Big Story: Startup ecosystem feels the effects of DOGE cuts
The Trump administration’s aggressive cuts in the name of “efficiency” have created changes that collectively undercut startups and the innovation ecosystem. From cuts at agencies supporting artificial intelligence development and competitiveness, to saddling the Small Business Administration (SBA) with oversight of the $1.6 trillion student loan portfolio, to undermining the U.S. Patent and Trademark Office’s (PTO) work on patent quality, the administration’s Department of Government Efficiency (DOGE) is creating instability where startups need most.
In a new blog post this week, Engine explored how the administration’s cuts to the PTO could erode patent quality and increase the risk of bad patents—which are easily weaponized against startups—being issued. By slashing staff and limiting time for reviewers to perform critical functions, DOGE is weakening the PTO, compromising patent quality and reducing the thoroughness of reviews. Unlike other agencies, the PTO is fee-funded and doesn’t rely on taxpayer dollars, but its mission to uphold strong patents is already under immense pressure.
Meanwhile, the administration continues to make cuts at key agencies that undermine its own stated goals around fostering entrepreneurship and U.S. competitiveness. Transferring the $1.6 trillion student loan portfolio from the Department of Education to the SBA risks creating uncertainty for borrowers (including startup founders) and reducing the agency’s bandwidth to provide resources and support to entrepreneurs. DOGE has also made cuts at agencies that are critical to AI development. Back in March, Engine joined industry and advocacy groups to explain to the administration that the National Institute of Standards and Technology plays a vital role in advancing talent within AI innovation. Policymakers should pursue an agenda that supports innovation, delivers real efficiency, and avoids the uncertainty and chaos startups are currently being forced to navigate.
Policy Roundup:
Agency opens call for feedback on anti-competitive rules. The Federal Trade Commission (FTC) launched a public inquiry on Monday seeking comments on rules that may reduce competition and innovation, following a new executive order from President Donald Trump. As one issue, the agency should account for how unnecessary barriers to acquisitions and exits can restrict the flow of capital, ideas, and talent that fuels the startup ecosystem.
Court strikes down Ohio ‘kids’ online safety’ law. This week, a federal judge struck down an Ohio state law requiring Internet companies to obtain parental consent before allowing users under the age of 16 from accessing their platforms. In the ruling, the judge said the overly broad law would curtail young users’ First Amendment rights.
Tariff turbulence continues. After initially exempting electronics from broad tariffs last Friday, the Trump administration reversed course this week, signaling that sector-specific tariffs—including on semiconductors—are back on the table. The current administration's fluctuating and escalating trade moves increase costs, inject uncertainty, and invite retaliation that harm startups.
Political organizers defend Section 230. Organizers of the protests at Tesla dealerships in response to DOGE cuts are urging policymakers to protect Section 230, highlighting how the law is vital for online organizing and free speech. The law is also essential for startups that host user-generated content and without it, companies would face costly legal risks just for letting users create and share content online.
Startup Roundup:
#StartupsEverywhere: Lincoln, Nebraska. Timing the sowing and watering of crops is as important as ever in agriculture. Jessi Korinek and her co-founders at Nave Analytics are developing a software that uses satellite data to help farmers cut down on water costs for irrigation. We sat down with Jessi to discuss her product, the impact of tariffs on the agricultural industry, and the challenges she faced in receiving federal research and development (R&D) grants.
