Tariffs Trigger Selloff, IPOs Put on Ice 🧊💼📉

Author

Nicole Rojas
April 07, 2025

Week of April 7th, 2025

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🦄 STARTUPS

ROUNDS AND UNICORNS

  1. OpenAI (AI): SoftBank led a record-breaking $40 billion investment in OpenAI, marking the largest venture deal ever. This deal could value OpenAI at $300 billion, pending restructuring conditions

  2. Plaid (Fintech):Plaid raised $575 million led by Franklin Templeton at a $6.1 billion valuation. Plaid connects user bank accounts to fintech apps and was previously involved in a failed $5.3 billion acquisition by Visa

  3. Silicon Ranch (Energy): Solar energy operator Silicon Ranch secured $500 million from AIP Management. The Nashville-based company operates solar and battery projects, with over $2 billion raised to date

  4. Runway (AI): AI video startup Runway raised $308 million from General Atlantic, doubling its valuation to over $3 billion. The company develops AI tools for video creation and plans to expand its film and animation studio capabilities

  5. AIRNA (Biotech): raised $155 million in Series B funding to advance RNA editing therapeutics. The financing will support a phase trial for treating alpha-1 antitrypsin deficiency and further pipeline development

Startup investment in North America hit $82 billion in Q1 2025, the highest level in three years — but nearly half came from a single record-breaking $40 billion raise for OpenAI, led by SoftBank. Excluding that deal, funding was down across early- and seed-stage startups. Meanwhile, exit activity showed strength with Google's planned $32 billion acquisition of Wiz and CoreWeave's $1.5 billion IPO

  • Late-stage dominated: $66.4 billion invested, with Anthropic ($3.5B) and Infinite Reality ($3B) following

  • Early-stage investment at $12.4B and seed-stage hit a multi-year low at $3.2B

  • AI sector surged with $54 billion invested in AI startups alone

INDUSTRY

Silicon Valley’s early support for Donald Trump’s 2024 presidential campaign is facing backlash as Trump’s sweeping new tariffs trigger a severe market downturn. Tech stocks have been hit hardest — the Nasdaq dropped 10% in a week, its worst performance since the pandemic’s onset in 2020. The seven most valuable US tech companies lost a staggering $1.8 trillion in market capitalization over just two days

  • Major firms like Apple (-14%), Tesla (-9.2%), Nvidia, Meta, and Amazon suffered double-digit losses

  • Trump’s aggressive tariffs have sparked recession fears, rising inflation expectations, and retaliatory measures from China. Economists warn of a 50% chance of a US recession

  • Tech executives — many of whom backed Trump — are now largely silent publicly, but market conditions are forcing companies to pause IPO plans and prepare for a potentially prolonged downturn

Private markets are reeling after the Trump administration's surprise “Liberation Day” tariff package, which imposed 10% tariffs on all U.S. imports and steeper rates on key partners—34% on Chinese goods and 20% on EU imports. The move triggered a 4.84% drop in the S&P 500, the worst trading day since 2020. While private markets have dry powder to deploy, the lack of clarity on whether tariffs are temporary or permanent is holding back deal activity

  • CoreWeave’s lukewarm IPO debut may be the last for a while as institutional investors reassess risk

  • Exits are expected to stall, slowing capital recycling for VCs and PE firms. Buyers are turning to earn-outs, minority stakes, and post-closing adjustments to hedge uncertainty

  • Inflationary pressures from tariffs may prevent the Fed from cutting rates, raising the specter of a recession if consumer spending slows further

U.S. venture capital activity in Q1 2025 surged to $91.5 billion across 3,990 deals—more than double the $42.4 billion from Q1 2024, according to PitchBook. However, this dramatic growth is skewed by OpenAI’s $40B round led by SoftBank, which accounted for nearly half of the quarter’s total

  • AI drove 71% of total VC investment, or 48.5% excluding OpenAI’s mega-deal

  • The market is bifurcated, with only a few elite companies raising outsized rounds while most startups struggle for funding

  • Exit activity remains limited despite a few standout events like CoreWeave’s IPO and Wiz’s $32B acquisition announcement

