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NASHVILLE, TN -  Donald Trump during his speech at the 2024 Bit

NASHVILLE, TN - Donald Trump during his speech at the 2024 Bitcoin Conference in Nashville, TN. (Photo by Johnnie Izquierdo for The Washington Post via Getty Images)

Johnnie Izquierdo/Getty Images

Regulation

Here’s what President Trump’s initial actions could mean for VCs

President Trump, in his first week in office, took more than 200 executive actions. VCs backing energy, AI and crypto startups are watching.

Several of the more than 200 executive actions President Donald Trump enacted this week could impact venture capital.

A popular belief among venture investors is that Trump’s pro-business approach is also good for their business. But they’re also cautioning that his time in office could impact sectors differently. And key policy details remain under wraps.

Experts are zeroing in on some themes already. “The first is broadly around deregulation and loosening of antitrust restrictions and the exit opportunities that will create in the venture market,” said EquityZen head of market insight Brianne Lynch, whose company facilitates VC secondary transactions. “The second is AI deregulation and AI infrastructure investments. The third is the normalization and support of crypto.”

Unleashing energy

Case in point: the “Initial Recission of Harmful Executive Orders and Actions,” which Trump signed on Inauguration Day. It slashed former President Joe Biden’s AI safety provisions and rescinded about a dozen of his climate and energy directives.

But it did not also replace them, thus creating new areas of uncertainty for VCs instead of smooth sailing to investment returns for all.

Biden’s renewables-heavy stance included a bold blueprint to render the federal government carbon-neutral by 2050. He curtailed offshore drilling and capped methane emissions. And he directed Wall Street regulators to, for the first time, examine private sector “climate risk.”

In a move expected to benefit fossil fuel producers and their supply chains, Trump dismantled all of it. A resulting rise in domestic fossil fuel production could be a boon for decarbonization and supply chain logistics startups.

Vic Pascucci, managing general partner of Energy Capital Ventures, says the “downstream impacts” of deregulation are “going to be meaningful; they are going to be real.” His firm exclusively backs early-stage natural gas sustainability startups.

Blue states like California aren’t budging on their own emissions caps. Not to mention that the largest investors, such as Blackstone, continue to evaluate environmental risks into their due diligence.

However, startups focused on electrification, such as replacing gas stoves with electrical models at scale, will have a tougher time, expects Pascucci.

Less AI paperwork, more AI growth

Biden’s AI executive order mandated that certain AI companies—namely those running large language models—share proprietary data with the government.

In Lynch’s view, even in the absence of clarity from the Trump administration, AI infrastructure startups are on more solid ground.

She points to OpenAI’s desire to build and operate its own centers. OpenAI and other large players with plenty of cash could snap up picks-and-shovels startups to help them achieve these ambitions.

SuRo Capital CEO Mark Klein says Trump “appears, obviously, to deregulate whatever he can deregulate,” adding that the administration is “going to try to be, ultimately, as supportive as they can to have AI and AI development in the US.”

SuRo, a publicly-traded firm that provides exposure to later-stage private companies, has recently shifted one-third of its concentrated portfolio into AI bets, shares Klein.

While he’s bullish on AI, privacy remains a big question mark.

“The fears that people still have is the safety of their information and having things run through external models, as opposed to doing something in-house,” he said. “I don’t know where the clarity comes from, and I don’t know where the comfort comes from. It’s a business issue, as well, for everybody, whether it’s going to be put in as a regulation or folks are just going to have to solve for this.”

Promoting crypto

Trump, as expected, selected crypto-friendly appointees in key slots.

On his first day on the job, Trump appointed commissioner Mark Uyeda as acting chair of the SEC until nominee Paul Atkins gets Senate approval. Atkins, also a former commissioner, has already indicated he plans to undo predecessor Gary Gensler’s crypto crackdown.

One of Uyeda’s first actions was creating an SEC “crypto task force.” It’s led by commissioner Hester Peirce, a staunch industry advocate.

That said, Trump’s pro-crypto attitude is also likely to increase demand for energy. Bitcoin mining companies, for example, are expected to take in significant cash this year to expand their operations. And they’re likely to further strain the US’ aging electrical grid. Experts have similar concerns about the boom in AI Trump is paving the way for.

But despite the new president clamping down on green energy efforts, Lynch says renewable energy sources are likely to gain from rising power demands from crypto and AI.

“While there’s a pullback from some of these green initiatives, you’ll also be able to allow AI to grow,” she said. “And to power these data centers, you need a ton of energy, and traditional energy sources aren’t going to be enough to make that happen.”

NASHVILLE, TN - Donald Trump during his speech at the 2024 Bitcoin Conference in Nashville, TN. (Photo by Johnnie Izquierdo for The Washington Post via Getty Images)

Johnnie Izquierdo/Getty Images

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  • Michael Bodley Headshot
    Michael Bodley is a senior venture capital reporter at PitchBook News, covering top fund managers and developments affecting limited partners. Based in New York, Michael previously led TheStreet.com’s crypto coverage. He also reported for Hedge Fund Alert after breaking into journalism at the San Francisco Chronicle. Originally from Baltimore, Michael graduated from Elon University.
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