Silicon Valley Eyes a Windfall From Trump’s Plans to Gut Regulation

SAN FRANCISCO - Prominent venture capitalists and start-up founders see Donald Trump’s victory as heralding a golden age for innovation -- anticipating a major boost to tech businesses from lucrative government contracts and the rollback of regulations they consider onerous.

The tech industry’s potentially unbridled future under the second Trump administration energized some Republican donors at a Las Vegas conference this week hosted by the Rockbridge Network, a conservative political advocacy group co-founded by Trump’s vice president and former venture capitalist, JD Vance, according to a person familiar with the meeting.

Those discussions took place behind closed doors but some tech investors, founders and executives are celebrating publicly.

“The regulatory cutbacks are going to be profound,” Cathie Wood, the CEO of investment firm Ark Invest, a major shareholder in Elon Musk’s electric vehicle company Tesla, said in a YouTube video Saturday. She predicted “explosive GDP growth” and said Trump policies favorable to cryptocurrency would unlock a wave of internet innovation.

The Rockbridge meeting in Las Vegas this week was attended by prominent venture investor and Trump supporter Marc Andreessen, as well as Trump’s pick for White House chief of staff, Susie Wiles. Tech industry insiders were in high spirits, according to the person familiar with the meeting, who spoke on the condition of anonymity to share private discussions.

Related:What a GOP Sweep of Congress Would Mean for Tech Policy

“These people are just so hyped up by the fact that they’re going to be able to do a lot of things and move a lot faster -- definitely around AI and energy,” the person said.

Trump is considering pro-crypto figures for key financial agencies and has said he will rescind nascent rules on AI enacted by President Joe Biden. Such changes will leave start-ups and investors an open playing field to “let us nerd out and develop our business,” the person said.

Silicon Valley’s most influential start-up incubator, Y Combinator, encouraged company founders Monday to pitch “notoriously hard” ideas, listing areas of business that mostly depend on cooperation or support from government or regulators. They include selling software to federal agencies and police departments, developing financial tech products for regulated sectors like insurance or investment banking, and bringing manufacturing back to the United States.

“Everything is on the table!” one of the firm’s partners said in a YouTube video.

The wide-ranging optimism suggests that many in Silicon Valley are confident that changes made under Trump’s administration will favor venture-backed tech start-ups -- despite the president-elect’s unclear policies on tech and his populist rhetoric.

Related:Accuracy, Bias in AI Concerns Most CEOs: IBM Study

Tech industry hopes for Trump’s return to the White House are coalescing around a slogan: “It’s time to build.”

The phrase was first popularized in 2020 by Andreessen, whose venture firm Andreessen Horowitz backed Musk’s bid to buy Twitter. He was among the most prominent tech leaders to endorse Trump after the failed assassination attempt on the Republican nominee in July.

Andreessen initially adopted his motto to describe the need for ambitious investments in infrastructure and science during the coronavirus pandemic. He and others in the tech industry now suggest that the radical government shake-up Trump and his close adviser Musk have promised will enable the tech industry to realize that vision.

“I think the winners are going to be … a lot of these new start-ups that are springing up,” Palmer Luckey, the founder of defense tech company Anduril Industries and a longtime Trump supporter, said on Bloomberg Television last week.

Luckey said he is in touch with members of Trump’s transition team and thinks the president-elect is eager to make defense spending more efficient, which would benefit upstarts more than established contractors.

Related:AI’s Effect on the US Economy Will Be Wildly Uneven

On Tuesday night, Trump announced that Musk, who donated at least $118 million to support his campaign, and former Republican presidential candidate Vivek Ramaswamy would run a vaguely defined body called the “Department of Government Efficiency.” Despite that name, it would be established outside of government.

The group would work with the White House and the Office of Management and Budget to bring about “drastic change,” a statement from Trump said, cutting regulations, government spending and the federal payroll. His aides are exploring strategies to implement its recommendations with or without congressional approval.

The U.S. government has passed relatively little technology regulation in the past 10 years. Tech leaders have nonetheless pushed back on stepped-up antitrust enforcement and proposals to regulate AI.

Federal investigations and lawsuits have alleged anticompetitive behavior or challenged mergers by tech companies including Amazon, Apple and Google. Amazon founder Jeff Bezos owns The Washington Post.

Major acquisitions did take place during Biden’s term, but tech executives have complained in particular about Federal Trade Commission chief Lina Khan’s scrutiny of their industry, which held up some deals.

Selling start-ups to Big Tech companies is a major way for venture capitalists to get a return on their investments.

“She will be fired soon,” Musk said in a post on X referring to Khan the week before the election.

Despite the excitement among some tech leaders, others in Silicon Valley are concerned.

The majority of voters in the San Francisco Bay Area, one of the most deeply Democratic areas in a reliably blue state, voted for Vice President Kamala Harris. Trump and his supporters’ views on immigration and diversity engendered protest from some tech workers and executives, many of whom are immigrants, during his first term. Workers in the industry have been more muted in response to Trump’s latest win.

Some of the loudest enthusiasm for Trump in Silicon Valley comes from a small but increasingly influential part of the industry that focuses on “hard tech.”

The term generally refers to areas such as self-driving cars, satellites and military technology that require physical as well as digital innovation. That ethos is celebrated at events like July’s Reindustrialize Summit in Detroit, aimed at improving ties between the tech, manufacturing, military, and financial sectors.

Progress on hard-tech ventures can require long-term funding such as that provided by government grants or contracts and on winning the approval of federal regulators.

Musk’s SpaceX has received massive government contracts by beating out older competitors, providing a blueprint that many hard-tech entrepreneurs seek to follow in areas such as military or border surveillance technology - both were listed as government investment priorities in the 2024 Republican Party platform.

Leaders of military tech start-ups often complain that government rules on defense procurement are too complex, disadvantaging their companies. Restrictions initially designed to prevent corruption have become “illogical and wild,” Ben Horowitz, Andreessen’s investment partner said on a podcast the firm released Tuesday about the tech investing landscape after Trump’s win.

The defense technology sector relies on its products being incorporated into U.S. military strategies, such as for resisting China’s growing power in the Pacific with air and sea drones. Trump has spoken skeptically of defense pacts with allies that he says take advantage of the United States, but he named China hawks this week as picks for foreign policy roles who are likely to advocate for continued military spending.

Luckey, the Anduril co-founder, said last week that he expected procurement strategy to become more favorable to defense start-ups like his own. “We did well under Trump in his first administration, and we did even better under Biden and his administration,” he told Bloomberg. “I think we’re going to do even better now.”