🏦 ECONOMIC SNAPSHOT

The White House denied reports on Monday that President Trump was considering a 90-day pause on his tariffs, calling the claim "fake news." The confusion stemmed from an interview with Kevin Hassett, who, when asked about the possibility of a tariff pause, responded by saying Trump would decide. This was misinterpreted, leading to false reports that Trump might pause tariffs, briefly boosting markets before the White House clarification

  • The Dow, S&P 500, and Nasdaq all rose briefly, with the S&P rising more than 6% over a 30-minute period before falling again

  • Trump, undeterred, defended his tariffs, asserting they were necessary to address trade imbalances and boost U.S. manufacturing, arguing that they would lead to economic "greatness"

  • Despite his stance, prominent supporters like Bill Ackman and Jamie Dimon expressed concerns that the tariffs could lead to inflation, economic downturn, and strained international alliances

After a year of exceptional stock market performance and stronger-than-average economic growth relative to other developed nations, the U.S. is now facing rising fears of stagflation—a rare and dangerous mix of slowing growth and persistent inflation. While inflation has eased since its 2022 peak, it remains well above the Federal Reserve’s 2% target, and recent indicators point to a cooling economy: consumer sentiment is plunging, business activity is slowing, and key labor metrics are beginning to weaken

  • New trade policies, including 25% tariffs on steel and aluminum, are raising costs for businesses and consumers, fueling inflation fears

  • Sentiment has fallen sharply, suggesting weaker spending ahead; small businesses and airlines are already adjusting forecasts

  • The Federal Reserve is caught between fighting inflation and avoiding deeper economic slowdown, as markets brace for policy missteps

Larry Fink, CEO of BlackRock, has expressed concerns that the U.S. is likely already in a recession, attributing this to the aggressive tariff policies introduced by President Trump. Fink highlighted that most CEOs he has spoken with share this sentiment, noting significant market declines and economic uncertainty as key indicators

  • BlackRock’s CEO believes the U.S. may already be in a recession

  • Aggressive tariff policies are cited as primary contributors to economic downturn

  • Market volatility and CEO sentiments reflect growing economic concerns

President Trump’s sweeping new tariffs, projected to cost U.S. businesses over $654 billion annually — with potential to exceed $1 trillion — have stunned economists and investors. The approach, based on trade deficits rather than direct reciprocity, has upended expectations and triggered fears of global retaliation. These tariffs are poised to spark inflation, supply chain disruptions, and a reevaluation of global trade flows, hitting sectors from tech to agriculture to healthcare

  • U.S. companies may face $1–2 billion in daily tariff costs, with major hits expected in California and Texas

  • The tech sector, especially firms like Apple, Alphabet, Meta, and Amazon, may be targeted for retaliation due to their massive digital trade surplus

  • Tariffs on imports — including goods where the U.S. lacks manufacturing capacity like apparel, footwear, and medical devices — could drive up prices and limit product availability

Federal Reserve Chair Jerome Powell warned that President Trump’s sweeping tariffs — including a new 10% tariff on all U.S. imports starting April 6, with further increases expected April 9 — are likely to drive inflation higher and could trigger stagflation: a mix of rising prices, slowing growth, and higher unemployment. Economists at JPMorgan estimate a 60% chance of a global recession if tariffs remain in place. Consumer prices, especially for cars, are projected to rise sharply

  • Despite Trump urging the Fed to cut rates, the central bank is keeping interest rates steady, waiting to assess the full economic impact

  • Powell said uncertainty should decline by 2026, once the effects of the trade policies fully materialize

  • Consumer confidence dropped to its lowest level since January 2021; small-business uncertainty spiked to its 2nd-highest level since 1973

 

Global markets were rocked last Friday as the U.S.-China trade war escalated dramatically. After President Trump imposed sweeping new tariffs, China responded with a 34% levy on all U.S. imports starting next Thursday. The surprise magnitude of the tariffs and the aggressive retaliation dashed hopes of a near-term resolution, triggering massive sell-offs across global markets. The S&P 500 dropped 6%, the Nasdaq fell 5.8% — officially entering bear market territory after a 20% decline from its peak — and the Dow Jones Industrial Average lost 2,231 points in a single day

