Uncle Sam Is Disrupting the Venture Capital World
Biden is tying startup funding to his national and social policy priorities. That’s probably an improvement over Silicon Valley values.
It’s not just about the chips.
Photographer: Qilai Shen/Bloomberg
Higher interest rates, slumping stock prices and corporate America’s shift in focus from growth to profitability has taken the air out of one of the main drivers of innovation and new company formation in recent decades: tech startups funded by venture capital . At the same time, the US government passed a host of bills last year that create new funding streams for manufacturing and technology industries — with strings attached . As a result, economic growth this decade could be driven less by Silicon Valley values and more by the values of the administration setting the terms for the new funding.
As we follow this shifting funding regime, it's worth thinking about what’s diminishing in importance — Silicon Valley culture — and what came out of it over the past 20 years. Venture capital is an inherently risky endeavor where most new company ideas fail, so for a VC fund to justify its existence it needs its few winners to be enormously successful.