The U.S. government shutdown could stifle deal flow, freeze visa processing for workers, and cause other problems for startups and the broader tech sector, especially if it lasts longer than a week, according to experts who spoke to TechCrunch.
The U.S. government shutdown, which began Tuesday, is the first one in seven years. The unpredictability of the Trump administration coupled with a politically entrenched Congress makes it hard to predict when the shutdown will end. Out of eight shutdowns since 1990, four have happened during a Trump administration, the last one was for 35 days, the longest in modern history.
TechCrunch spoke to investors, founders, and even lawyers who warned about delayed deal flow and visa processing for workers, which was recently upended by a recent change by President Trump who announced the application fee for an H-1B visa would increase to $100,000 — a number that caused sticker shock within the industry.
The main concern is a slowed-down immigration process for startups, since the Department of Labor — which offers first approval for H-1B visas and green cards — is shut down. The result, immigration attorney Sophie Alcon said, is that the pipeline for hiring and renewing visas for high-skilled workers is completely frozen.
“This creates significant uncertainty for a startup’s workforce, including founders who may be on visas themselves,” she told TechCrunch.
“Visa workers are hit hard in a shutdown because their status depends on government approvals,” Michael Scarpati, CEO and founder of the fintech RetireUS, added. “When processes like E-verify or labor certifications stop, workers risk falling out of status, leaving their future in the U.S. uncertain and creating added disruption for the businesses that depend on them.”
Thousands of workers in tech are on visas, and have brought with them, in many cases, partners and children.
Techcrunch event Join 10k+ tech and VC leaders for growth and connections at Disrupt 2025 Netflix, Box, a16z, ElevenLabs, Wayve, Hugging Face, Elad Gil, Vinod Khosla — just some of the 250+ heavy hitters leading 200+ sessions designed to deliver the insights that fuel startup growth and sharpen your edge. Don’t miss the 20th anniversary of TechCrunch, and a chance to learn from the top voices in tech. Grab your ticket before doors open to save up to $444. Join 10k+ tech and VC leaders for growth and connections at Disrupt 2025 Netflix, Box, a16z, ElevenLabs, Wayve, Hugging Face, Elad Gil, Vinod Khosla — just some of the 250+ heavy hitters leading 200+ sessions designed to deliver the insights that fuel startup growth and sharpen your edge. Don’t miss a chance to learn from the top voices in tech. Grab your ticket before doors open to save up to $444. San Francisco | REGISTER NOW
“Many are understandably nervous about processing delays and how that affects their ability to stay and work,” Chris Chib, CEO of the strategy solutions company BlueFin Solves, told TechCrunch. “But just as these engineers help us persevere through complex challenges with ML algorithms and innovation, we owe them the same careful attention and commitment during this situation.”
Startups may also be affected by delayed or stopped permitting processes and other regulatory requirements, which could dwindle precious funds and even lead to layoffs.
... continue reading