Trade War Fallout Hits Home
Week of June 2nd, 2025
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STARTUPS
ROUNDS AND UNICORNS
The Week’s Biggest Funding Rounds: Another Billion-Dollar AI Raise Leads List That Includes Lots Of Biotech And More AI (Crunchbase, 5 minute read)
Grammarly (Artificial Intelligence): Raised $1B from General Catalyst’s Customer Value Fund. Founded in San Francisco, Grammarly provides an AI-powered writing and productivity assistant and will use the funding to scale sales, marketing, and pursue strategic acquisitions
Neuralink (Neuroscience):Raised $600M at a $9B pre-money valuation. Based in Fremont, California, Neuralink is developing brain-computer interfaces, currently in clinical trials for people with quadriplegia
ClickHouse (Analytics): Raised $350M (Series C) led by Khosla Ventures, plus a $100M credit facility from Stifel Bank and Goldman Sachs. Headquartered in Palo Alto, ClickHouse builds analytics and machine learning tools
Grin Therapeutics (Biotech): Raised $140M (Series D), including $65M from Angelini Pharma and $75M from Blackstone Life Sciences. Based in New York, Grin develops therapies for severe neurodevelopmental disorders
Snorkel AI (Artificial Intelligence): Raised $100M (Series D) at a $1.3B valuation led by Addition. Founded in 2019 in Redwood City, Snorkel builds tools for evaluating and fine-tuning specialized AI systems
A Vast Number Of Well-Funded Startups Haven’t Raised New Funding Since 2021 (Crunchbase, 4 minute read)
A growing number of heavily funded U.S. startups that raised significant capital during the 2021 venture boom are now navigating a prolonged capital drought. Around 280 startups that each raised $100 million or more haven’t secured new funding rounds since 2021. Together, these companies amassed approximately $77.4 billion in equity funding, a figure that rivals the average global quarterly venture funding total in 2023, highlighting the scale of capital concentrated in this cohort
Many of these companies were once considered high-flying unicorns, especially in sectors like connected fitness, consumer tech, e-commerce, and micromobility, which have since fallen out of favor
The funding pause doesn’t necessarily signal failure; many are simply adapting to leaner times with changing investor preferences and valuation expectations
Ultimately, the post-2021 startup landscape reflects a broader truth: even unicorns aren't immune to market cycles, and while some may fizzle, others might still deliver long-term value
AI Share Of Startup Funding Fluctuates Sharply By Stage (Crunchbase, 3 minute read)
U.S. AI startups are capturing a dominant share of venture funding across all stages, with a clear concentration at the late stage, which accounted for 61% of labeled AI-related deals over the past year. Early-stage and seed-stage funding made up 30% and 38%, respectively. This trend reflects both a maturing segment and the capital-intensive demands of scaling top players in the space
Notable late-stage rounds include Databricks’ $10 billion Series J, xAI’s $6 billion round, and Anthropic’s $3.5 billion raise
While this could suggest a market shift toward consolidation, early-stage investors remain highly active, particularly in areas like agentic AI and AI-enabled healthcare
The smaller early-stage share may even be a positive sign, indicating startups are launching with greater capital efficiency—though that may change as they grow and require more funding
Venture funding is creating a global AI divide, even as sovereign wealth funds and tech unicorns try to bridge the gap (Fortune, 5 minute read)
Global appetite for AI is rising, but access to capital remains deeply unequal. While nearly 75% of all global venture investment in Q1 2025 went to U.S. companies—largely driven by massive AI deals—many emerging regions are struggling to keep pace. At a summit in Malaysia, leaders from Southeast Asia, the Gulf, and China expressed strong interest in AI but raised concerns about affording its infrastructure, especially given the energy demands of large AI models
The UAE has partnered with OpenAI on a multi-billion-dollar data center initiative, but investment mionister Mohamed Alsuwaidi admitted most emerging regions still lack investable infrastructure
OpenAI, through its new "AI for Countries" initiative, plans to supply AI infrastructure to governments, offering compute power and platform support in exchange for local cooperation
Despite global enthusiasm, economic imbalance may leave many countries dependent on U.S. firms for AI development
The Rise Of Megafunds — A Decade In The Making (Crunchbase, 5 minute read)
Over the past decade, venture capital has grown massively, with billion-dollar-plus “megafunds” becoming increasingly common. Despite the inherent paradox that the venture asset class doesn’t scale as well as the startups it funds — more capital doesn’t necessarily produce more big wins — firms have consistently raised larger and larger funds, particularly from 2015 through 2022
