The shutdown of the federal government in the U.S., which began on October 1, 2025, due to a lack of agreement between Congress and the White House on funding, creates serious risks for startups and the initial public offering (IPO) market. Experts emphasize that an extended shutdown could lead to delays in the awarding of government contracts, permits, and grants, as well as slow down the activities of companies planning to go public.
This is reported by Business • Media
Impact of the Shutdown on the Tech Sector and Startups
The hosts of the Equity podcast — Kirsten Korosec, Maxwell Zeff, and Anthony Ha — note that the current shutdown is more risky for startups than previous similar situations. They particularly highlighted companies operating in the fields of artificial intelligence, defense, and aerospace technology, where collaboration with the government is critical for business development. In recent years, startups’ dependence on government support has significantly increased, presenting a new challenge for the innovation sector.
“This also reflects how the startup landscape has changed over the last decade, especially in recent years. For a long time, the focus was on consumer internet startups. But now we see much more activity in defense technology and deep tech, where various types of regulatory approvals are needed. Thus, significantly broader sectors of startups today rely on the government in a way that was atypical ten years ago,” said Ha.
Startups that operate in segments requiring close collaboration with government agencies, including automation, robotics, and climate solutions, may be particularly vulnerable to the consequences of the shutdown. Among the companies preparing to go public are BitGo, Kraken, and Grayscale. Meanwhile, Circle, Gemini, and Bullish have already successfully completed public offerings on the exchange.
Growing Government Influence and Investor Reaction
According to analysts, the shutdown has led to an increased role of the federal administration in the U.S. tech sector. Specifically, the government is showing interest in acquiring stakes in high-tech and industrial companies, complicating relations between the public and private sectors. This adds challenges for startups planning to scale or enter the public market.
It is worth noting that this is the third shutdown during Donald Trump’s presidency and the first since 2018. The duration of the current government suspension is currently unknown — for comparison, the previous one lasted 35 days. According to Polymarket, even before the shutdown began, 76% of users expected a government stoppage to occur in 2025, with 64% predicting it would happen by October 1. The main reason cited was the Senate’s blockage of financial plans. Despite this, the reaction of the crypto market remains cautious for now.