Political Heat on the Fed: Trump’s Threats Shake the Market
Week of April 21st, 2025
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STARTUPS
ROUNDS AND UNICORNS
The Week’s Biggest Funding Rounds: Safe Superintelligence’s $2B Raise Leads The Way (Crunchbase, 5 minute read)
Safe Superintelligence (AI): Raised $2 billion at a $32 billion valuation led by Greenoaks Capital. Co-founded by former OpenAI chief scientist Ilya Sutskever, the lab focuses on developing safe AI systems. This is their second major raise in under seven months
Mainspring Energy (Energy): Secured $258 million in Series F funding led by General Catalyst. The company builds low-emission generators to power U.S. data centers, with $813 million raised since its founding in 2010
Auradine (Blockchain/AI Infrastructure): Raised $153 million in Series C funding led by StepStone Group. The startup develops sustainable Bitcoin mining and AI data center networking solutions. Founded in 2022, it has raised over $300 million
Glycomine (Biotech): Closed a $115 million Series C round led by Abrdn, Advent Life Sciences, and CTI Life Sciences Fund. The company is developing treatments for orphan diseases and plans to enter phase 2b trials for its lead therapy
Science (Biotech/Neurotech): Raised $104 million led by Khosla Ventures. A Neuralink competitor, the company is developing brain and retina implants for neurological and eye disorders
March Mints 11 New Unicorns, As $200B Is Added Through Up Rounds And Board Posts Strong Exits (Crunchbase, 6 minute read)
In March, eleven new companies joined the Crunchbase Unicorn Board, contributing approximately $16 billion in new value, while existing unicorns added another $200 billion through valuation increases. The month also marked a strong period for exits, with seven unicorns — previously valued at a combined $48 billion — leaving the board through IPOs and M&A deals
Massive valuation jumps were led by OpenAI, which reached $300 billion, adding $143 billion in just six months, and Anthropic, which grew to $61.5 billion, up $43 billion from its last valuation
Of the 11 new unicorns, nine are U.S.-based, with one each from Mexico and Hong Kong
Key new unicorns include Plata (Mexico, $1.5B), Celestial AI ($2.5B), Fleetio ($1.5B), Insilico Medicine ($1B), and Nerdio ($1.2B)
Startup funding hit records in Q1. But the outlook for 2025 is still awful (TechCrunch, 4 minute read)
U.S. startups raised $91.5 billion in VC during Q1 2025, an 18.5% increase over the previous quarter and the second-highest quarterly total in the past decade. On the surface, this appears to signal renewed investor enthusiasm. However, analysts warn the headline numbers mask deeper issues. Analysts had expected a rebound in IPOs and M&A activity in 2025 to unlock liquidity and reignite the startup ecosystem. Instead, stock market instability and recession fears—partly triggered by President Trump’s tariff policies—have led to IPO delays (e.g., Klarna, Hinge)
Funding Concentration Skews the Numbers: 44% of all VC funding in Q1—$40 billion—went to OpenAI. Another 27% came from just 9 companies with mega-rounds
Startups may continue avoiding IPOs amid a liquidity drought, forcing many to accept down rounds or sell at steep discounts
Despite cost-cutting, others are “hanging on by a thread,” with more shutdowns likely in 2025 if a recession hits
AI eats up 58% of global venture dollars as fear of missing out drives up dealmaking (Pitchbook, 3 minute read)
AI Dominates VC Funding in Q1—but Hype May Outpace Reality AI and machine learning startups captured the lion’s share of venture capital in Q1 2025, accounting for 57.9% of global VC investment. In North America, 70.2% of total deal value flowed into the AI/ML sector. In total, AI companies raised $73.1 billion globally in Q1—more than half of 2024’s entire annual funding. A massive portion of that—$40 billion—came from a single deal: OpenAI’s latest round, led by SoftBank
The rapid pace of technological advancement is fueling urgency among investors, keeping deal momentum strong despite broader market uncertainty
Nine mega-deals (excluding OpenAI) contributed to nearly 27% of all U.S. deal value, suggesting smaller startups are increasingly crowded out
INDUSTRY
Startups aren’t abandoning Delaware—yet (Pitchbook, 4 minute read)
