How startups could be affected by a prolonged government shutdown | TechCrunch
Key Takeaways
- The U.S. government shutdown threatens to slow down startup deal flow and freeze visa processing for high-skilled tech workers.
- The closure of the Department of Labor is the primary concern, as it halts the initial approval stage for H-1B visas and green cards.
- Workers on visas face uncertainty regarding their status, and businesses relying on them face operational disruption if processes like E-Verify stop.
- Startups in regulated industries face existential threats if essential government functions like FDA approvals or permitting processes are halted.
- Investors and founders express concern that prolonged shutdowns create significant workforce uncertainty and negatively impact fundraising climates.
The U.S. government shutdown, which commenced on Tuesday, is raising alarms among experts who fear it will stifle deal flow and freeze essential visa processing for the tech sector, especially if it extends beyond one week. Key concerns center on the Department of Labor being shut down, which halts the first approval stage for H-1B visas and green cards, effectively freezing the hiring pipeline for high-skilled workers and creating instability for employees whose status depends on government approvals. Immigration attorneys note that workers risk falling out of status, causing disruption for businesses reliant on them. Beyond immigration, startups face potential delays in regulatory processes like FDA approvals or aerospace permits, which could drain funds or even lead to layoffs if essential government functions cease for too long. Investors also note the poor timing, as political uncertainty has previously hampered fundraising efforts, making prolonged shutdowns increasingly uncomfortable for the venture capital ecosystem.
