brings a lot of instability to startup teams, including founders who may themselves be on visas,” she explained to TechCrunch.
Michael Scarpati, CEO and founder of fintech company RetireUS, added, “Visa holders are particularly vulnerable during a shutdown because their legal status relies on government approvals. When systems like E-Verify or labor certifications are paused, these workers risk losing their status, making their future in the U.S. uncertain and causing further disruption for the businesses that employ them.”
There are thousands of tech workers in the U.S. on visas, many of whom have brought their families with them.
Chris Chib, CEO of BlueFin Solves, a strategy solutions firm, told TechCrunch, “Many are understandably anxious about delays in processing and what that means for their ability to remain and work here. Just as these engineers help us overcome complex problems with machine learning and innovation, we owe them the same level of support and dedication during these times.”
Startups could also be impacted by delays or halts in permitting and other regulatory processes, which might drain valuable resources and potentially result in layoffs.
Jenny Fielding, managing partner at Everywhere Ventures, said that ongoing political instability is always a concern. While previous shutdowns have had minimal economic impact, she warned that an extended shutdown this time could force companies to lay off staff.
Fielding told TechCrunch, “Because we invest in many regulated sectors, a shutdown could significantly slow or even stop crucial government functions like FDA approvals or aerospace permits. For a startup whose entire business depends on a single regulatory approval, this could be existential.”
She added that the timing of the shutdown has been particularly challenging for her firm. When Everywhere Ventures began fundraising in early spring, President Trump’s announcement of new tariffs introduced uncertainty and increased costs for some businesses.
The firm postponed fundraising at that time because limited partners were hesitant to invest amid the uncertainty. “And now, as we restart fundraising this week, the timing is once again far from ideal,” she said.
Regarding her portfolio companies, Fielding said waiting to see what happens is not an option. She emphasized that founders must always have a backup plan, especially given limited capital.
“If the shutdown only lasts a week, it’s manageable,” she said. “But if it stretches into several weeks, things could become much more difficult.”
Garima Kapoor, who co-founded the software company MinIO with her husband AB—who arrived in the U.S. on an H-1B visa over ten years ago—said startups should begin preparing now in case the shutdown drags on.
She told TechCrunch, “When government agencies slow down, transactions in tightly regulated sectors like fintech, health tech, or mergers and acquisitions can come to a standstill. Even companies outside the federal regulatory environment may see their valuations drop and face tougher deal terms as uncertainty increases in the market.”
Kapoor advised that founders should stay proactive, keep communication open with partners and investors, and plan carefully for possible delays, stressing that transparency and alignment are crucial in these circumstances.
“Being prepared will distinguish those who can navigate the disruption from those who are caught off guard.”
Chib agreed, saying, “Their ability to adapt is what keeps progress moving. For anyone facing these obstacles, remember that this period will eventually end. Keep pushing forward.”
