Tariffs Disrupting the Venture Value Chain

The venture value chain—from raising capital to startup funding and exits—is facing real pressure from growing tariff tensions. What once seemed like distant trade policy is now affecting day-to-day decisions across the startup and venture capital world.

Tariff uncertainty is being called one of the biggest global trade shake-ups since 1947. With governments rethinking alliances and tightening trade policies, startups and investors are forced to respond.

VC Fundraising Feels the Pressure

Even before tariffs entered the picture, venture capital was seeing a slowdown. Now, tariffs are creating more hurdles:

• Capital Pullback: Market volatility tied to tariffs is causing some investors to reduce their exposure to venture funds. Many are rebalancing after recent stock market declines.
• Shift to Safer Investments: Limited partners (LPs) are moving money into asset classes like private credit or infrastructure, which feel safer in today’s uncertain economy.
• Favoring the Familiar: LPs are sticking with established VC firms, making it harder for newer funds to raise capital.

The venture value chain starts with capital, and that flow is already under pressure.

Tariffs Make Startup Fundraising Tougher

While Q1 showed signs of a startup funding recovery, the momentum may not last. Tariffs create a more cautious environment:

• Increased Risk Aversion: Even with plenty of capital on hand, investors are pulling back. Only startups with proven metrics and resilience are seeing strong interest.
• Sector Impact Varies: Startups in hardware or consumer goods face higher costs and supply chain delays. Global expansion plans are now more difficult due to trade restrictions.
• Geographic Fallout: Chinese startups were already struggling, but if U.S.-EU trade tensions grow, fundraising timelines could stretch and valuations may stall.

The venture value chain relies on steady funding. Tariffs are causing that chain to tighten.

Exits Are the Weakest Link

Tariffs may be hitting the exit stage hardest—impacting IPOs, mergers, and secondaries.

• IPO Uncertainty: Public offerings are rare but essential for major returns. Early 2025 brought hope, but renewed tariff fears spooked markets. Firms like Klarna and StubHub hit pause on IPO plans.
• M&A Activity Rising Slowly: Big players are cautious, but startup-to-startup deals are growing. These smaller mergers, driven by team hires or product synergy, may increase as funding stays tight.
• Secondaries Gaining Ground: Selling stakes in private companies is becoming a key way to get liquidity. However, tariffs complicate pricing, and discounts may deepen—especially for newer or underperforming funds.

This stage of the venture value chain is crucial. Without strong exits, the whole system slows.

What’s Next for the Venture Value Chain?

Tariffs are no longer background noise. They’re directly influencing hiring, investing, and exit strategies across the venture value chain. As global trade remains uncertain, founders and investors must rethink how they operate.

The coming months, especially Q2, will be critical. If trade tensions cool, the disruption may be short-lived. If not, the venture world will need to evolve—fast.