While Delaware has long been the preferred legal home for U.S. corporations due to its established legal system and investor-friendly statutes, a small but growing number of high-profile companies, led by figures like Elon Musk, are shifting to Nevada and Texas. These states are perceived as more favorable to founders and offer less exposure to minority shareholder litigation
Companies like Tesla and Dropbox have relocated their legal domiciles from Delaware to Nevada, driven by perceptions of greater founder control and legal leniency
Though still small, interest among startups in incorporating in Texas and Nevada is growing
Figures like Sequoia Capital and Bill Gurley are vocally supporting the shift, while legal experts caution that Delaware’s legal predictability remains a strong advantage
ECONOMIC SNAPSHOT
Federal Reserve Holds Rates Steady Amid Inflation Fears from Tariffs (NY Post, 4 minute read)
Federal Reserve Chair Jerome Powell confirmed that the Fed will maintain its current interest rate range of 4.25%–4.50%, resisting mounting political pressure to cut rates. Speaking at a business journalism conference, Powell emphasized that the central bank is carefully monitoring the inflationary effects of new tariffs announced by President Donald Trump. While financial markets are pricing in possible rate cuts later this year, Powell said it was too early to determine whether monetary easing is appropriate, especially as tariffs risk pushing consumer prices higher
The Fed kept interest rates steady, maintaining a cautious approach
Chair Powell cited risks of inflation driven by newly implemented tariffs
Despite pressure from the Trump administration and market volatility, Powell stated the Fed will not act prematurely
Trump renews attack on Federal Reserve Chair Powell, Dow Jones tumbles 1,000 points (AP, 4 minute read)
President Donald Trump escalated his attacks on Federal Reserve Chair Jerome Powell, calling him a “major loser” and demanding immediate rate cuts to boost the economy, despite inflation still exceeding the Fed’s 2% target, Trump argued there’s “virtually no inflation,” though food prices have spiked and Powell warned of a complex scenario where Trump’s tariffs could both worsen inflation and slow growth
His comments triggered sharp market reactions: the Dow Jones fell over 1,000 points, the S&P 500 dropped nearly 3%, and the dollar sank to a three-year low
The Nasdaq Composite fell over 3%, with Tesla and Nvidia down more than 5%
The yield on 10-year Treasuries rose to 4.37%, a sign investors are uneasy with rising political risks and tariff-related inflation
Trump also floated firing Powell, a move legal experts say would spark a constitutional showdown, as Powell’s term runs through May 2026
JPMorgan Raises U.S. Recession Risk to 60% Amid Tariff Turmoil (NY Post, 5 minute read)
JPMorgan has raised its forecast for a U.S. recession to 60%, citing the destabilizing impact of President Donald Trump’s newly announced tariffs. The bank, previously projecting a 40% chance, attributes this sharp increase to what it calls “decisively less business-friendly” trade policies, which function as significant tax hikes on both consumers and businesses. According to the bank, these tariffs—set as high as 46% on countries like Vietnam and 34% on China—are expected to raise the U.S. average tax rate by approximately 22 percentage points, to an estimated 24%, potentially marking the largest tax hike since World War II
JPMorgan warns that if sustained, these policies could push both the U.S. and global economies into recession
Other major institutions have echoed these concerns, with Goldman Sachs also raising its recession probability from 20% to 35% due to deteriorating business and household confidence
Markets have reacted negatively, with stock indices in freefall and growing fears of rising unemployment, stalled growth, and resurging inflation
China warns nations against 'appeasing' US in trade deals (BBC, 3 minute read)
As the U.S. intensifies its global tariff strategy, China has issued a stern warning that it will retaliate against any country that enters trade agreements with the U.S. at Beijing’s expense. This follows reports that the U.S. is pressuring dozens of countries—including Japan, South Korea, and India—to restrict trade with China in exchange for exemptions from sweeping new tariffs. China’s Commerce Ministry declared it would “resolutely take countermeasures”
Meanwhile, the Trump administration has imposed tariffs of up to 145% on Chinese imports, with additional levies potentially pushing rates on some products to 245%
