U.S. startup funding rose by 75% in the first half of the year, driven largely by a surge in capital flowing into early-stage artificial intelligence ventures. However, this growth contrasts with a broader decline in funds raised by venture capital firms, signaling underlying challenges in the investment landscape.
Jo Ann Corkran, co-CEO and managing partner at Golden Seeds—a firm specializing in venture and angel investments in women-led startups—highlighted several economic pressures affecting early-stage companies. Approximately half of the startups in her firm’s portfolio operate in bio and life sciences or deep tech, sectors that often rely on federal grants and contracts to advance research and scale operations.
Recent government policy shifts, including the cancellation of federal grants and contracts, have forced many of these companies to reassess their financial planning. Corkran noted that anticipated funding, once factored into long-term strategies, is no longer guaranteed, creating uncertainty for innovation-driven businesses.
Trade policy is another complicating factor. Tariffs and restrictions on offshore manufacturing have disrupted scaling plans. Many U.S.-based startups that prototype domestically now face difficulties moving production overseas to reduce costs—a common path to commercialization. With this option increasingly blocked, companies struggle to scale efficiently.
Corkran explained that investor caution rises during periods of uncertainty, leading to lower valuations for startups seeking funding. This dynamic disproportionately affects female entrepreneurs, who already face steeper hurdles in accessing capital. As a result, they may receive less favorable terms during fundraising rounds.
Despite these headwinds, interest in high-tech innovation remains strong. The influx of capital into AI startups reflects confidence in transformative technologies, even as broader structural issues in policy and supply chains create friction for early-stage ventures.
— news from marketplace.org
— News Original —
Startup funding is facing several economic headwinds
Funding for startups in the U.S. went up 75% in the first half of this year. A big chunk of this is money flowing into fledgling artificial intelligence companies. n nBut when you zoom out, there’s actually a decline in the amount of money that venture capital groups raised. There are several headwinds when it comes to this kind of investment, including tariffs, and the cancellation of government grants and contracts under the Trump administration. n nGolden Seeds does both venture capital and angel investment, specifically for businesses founded by women. Jo Ann Corkran is co-CEO and managing partner there. “Marketplace Morning Report” host Nancy Marshall-Genzer checked in with her for a closer look at what’s happening in the startup space. The following is an edited transcript of their conversation. n nNancy Marshall-Genzer: I’ve reported on the impact of government cuts on federal workers, but private companies rely on government contracts and grants too, of course. Can you tell us about the effect that these cuts and cancellations are having on startups, especially startups led by women? n nJo Ann Corkran: About 50% of the things that we do, the companies in which we invest, are either bio and life sciences-related or deep tech-related, things that depend on scientific and technological advancements to start a business. And all of these companies, I would say, have considered — as they look at their business plans over the next couple of years — have considered some possibility that they would get more grants to advance whatever the tech is, and they have really had to stop and reevaluate. n nMarshall-Genzer: Of course, along with the cuts in government contracts, tariffs are in the mix now. How has that affected angel investments and how you evaluate an investment? n nCorkran: Let’s say you’re a company who has developed a product in the U.S. at a prototyping facility, right? And now you have a product, and you have customers who want to buy it, and you want to scale it and lower the price. So what are you going to do? In many cases, you would go offshore. You can’t. So we’re seeing that with a lot of companies. There’s also this whole uncertainty out there, and for us, as investors, when things are uncertain, that means we’re going to pay a lower price for them. n nMarshall-Genzer: Oh, so the female entrepreneurs are getting not such a great deal during uncertain times?