How startups could be affected by a prolonged government shutdown

image via TechCrunch

October 2, 2025, 4:05 PM

• •Government shutdown impacts: delayed deal flow, visa processing issues, and potential regulatory delays.
• •Immigration pipeline is frozen due to Department of Labor shutdown, affecting visa processing.
• •Startups may face financial strain and layoffs due to slowed permitting and regulatory processes.
• •Founders should prepare for potential disruptions, communicate transparently, and have contingency plans.

Experts warn that the U.S. government shutdown could severely impact startups and the broader tech sector, potentially delaying deal flow and visa processing for workers. The shutdown, the first in seven years, is creating uncertainty, particularly regarding immigration processes, as agencies like the Department of Labor are shut down, freezing the hiring and renewal of visas for high-skilled workers. Startups in regulated areas face additional risks from slowed permitting processes and regulatory requirements, which could lead to financial strain and potential layoffs. Founders are advised to prepare for potential disruptions, communicate transparently, and develop contingency plans to navigate the challenges of the prolonged shutdown.

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