In response, China has imposed its own retaliatory tariffs of up to 125%
The U.S. argues the tariffs will boost domestic manufacturing and tax revenue, but critics warn the economic disruption could take years to resolve
Why everyone is suddenly so interested in US bond markets (BBC, 6 minute read)
Global stock markets have stabilized following recent turbulence sparked by U.S. trade tariffs, but attention has shifted to the U.S. bond market, where yields have experienced unusually sharp swings. After President Trump’s April 5th tariff escalation, the yield on the 10-year U.S. Treasury jumped from 3.9% to 4.5%, while the 30-year yield neared 5%—a move of over 70 basis points, which is considered highly significant in bond markets
The bond sell-off pressured the Trump administration, which responded by announcing a 90-day pause on tariff hikes for all countries except China
Although yields have settled slightly, they remain elevated, suggesting long-term concerns
Meanwhile, China, the second-largest foreign holder of U.S. Treasuries after Japan, holds over $800 billion in U.S. debt
IMPACT & CLIMATE RESILIENCE
Here are all the tech companies rolling back DEI or still committed to it — so far (TechCrunch, 5 minute read)
Across the U.S., companies are scaling back or eliminating Diversity, Equity, and Inclusion (DEI) programs in response to increasing legal and political pressure from the Trump administration, including a directive from Attorney General Pam Bondi to investigate and penalize federally funded companies with DEI initiatives deemed illegal. Trump also signed an executive order banning DEI in the federal government, with support from Elon Musk
The private sector has followed suit, with companies like McDonald’s, Ford, Target, and Goldman Sachs rolling back or removing DEI commitments, while entities like NASA and PBS have scrubbed DEI-related language or shut down DEI offices entirely
In the tech industry, giants like Google, Meta, OpenAI, Salesforce, and Tesla have either eliminated DEI programs, removed diversity language from public reports, or disbanded DEI teams
Meanwhile, firms like Apple, Nvidia, and Workday continue to voice support for DEI, though many have altered public messaging or removed diversity metrics from financial filings
IPO & EXITS
Global M&A Startup Dealmaking Sees Year-To-Year Boost In Q1 (Crunchbase, 4 minute read)
Dealmaking involving VC-backed startups rose 26% year-over-year in Q1 2025, reaching 550 M&A deals, up from 435 in Q1 2024, but slightly below Q4 2024’s 563 deals. U.S.-based VC-backed startups followed a similar trend, with 300 deals — a 40% increase from Q1 2024 and nearly flat compared to 295 in Q4. While overall deal volumes held steady, the quarter featured major headlines, including Google’s $32 billion acquisition of Wiz, marking the largest-ever purchase of a venture-backed private company
Despite early optimism following the White House transition — with expectations of reduced regulatory friction — concerns over trade tensions, market volatility, and recession risk have dampened enthusiasm
For VCs, DPI (distributed to paid-in capital) remains a priority, but current market instability has made large exits through M&A less likely
As strategic acquirers grow more cautious amid valuation shifts, many industry leaders advise patience
The Longer IPOs Delay, The Less Likely Debuts Will Happen (Crunchbase, 5 minute read)
Going public is a costly, strategic endeavor, often requiring years of preparation and millions in investment. For high-profile companies like Klarna and StubHub, recent decisions to delay IPO roadshows are largely attributed to market volatility, including a week when the Dow Jones dropped over 1,000 points—its third-largest single-day point loss in history. Between 1997–2021, 1 in 6 IPO filings on the Nasdaq and NYSE were withdrawn. That represents hundreds of billions of dollars in unrealized capital
Klarna, StubHub, and Cerebras Systems have postponed IPOs in recent weeks. The primary reason: poor public market conditions that could significantly reduce offering valuations
Nonetheless, markets have recently bounced back from near-term lows
This has encouraged some companies like Figma, which re-entered the IPO pipeline with a confidential filing after its $20B acquisition by Adobe was blocked
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Happy reading,
AI8 Ventures’ Research & Investment Team
