Big Story: Trump administration targets programs that provide funding, resources to startups
President Donald Trump kicked off the process of gutting two government programs that provide critical resources to entrepreneurs in underserved communities. A new executive order directs the agencies to eliminate “to the maximum extent” the Community Development Financial Institutions (CDFI) Fund and scale back the Minority Business Development Agency (MBDA), which could have significant ramifications for founders who already face barriers when accessing capital. These agencies play a critical role in supporting startups, driving innovation, creating jobs, and strengthening the economy. By eliminating their operations, the administration is making it even harder for underrepresented founders—including those in low-income and rural communities—to break into the startup ecosystem.
The CDFI Fund and the MBDA help level the playing field by expanding financial opportunities for founders who have historically faced barriers to capital. The CDFI Fund invests in community lenders that provide capital and financial services to economically disadvantaged communities, while the MBDA offers financial management assistance, market research, and guidance for startups navigating government procurement and export opportunities. Dismantling these programs not only stifles innovation but also weakens overall job creation and economic growth. Without access to capital, these proven drivers of innovation are left without the resources to grow, limiting opportunities for everyone in the startup ecosystem.
The administration’s move to dismantle the CDFI Fund is an attack on a long-standing, widely supported bipartisan program that provides critical resources for innovators in low-income and rural communities. Instead of eliminating resources that support entrepreneurs, policymakers should focus on expanding access to capital and support, ensuring the startup ecosystem thrives by harnessing the full potential of all communities—leading to stronger innovation, broader market reach, better investor returns, and more job creation.
Policy Roundup:
AI Essentials: Copyright and model training. Startups need access to data to train AI models, and requiring licenses for training data would create massive barriers for AI startups working in model development. In the newest installment of our AI Essentials, we explore how including copyrighted content in AI training data should be allowed, to ensure startups can continue to innovate without the threat of costly infringement lawsuits.
Republican policymakers consider expanding the child tax credit. Senator Mike Crapo (R-Idaho), Ranking Member of the Senate Finance Committee, alluded that he and his Republican colleagues are mulling an expansion to the Child Tax Credit—including the refundable portion of the credit, which is particularly useful to those with low incomes—as part of tax reform this year. Expanding the child tax credit would allow for more founders, particularly working moms, to enter the startup ecosystem.
President Trump moves to shut down the Department of Education. President Donald Trump signed an executive order late last week to begin dismantling the Department of Education, a move that could upend billions in K-12 and college funding. The ripple effects could impact efforts to boost STEM education across the country, weakening the talent pipeline that startups rely on to expand and innovate.
California advances AI disclosure bill. The California state legislature advanced a bill last Tuesday that would require AI developers to track and disclose copyrighted materials used in AI training data. Engine joined a letter warning that these disclosure requirements would place a substantial burden on startups and leave them vulnerable to costly lawsuits.
SEC begins to address the accredited investor definition. The Securities and Exchange Commission issued new guidance earlier this month allowing investors to self-certify their accredited investor status under Rule 506(c) of Regulation D if investment minimums are at least $200,000 for individuals and $1 million for entities. While 506(c) offerings have thus far enjoyed limited success, the step signals a willingness to address the limitations of the current accredited investor standard.
Trump fires FTC Democrats. President Donald Trump removed two Democratic commissioners, Alvaro Bedoya and Rebecca Kelly Slaughter, from the Federal Trade Commission (FTC) last Tuesday in a move to restructure the agency. The FTC plays a critical role in shaping policies that impact startups—including on privacy, competition, and more.
On The Horizon:
TUE: 3/25: The House Committee on Financial Services will convene a public hearing to discuss how Congress can better support small businesses in accessing capital across all ecosystems at 10:00 AM ET.
WED 3/26: The House subcommittee on commerce, manufacturing, and trade will convene a hearing on protections for young users online at 10:00 AM ET.
WED 3/26: The House Committee on Financial Services will convene a public hearing to discuss changes to the Consumer Financial Protection Bureau at 10:00 AM ET.
WED 3/26: The House Ways and Means subcommittee on trade will convene a hearing to discuss trade negotiation priorities at 10:00 AM ET.
Startup Roundup:
#StartupsEverywhere: Philadelphia, Pennsylvania. Obtaining an American college degree can be challenging to navigate. Strenuous curriculums and a ballooning financial burden make student retention a growing concern. CampusESP is advancing student success by streamlining academic and financial conversations with parents and families. We sat down with their co-founder and CEO, Dave Becker, to discuss his startup, the hostile targeting of hiring initiatives like diversity, equity and inclusion, and more.
