Ask HN: How will the tariffs affect investor funding?
Assuming Pres. Trump's tariffs are not repealed or significantly altered, what does this mean for startups seeking capital? If a startup had already closed several rounds at a high valuation, how will this affect subsequent funding rounds, and ultimately an IPO?
IPO window is closed/dead for at least the next 3-6 months. Both Klarna and Circle have paused their upcoming IPOs. Even the corporate bond market is seizing up at the moment. Uncertainty is toxic to long term investment.
https://www.marketplace.org/story/2025/04/08/why-has-the-cor...
https://www.wsj.com/livecoverage/stock-market-tariffs-trade-... | https://archive.today/iKHbX
Exactly - Current thinking is we are headed for recession:
https://polymarket.com/event/us-recession-in-2025
https://www.atlantafed.org/cqer/research/gdpnow
Thinking is moot though. What’s going on at the moment is about Trumps raw power. As much as the markets prefer stability, everything is relative, so he still has the power to move the markets just by signaling different things moment to moment. Of course this is not sustainable over the long run, but the American economy is certainly meta enough at this point that it’s very hard to guarantee the repercussions will land while he is still alive/in-office.
I hope in the long term the voting public can come back around to the idea that character and thoughtfulness still have a place in politics, but that might just be wishful thinking in a social/AI age where real truth in any particular domain is too complex for individuals to digest, intellectuals and experts have lost credibility with the public at large, and therefore trust in leadership is entirely based on superficial vibes and talking points that can resonate in a 5-10 second TikTok-ready take.
> that might just be wishful thinking in a social/AI age where real truth in any particular domain is too complex for individuals to digest
It's not necessarily that you're smarter, but you have different preferences and concerns given your circumstances.
If you're a low-paid worker you're likely very vulnerable and exposed globalisation. Globalisation is great because it means all the bad jobs low-paid workers used to do can be done even cheaper abroad, but if you're one of those workers you have to watch your opportunities drying up. Not sure it's going to happen now, but there was a hope that with places like India coming online even some of the more expensive digital jobs can now more easily be outsourced would be a huge boom for the IT sector which has historically had to pay very high salaries to employ skilled workers in the West. But again, whether this is good or not really depends on if you're one of the workers in these sectors – if you are you might think that we should protect jobs even if it is bad for GDP.
Plus if you're poor already you're not going to care much about an economic crash because you have no real stake in the economy. Even if this is a bad way to look at it because things can always get worse, the immediate impact of the DOW dropping isn't going to bother you if you have no assets.
Not all, but many people who voted Trump don't want a stable thoughtful character who will continue with the status-quo with a few minor adjustments. They actually want a mad man who will disrupt everything. Many even want the DOW to tank – we're seeing this sentiment all over places like X right now.
I live in the UK, but I saw the same kind of thing with Brexit too. Middle-class people understood immigration and the EU was good because immigration increased GDP and it meant those who went to university could study and work abroad. But these types of arguments are not very convincing for someone who is poor and on welfare (which would be over 50%+ of UK households). Politics needs to be discussed from a different perspective. Arguing something is bad for investors or GDP isn't going to convince people who are poor when the people on the other side of the argument are saying it's going to be good for jobs and the average American. Of course whether that's actually true or not is another conversation, but that's the way arguments need to be framed.
What kind of startup? Right now it's probably easy to raise money if you're in the business of vehicle repossession, payday loans, dollar stores...
Probably right for everything except dollar stores - too much dependence on foreign manufactured, low-cost items.
If we're being serious about dollar stores then I agree: while impoverishing Americans will increase demand, turning foreign-made trinkets into luxury items will erase the supply.
Why is dollar store financing easy, and what are some current business examples?
It was just a quip. My point wasn't that targeting poor people is great business, but that Americans soon will be poorer.
A lot of regular people are going to postpone that new MacBook purchase, pass on buying junior a car, cancel their second streaming subscription, etc.
If I were to fund a company now (not that I have the funds to invest in anything bigger than a lemonade stand!) I would fund something essential, or something that prospers in hard times.
Exactly how lucrative that makes the car repossession business, or the others, in any era, I don't know.
Investors hate uncertainty and these tariffs will raise costs for a lot of startups to the point they can't be profitable.
Investors will likely increase investment in other countries or keep their money liquid for a while to see what happens.
US tech is effectively dead unless the tariffs go away, and it may still be dead if the go away in a way that feels like it could be temporary.
Best case scenario is for SCOTUS to rule they're unconstitutional in the very near future.
I think it's early to tell. But generally tariffs = more uncertainty = tighter capital. If a startup raised high before, it might have to do a down round in the future unless growth is real.
VCs that recently raised a fund and are in deploy mode will continue to deploy (assuming no issues with LP base). Funds who are maturing will have a hard time exiting from their investments. Eventually the money will dry out if we can’t get exits flowing again. Potential for M&A activity to pickup as funds look for liquidity, albeit at less than stellar valuations most likely. Long term it’s hard to predict what will happen
Here in Australia, we are now expecting 4 interest rate cuts due to likely global economic turmoil. That's up from zero before the tarriffs.
My understanding is lower interest rates = more money for VCs and investors. Digital products, which most startups are building, aren't subject to Tariffs, unless you are shipping physical copies which most software startups are not.
If that is the case, would this mean more money for startups in non-US countries?
They make interest rate cuts to try to drive money into investment, but they're making those cuts now because money is already fleeing investments.
It's like how sandbags are really useful at preventing floods from getting into your house. But if you see a bunch of sandbags being distributed, it's not because there is about to be less flooding.
If the interest rate cuts are as a response to a potential or ongoing recession then no, it doesn't really have the effect you're suggesting. Sure, borrowing costs go down... but so does revenue. Investors are unlikely to have loose wallets during a recession since even good ideas may not be able to monetize effectively.
In the short term, there will be a direct revenue hit as the result of very uncertain policies causing investors to be more cautious.
In the long-term however, I think Australia is in a strong position to thrive, assuming the tariffs don't get rolled back (admittedly, a very big assumption). Australia isn't as reliant on exports to the US as other countries. Australia is one of the few countries in the world that recorded a trade surplus against the US.
About 5% of exports form Australia go to the US. So not a big direct hit.
The biggest concern is what happens to China, where most of our exports go. Any problems there will impact Australia.
Yes. A slowdown in Chinese exports, may mean a slowdown in production, and hence a weakness in imports.
At the moment the future is uncertain, and that uncertainty spooks markets. But markets recover once certainly is restored.
Right now the uncertainty is mostly around the US consumer. Individually they're the big losers here. The goal of the tarrifs is to drive up consumer prices (to the point where local production is attractive. )
But local production takes time to create, so in the meantime they'll have to buy less. Once local production is in place, that will price output at market levels (meaning it stays expensive. )
The market for, say coffee, will fluctuate and production will rebalance somewhat. Americans will likely drink a bit less. But in the long run it'll just be normal.
So yes, the market hates an uncertain future, but certainty arrives pretty quick.
Depends largely on what you need to grow your company, in terms of the supply chain and whatnot. I suppose there are indirect costs as well, in terms of the stuff you need to buy and how those things have been influenced by these stellar economic choices made by the geniuses that be.
I would say wait for things to level-out before pursuing capital. Everything has gone to shit for the time being.