Although fundraising slowed in 2023 due to valuation corrections and unused capital, 2024 saw a 60% rebound, and 2025 levels remain steady
Leading firms like Insight Partners and General Catalyst top the charts, often combining venture, growth, debt, and secondary strategies
Despite massive dry powder and continued investor appetite, the IPO and M&A markets remain sluggish, leaving a large pipeline of unicorns in limbo
ECONOMIC SNAPSHOT
US economy shrank at 0.2% rate in first quarter (Financial Times, 3 minute read)
The U.S. economy contracted by an annualized 0.2% in Q1 2025, marking the first GDP decline since 2022, according to revised data from the Bureau of Economic Analysis. The contraction, down from a 2.4% expansion in Q4 2024, was largely driven by a surge in imports as businesses rushed to stock up ahead of Trump’s "Liberation Day" tariffs announced in early April. This import spike was not matched by inventory growth or consumer demand, which slowed due to higher prices and trade-related uncertainty
While investment increased slightly, consumer spending—especially in services and housing—fell
Since 2019, U.S. consumer prices have risen over 25%, weighing on sentiment and reducing discretionary spending
The IMF downgraded U.S. GDP growth forecasts to 1.8% for 2025, citing trade instability
Why has a US court blocked Donald Trump’s tariffs – and can he get round it? (The Guardian, 5 minute read)
On Thursday, 29th 2025, Donald Trump’s trade agenda suffered a major setback after a U.S. federal court ruled that his April 2 “Liberation Day” tariffs—based on the International Emergency Economic Powers Act (IEEPA)—were illegal, but an appeals court allowed them to remain in place for now. The ruling challenges the legality of sweeping tariffs Trump imposed on imports from China, Mexico, Canada, and globally, arguing that the White House failed to meet the legal threshold of citing an “unusual and extraordinary threat.” The case was brought by the Liberty Justice Center and multiple U.S. states. Other tariffs imposed under Section 232 of the Trade Expansion Act, such as on steel, aluminum, and cars, remain unaffected
Markets welcomed the court’s decision as a possible curb on tariff escalation, though it also adds to broader volatility
Legally, Trump still has other tools to pursue trade restrictions—including Sections 122, 232, 301, and 338 of various trade acts—but these mechanisms are generally slower to implement
The decision also has fiscal implications: Trump was counting on tariff revenue to help offset the $5 trillion cost of his new tax plan, the One Big Beautiful Bill Act, recently passed in the House
US goods imports tumble 20% in April as Donald Trump’s tariffs disrupt trade (Financial Times, 4 minute read)
U.S. goods imports fell by a record 19.8% in April, totaling $276.1 billion, the sharpest monthly drop since data collection began in 1992, according to the Census Bureau. This plunge followed a March import surge ahead of President Trump’s April 2 “Liberation Day” tariffs and reflects growing uncertainty in global trade relationships due to the administration’s erratic tariff policy
The steep drop in imports, especially consumer goods (-32%), industrial supplies (-31%), and automobiles (-19%), highlights the disruptive effect of sweeping levies, including a universal 10% tariff and targeted tariffs on Chinese goods
The sharp fall in imports is expected to boost Q2 GDP: The Atlanta Fed raised its forecast to 3.8%, while JPMorgan increased its projection to 4%, though it cautioned that trade swings distort true economic trends
Consumer spending also slowed to 0.2% growth in April, down from 0.7% in March, signaling broader caution in the economy
China hits back after Trump claims it is 'violating' tariff truce (BBC, 6 minute read)
Trade tensions between the U.S. and China escalated again after President Donald Trump accused China of violating a recent tariff truce agreed upon during Geneva talks. While both countries had agreed to temporarily reduce tariffs—cutting U.S. tariffs on Chinese goods from 145% to 30% and China’s retaliatory tariffs from 125% to 10%—Trump claimed China failed to roll back non-tariff barriers such as blacklisting U.S. firms and restricting rare earth exports
U.S. Trade Representative Jamieson Greer echoed the concern, saying China was "slow-rolling" its compliance, prompting the U.S. to closely monitor progress
In response, China denied wrongdoing and accused the U.S. of discriminatory export controls, particularly in the semiconductor sector
The broader U.S.-China trade relationship remains unstable. While talks are continuing, U.S. Treasury Secretary Scott Bessent said negotiations had “stalled,” although future high-level discussions are still expected
