“To the extent you are mid-stream in raising capital, get that closed as soon as possible. We repeat, close anything mid-stream ASAP,” Hazard wrote. “And be really judicious about how your capital is being deployed.”
Managing partner Charles Hudson told WIRED that his venture firm, Precursor, has stakes in several ecommerce startups that could be “heavily impacted” by Trump’s tariffs.
But, Hudson adds, he doesn’t know the best way to strategize around the tariffs because “the logic for their timing, scale, and scope seems to reside only in the head of our president, and tariffs aren’t being discussed as part of the normal policy-making process that would give us more clarity.”
Precursor, which invests in early-stage startups, just raised more than $65 million for its fifth fund. Hudson said in a recent interview with The Information that he currently plans to make investments over a three-year period, rather than the standard two years. The hope is that the extra time horizon will give limited partners, who supply the funding to venture capital firms, to see returns on their investments.
Hudson also predicted that selling stock in private startups on the secondary market will make up the overwhelming majority of liquidity that investors see over the next five years, rather than returns from acquisitions or initial public offerings.
Other VCs agree that the secondary market is likely to heat up. “VCs used to be the ultimate HODLers, holding on for dear life, riding it out until a startup they invested in IPO’ed,” says Drummond. “But over the past 10 years they’ve had to become much more disciplined sellers, and figure out how to deliver liquidity sooner.” That’s been true for a while because of rising interest rates and VCs being more cautious, but it’s “especially true now,” he says.
Analysts from PitchBook, a database for statistics about the venture capital and private equity markets, warn the tariffs could have a cooling effect on international investments, noting that startups once celebrated for having “global first” strategies might now be seen as vulnerable.
In the first quarter of this year, prior to Trump’s official tariff announcements, a smaller share of US capital was already flowing to VC deals in Europe and China than in recent periods. Around 47 percent of European deals included US funding, down four percentage points from the final quarter of 2024.
“For decades, VC has flourished in an increasingly borderless world, but another week of tariff wars is prompting a major reassessment,” PitchBook reporter Leah Hodgson wrote earlier this month.
Bad News for IPOs
Before Trump took office, investors had been hopeful that the tech IPO market would continue rebounding this year after falling into a slump in 2022. The market was showing signs of recovery in 2024: There were 176 initial public offerings in the US last year, compared to 127 in 2023 and 90 in 2022, according to data collected by the consulting firm EY.
Accounting firm KPMG noted in a report published earlier this month that “lingering market uncertainties” had led many startups to delay their imminent public debuts this quarter. The mobile banking service Chime, ticket giant StubHub, and Swedish “buy now, pay later” firm Klarna all hit pause on planned public offerings. AI infrastructure firm CoreWeave was the outlier—it began trading shares in late March.
Source: Wired