  • The two-day market rout erased a record $6.6 trillion in global equity value

  • Only 14 stocks in the S&P 500 rose on Friday, while 28 stocks plunged more than 10%

  • European markets dropped over 4%, and U.S. oil prices slid to $62 per barrel — the lowest since 2021

U.S. stock markets experienced extreme volatility on Monday as President Trump threatened to increase tariffs further, sparking fears of a prolonged trade war. The Dow Jones fell 349 points (0.9%), while the S&P 500 slipped 0.2% after dramatic swings driven by rumors of a potential tariff pause — later debunked. Markets are struggling to assess Trump’s intentions: whether tariffs are a negotiating tactic or a long-term economic shift. Investors worry the tariffs will drive inflation higher and slow global growth, putting additional pressure on the Federal Reserve as recession risks rise.

  • False rumors about a 90-day tariff pause briefly pushed markets higher

  • Global markets also fell sharply — Hong Kong’s Hang Seng dropped 13.2%

  • Bitcoin dropped below $79,000 amid global market stress, after peaking above $100,000 earlier in the year

  • The 10-year Treasury yield jumped to 4.20% from 4.01%, signaling reduced expectations for near-term Fed rate cuts

🌱🌎 IMPACT & CLIMATE RESILIENCE

In 2024, small business creation in the U.S. demonstrated remarkable growth in diversity, innovation, and resilience, with 1.7 million new business applications filed. Women led 49% of these startups, a 69% increase in female-founded businesses since 2019. Minority ownership also saw significant gains, with LatinX and Black founders rising by 25% and 66%, respectively, over 2019 levels, and Asian Pacific founders increasing by 16%. Despite this progress, only 1% of VC funding went to women-led companies

  • Nevertheless, 65% of new businesses reached profitability in their first year, and 57% hired or plan to hire employees

  • Generative AI adoption surged, with about half of new businesses using it, up from 21% in 2023; over 80% of those adopters reported significant productivity gains

  • However, stricter return-to-office mandates across the workforce led to a decline in side-hustle startups, from 45% in 2023 to 34% in 2024

🚀 IPO & EXITS

Several major US IPOs — including Klarna ($15bn), Medline ($50bn), StubHub, and Hinge Health — have been delayed due to market turmoil caused by Donald Trump’s aggressive tariffs on US trade partners. This wave of IPO pauses comes despite early-year optimism that a Republican administration would fuel a business-friendly environment for listings. These tariffs have sparked fears of a global trade war, leading to sharp declines in stock markets and disrupting IPO plans

  • Klarna, Medline, StubHub, and Hinge Health had confidentially filed for IPOs but postponed their investor roadshows amid market volatility

  • Trump's new tariffs triggered retaliatory measures from China, escalating fears of a global trade war and shaking investor confidence

  • The S&P 500 fell 6% and the Nasdaq dropped 5.8%, reversing earlier optimism for a strong IPO market recovery in 2025

🗞️ AI8 VENTURES HIGHLIGHT

Wall Street's Wild Ride into 2025

“We’re bringing wealth back to America. That’s a big thing... It takes a little time, but I think it should be great for us.”

Donald J. Trump - 45th and 47th U.S. President

We are living in a world defined by rapid and accelerating change— political, economic, social, and technological. This is not a typical business cycle. We are in an era shaped by powerful megatrends, with artificial intelligence transforming industries, geopolitical shifts reshaping markets, and macroeconomic forces creating new uncertainties.

Despite the challenges, the U.S. economy outperformed its developed market peers in 2024, with real GDP growth reaching 2.8%. Consumer spending remained resilient, and unemployment stayed relatively low. Just weeks before the election, The Economist described the U.S. economy as the “envy of the world.”

After Donald Trump’s victory in November 2024, markets initially anticipated controlled inflation and a less restrictive monetary policy.

Fast-forward a few months to March 2025, and the optimism has faded. With capital markets reacting negatively to renewed trade war fears, over $4 trillion in market value has been erased since the S&P 500’s peak last month—a dramatic reversal from the bullish sentiment surrounding Trump’s agenda.

What happened at year-end, and what comes next?

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Happy reading,

AI8 Ventures’ Research & Investment Team