US to double tariffs on steel and aluminium imports to 50%, Trump says (BBC, 4 minute read)
President Donald Trump announced a doubling of tariffs on steel and aluminum imports from 25% to 50%, effective Wednesday, aiming to boost domestic steel production and reduce reliance on foreign suppliers like China. Speaking at a rally in Pittsburgh, he also touted a $14 billion investment deal between U.S. Steel and Japan’s Nippon Steel—though details and approval remain unclear. Trump pledged no layoffs, no outsourcing, and a $5,000 bonus for steelworkers
About 25% of steel used in the U.S. is imported, mainly from Canada, Mexico, and Asia
Trump’s tariffs on steel and aluminum remain untouched by ongoing legal battles over his broader tariff powers, many of which have rattled global markets and strained U.S. trade relations
Meanwhile, Trump accused China of violating a recent tariff truce, while China urged the U.S. to lift discriminatory trade barriers
IPO & EXITS
Shein’s embattled IPO signals mounting troubles for fast fashion giant (CNBC, 5 minute read)
Shein’s plans for an international IPO have hit another obstacle, as the Chinese-founded fast fashion giant shifts its focus from London to Hong Kong after failing to secure approval from Chinese regulators. The London listing had been expected to provide Shein with global legitimacy and access to Western capital, but analysts say the move to Hong Kong was predictable due to mounting scrutiny around the company’s labor practices, business ethics, and regulatory concerns
The decision is seen as a blow to London’s efforts to revitalize its IPO market, which has struggled with company defections and weak deal flow
Pressure to lower Shein’s valuation in the U.K. — reportedly from $50 billion to $30 billion — may also have influenced the pivot
A Hong Kong listing could yield a higher valuation and aligns with renewed investor interest in the region
The Chime IPO: what investors should know about its $31 a share private market valuation and more (Fortune, 5 minute read)
Chime, the once high-flying fintech valued at $25 billion in 2021, is preparing for an IPO amid a significantly lower valuation and a more competitive market landscape. The company, which offers fee-free checking and savings services to lower-income U.S. consumers, has seen its valuation drop by more than 50%, with recent secondary market trades pricing shares around $31 to $31.50—down from $69.07 in its last funding round. Chime plans to list on the Nasdaq under the ticker CHYM, with its roadshow expected to begin soon
Despite operating losses on an annual basis, Chime reported $13 million in net income in Q1 2024 and grew revenue by 31% to $1.7 billion for the full year
However, analysts remain cautious, citing limited profitability progress and mounting competition from players like Cash App, which boasts a more diversified revenue stream
The US direct VC secondary market is swelling (Pitchbook, 4 minute read)
The U.S. venture capital direct secondaries market is expanding, with PitchBook estimating its value at $60 billion in 2025, up from $50 billion in 2024. This growth is driven by inflated valuations of top unicorns and increased demand for liquidity amid ongoing market volatility. While average premiums hit 6% and median premiums reached 3% in Q1 2025 many startup secondary shares are still selling at 30–60% discounts from prior valuations
Tariff-driven uncertainty and tighter liquidity have prompted more LPs to exit positions, especially in lower-tier companies
Inflows into VC-focused secondaries funds have doubled since 2022, signaling rising investor appetite, but mostly for high-quality names
As volatility persists, concentration in the secondary market is expected to increase, favoring top-tier firms
WHAT A TIME TO BE ALIVE
Corporate America's retreat from DEI has eliminated thousands of jobs (NPR, 9 minute read)
Former President Trump’s re-election and executive orders targeting DEI as "illegal" accelerated a growing backlash that had been brewing since the post-George Floyd reckoning, when corporations had rushed to invest in inclusive workplaces. Now, major companies like Verizon, Walmart, and Meta are disbanding DEI teams or rebranding them under neutral terms like "belonging" or "engagement," often while continuing to claim commitment to inclusion
Since early 2023, over 2,600 DEI-related jobs have been eliminated in the U.S., as companies reduce or rebrand their initiatives under different terms like “belonging” or “culture”
This marked a 40% year-over-year decline in DEI-related job postings, even as overall job postings fell by just 10
While some businesses continue to express commitment to inclusive cultures, they are hiring fewer DEI professionals: one-third of DEI professionals employed in 2022 no longer held their roles in 2024
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