Silicon Valley is betting a Musk-inspired Trump could unleash a startup boom

• The tech industry is anticipating an upswing thanks to Trump’s election this week.
• VCs expect deregulation that could boost innovation and think Musk may influence US policies.
• Biden’s administration faced criticism for strict tech regulations, which hindered M&A.

Some venture capitalists expect Donald Trump to dial back regulation when he’s president again, which could make it easier to develop new technologies and do business in Silicon Valley. Many of these hopes are pinned on Elon Musk’s involvement in the new administration.

“The most exciting thing of all will be putting Elon in charge of government efficiency,” Ben Narasin, Tenacity Venture Capital’s founder and general partner, told Business Insider of the election outcome. “He’s going to take a chainsaw through calcified butter, and it’s going to be awesome to attack the bloat and overreach that we’ve had in the government.”

Trump has said he would consider Musk for White House roles. The Wall Street Journal reported he and Musk talked about roles in which Musk would audit various federal programs and organizations.

Musk, in turn, has proposed creating a “Department of Government Efficiency” — cheekily nicknamed DOGE, a nod to the cryptocurrency dogecoin — which he said would remove dealmaking regulations that have slowed M&A in the tech sector in recent years.

While many in Silicon Valley dislike Trump, many VCs and startup founders crave more freedom to pursue riskier new technologies, unburdened by regulation. In short, tech is stoked about this.

“Trump-Vance ticket is the first unabashedly pro-tech presidency in our nation’s history,” Augustus Doricko, the CEO and founder of the cloud-seeding startup Rainmaker, said. He expects an onslaught of tech innovation during the Trump administration.

In conversations with more than a dozen VCs and Silicon Valley executives following the election, many echoed this sentiment — including those who supported Vice President Kamala Harris in the election.

“With a major push to remove unnecessary red tape and over-regulation in key areas, we could really have a century of crazy building, innovation, and acceleration,” Aaron Levie, the CEO of the cloud company Box and a Harris supporter, posted Wednesday on X. “Excited for Elon’s efforts here.”

Mark Pincus, an early Facebook investor and the founder of Zynga, responded on X, “Effective accelerationism! E-acc,” referring to the recent Silicon Valley movement that wants technological advancements in artificial intelligence to move as fast as possible, without any guardrails.

Regulation has held Silicon Valley back in recent years

VCs during Joe Biden’s presidency have complained about how tough it’s been to get deals done. The outgoing administration has been an antitrust enforcer and put many tech mergers and acquisitions on hold that it deemed anticompetitive. This is particularly galling for VCs because they rely on selling startups in M&A deals for many of their exits and returns.

Limits on tech M&A have “caused the rate of venture-capital return of distributed proceeds to fall drastically, making new capital formation near impossible,” Louis Lehot, a top tech lawyer at the law firm Foley & Lardner, said. Silicon Valley is looking for a relaxing of the government’s stance here “to enable exits and new capital formation, which is the cycle of innovation,” he added.

For example, regulatory pressure had dampened dealmaking at Google, with the tech giant abandoning two prospective purchases this year, including of the cybersecurity startup Wiz, which would have been one of the tech giant’s biggest-ever acquisitions.

The US also opened antitrust inquiries into Microsoft and Nvidia earlier this year over their dominance in the hot AI space. The Federal Trade Commission is investigating Microsoft’s acqui-hire of Inflection AI, and the Department of Justice is looking into Nvidia’s acquisition of the Israeli AI startup Run:AI.

While some lawmakers say that allowing a few companies to influence the majority of AI research, development, and monetization poses an economic risk, many VCs have cried foul and accused the FTC’s commissioner, Lina Khan — who has frequently sued to block mergers — of an antibusiness bent and say it’s trickled down to fewer closings of startups deals.

Investors have also been critical of what they call unclear rules for cryptocurrency under Biden. Many VCs and founders in the space donated to Trump and other Republican candidates whom they consider more favorable toward crypto technologies and markets.

VCs are now hopeful that Trump could roll back some antitrust and crypto policies that a Harris administration may have continued, though nothing is certain about the incoming administration’s approach.

Vice President-elect JD Vance, a former VC, has publicly said that Khan is “doing a pretty good job,” referring to her antitrust enforcement with Big Tech companies. At the end of Trump’s first term, regulators launched antitrust investigations into Big Tech companies, including Amazon, and filed antitrust lawsuits against Google and Meta.

“At a high level, we expect Trump to cut corporate taxes and regulations, helping startup M&A and investment,” Mason Angel, a general partner at Industrious Ventures, said. “We may see new acquisition efforts by big tech with a new FTC director.”

Musk’s influence could also help slim down the government’s involvement in tech deals, these VCs told BI.

“Elon is a positive force who’s had to run multiple companies that are heavily regulated, so he has a realistic view; since he’s lived it, he can be influential,” Narasin said of Musk’s track record of building Tesla, SpaceX, and xAI. “He’s pro-startup, pro-business, pro-everything that will help the US population. A good, healthy economy is good for everybody.”

VCs anticipate an innovation boom

America is a country of entrepreneurs, and that’s especially true in Silicon Valley. Some VCs and founders say that having an entrepreneur like Musk influencing the Trump administration and potentially wiping away regulations will bring prosperity to the industry.

Indeed, the stock market responded exuberantly to Trump’s decisive win this week, which could eventually be a boon to venture firms seeking investments. Limited partners such as pensions and endowments have been choosier recently thanks to high interest rates and few exit options for startups. But their return to funding venture firms would, in turn, mean that more founders are building and getting funded.

“I would like to see the President given the power to unilaterally remove, or at least streamline, regulations around major projects or economic areas that will make it possible to actually build new things,” Ben Thompson, a tech blogger, wrote after the election. “There needs to be a way to cut through all of the red tape that has accumulated.”

Rainmaker’s Doricko said: “I think the next four years will be imbued with aspirational megaprojects and visionary initiatives without precedent: new cities, lunar and Martian colonization, free electricity, weather control.”

Angel, whose VC firm invests in the space, industrial, and defense sectors, said those industries would experience strong growth.

“Trump created the Space Force in 2019, and his close relationship with Elon Musk will bring renewed attention and government investment into the field,” Angel said. “Same goes for the US industrial and defense bases.”

As various sectors within the tech industry ebb and flow, VCs say they’re optimistic about the idea of having one of their own helping to call the shots at the federal level.

“Elon’s going to be an enormously positive monster who delivers a cleaned-up, slimmed-down, pro-business government,” Narasin said, “and there will be prosperity for everybody.”