Venture capital ties could shift U.S. government policies

The VC effect on U.S. policies, government

Venture capitalists tend to focus on innovation and, within the Trump administration, will likely have "an instinct to try to move toward deregulation" as a way to promote innovation and growth, Calidas said.

Indeed, Trump in his first week in office issued an executive order halting federal agencies from introducing new rules and regulations and repealed former President Joe Biden's executive order on artificial intelligence safety and security. He's also paused fund disbursement for certain provisions within the Inflation Reduction Act of 2022 (IRA) and the Infrastructure Investment and Jobs Act. The IRA provides clean energy incentives to businesses while the infrastructure law expands broadband deployment in the U.S.

Trump also created the Department of Government Efficiency, led by X and SpaceX CEO Elon Musk. Vivek Ramaswamy, businessman and former Republican presidential candidate, was also tapped to lead the agency but has since indicated that he plans to depart for "future plans in Ohio."

Although DOGE's purpose is described as "modernizing federal technology and software to maximize governmental efficiency and productivity," Ramaswamy said in a post on X last year that the agency will assess cutting federal agencies, rules and regulations.

"Traditional Republican conservatism is generally small government, but it's not anti-government in the same way this new movement is," said Rob Lalka, a professor at Tulane University's Freeman School of Business and author of "The Venture Alchemists: How Big Tech Turned Profits Into Power."

Lalka argues that the "reshaping" of the Republican party toward a more venture capital-like mindset began in 2016 with Thiel's first $1.25 million dollar donation to Trump, followed by a $15 million donation to Vance during his 2022 campaign for the Ohio senate seat. Although it's not just an issue of money, Lalka said Thiel's investments in Trump and Vance, totaling more than $16 million, along with more than $277 million in donations from Musk during Trump's 2024 campaign, helped shape the course of the new administration.

Lalka said it remains to be seen whether the influence of venture capitalists in U.S. policies will result in a small portfolio of efficiency successes via the risks of "chaos, confusion and disruption" through restructuring measures such as agency and regulation cuts.

"That's an incredible sum of money that is being put behind these people in the Republican party. That reshapes the Republican party away from the Reagan-era small government conservatism that was more traditional and toward a more strident, anti-government libertarian streak that is straight out of Silicon Valley," he said.

Big tech's power in the Trump administration

Numerous big tech leaders stood with Trump during his inauguration Monday, including Musk, OpenAI CEO Sam Altman, Amazon founder Jeff Bezos, Meta CEO Mark Zuckerberg, and Google CEO Sundar Pichai.

"What kind of a statement is that in terms of political power," Lalka said.

On Thursday, Trump unveiled formation of a new company called Stargate, led by Oracle CEO Larry Ellison, Softbank CEO Masayoshi Son and Altman, that plans to invest $500 billion in U.S. AI infrastructure including data centers.

"We wouldn't be able to do this without you, Mr. President," Altman said during the announcement.

Despite appearances, companies like Meta are likely seeking to get close to the Trump administration to avoid potential federal challenges, said Rob Atkinson, president of the Information Technology and Innovation Foundation. Before Trump took office, Zuckerberg ended the company's content moderation policies that drew Trump's ire during his first term. Trump issued an executive order this week called "Restoring Freedom of Speech and Ending Federal Censorship," which prohibits federal employees from engaging in conduct that would "unconstitutionally abridge the free speech of any American citizen."

Trump's first administration also filed the search antitrust case against Google. In 2024, the company was found guilty of being a monopolist. Atkinson said he believes big tech leaders' presence at the inauguration sent the message that "we are here to kiss the ring."

"They're scared out of their pants," he argued. "They're not running the show."

However, in his exit address, Biden warned of a "tech industrial complex" and an "oligarchy" of extreme wealth and power that "threatens our entire democracy."

"Those phrases were specifically chosen in that outgoing speech for reasons," Lalka said.

Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining Informa TechTarget, she was a general assignment reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.