Experts who spoke with TechCrunch said the US government closure could curb the flow of transactions, freeze visa processing for workers, and create other issues for startups and the broader technical sector, especially if it lasts for more than a week.
The US government closure, which began Tuesday, marks the first in seven years. Coupled with politically entrenched Congress, the unpredictability of the Trump administration makes it difficult to predict when the closure will end. Of the eight closures since 1990, four have happened during the Trump administration, the last one being 35 days, the longest in modern history.
TechCrunch spoke with investors, founders and even lawyers who warned about the trade flows and delays in visa processing for investors, founders and even workers. This was recently changed by President Trump, who announced that the H-1B visa application fee would increase to $100,000.
The main concern is delays in the startup’s immigration process as the Ministry of Labor, which provides initial approval for H-1B visas and green cards, shuts down. As a result, immigration attorney Sophie Alcon said the pipeline for hiring and renewing visas for skilled workers is completely frozen.
“This creates significant uncertainty in the startup workforce, including founders who may be using visas,” she told TechCrunch.
Michael Scarpati, CEO and founder of Fintech Retireus, added: “Visa workers are being hit hard by the shutdown as they rely on government approval.” “When processes like electronic verification and labor certificates stop, workers will drop out of their positions, leaving them uncertain about their future in the US and creating additional disruption for businesses that rely on them.”
Thousands of high-tech workers were on visas, often bringing partners and children.
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“Many people are obvious about the delay in processing and how it affects their ability to stay and work,” Chris Chib, CEO of Strategy Solutions Company Bluefin, told TechCrunch. “However, we owe them the same careful attention and commitment in this situation to help these engineers endure us through the complex challenges that involve ML algorithms and innovation.”
Startups can also be affected by delays or outages in processes and other regulatory requirements, reducing valuable funds and leading to layoffs.
Jenny Fielding, managing partner at Everywherry Ventures, said ongoing political uncertainty is always worried about her. Past shutdowns have had little economic impact, but this can lead to layoffs if it lasts too long.
“Because we invest in many regulated areas, shutdowns could potentially shut down important government functions such as FDA approvals and aerospace permits, which could be an existential threat to startups whose entire business model relies on a single regulatory green light.
Fielding said the timing of the shutdown was once again awful for her and the company. When ventures started raising funds everywhere, President Trump announced tariffs that caused uncertainty and caused costs for some businesses.
Limited Partners were nervous about investment given the uncertain climate and therefore thwarted funding at the time. “And of course, we started fundraising this week, so once again, it’s awful timing,” she said.
As for Fielding’s startup, she said it’s difficult to wait and see in this case. Fielding says that founders should always think about Plan B, especially since capital is finite.
“In the case of a weekly shutdown, that’s manageable,” she continued. “But after a few weeks, it can be uncomfortable.”
Galima Kapoor co-founded software company Minio with her husband AB, who came to the US on an H-1B visa over a decade ago. She said startups should start preparing now in case the government shutdown is extended.
“As agencies slow down, trading could cease in highly-restricted industries such as Fintech, Health Tech, and M&A. Even companies operating outside the federal territory could face valuations and harsher trading terminology as more uncertainty penetrates the market,” she told TechCrunch.
Overall, founders need to be proactively maintained, communicate transparently with partners and investors, and plan “carefully for slipping.”
“Preparation will get through the confusion and separate from those who stepped in.”
Chib has been added to it. “Their resilience is part of what drives progress,” he said. “For those facing these challenges, this will also pass: Patience.”
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