What Does The Five-Week-Long U.S. Shutdown Really Mean For Startups Around The World?

The five-week-and-counting shutdown of the US federal government has been framed and reframed to exhaustion,  with some confidently blaming Trump and the Republican government and others saying it’s all the fault and responsibility of the Democrats. But, regardless of who’s really at fault (or, at least, most at fault), the shutdown is affecting a lot of people.

First and foremost, the American people. But, what about others who have close ties to the US? What about those with investments in the States and startups from other countries wanting to business or expand there?

Well, in a world where economies are tightly interconnected, the effects ripple far beyond US borders.

For startups around the world that rely on American partnerships, capital flows, regulatory clarity or simply access to the US market, the impact is subtle but mounting. From frozen visa processing and disrupted export-licensing to uncertainty around US consumer demand and investor behaviour, global founders and investors are starting to sit up and take notice.

While the headlines may focus on everyday Americans feeling the squeeze – which is, undoubtedtly, a very real issue – the reality is that international entrepreneurs and business owners who work with the US economy are also face mounting stress and strategic questions. They may not be in Washington, but many now find that Washington is very much in their business.

Global Operations Meet US Gridlock

When a startup outside the US identifies America as a key market, partner or investor base, it often relies on predictable back-office functions of the US government. For instance, visa and immigration processes can enable foreign talent to engage with US incubators or assemble satellite teams in the US.

Equally, when federal agencies pause data collection, licensing or regulatory reviews – as already observed in recent weeks – the consequences impact global founders who reference US benchmarks or launch American-facing products.

In short, the shutdown has transformed the US from a reliably open gateway to an intermittently opaque market. For startups abroad, that means rethinking dependency on US timing and potentially exploring parallel markets until normality returns.

Our Experts

• Dr Keith Arundale: Senior Visiting Fellow at Henley Business School
• Rajive Jain: Investor and Coach
• Joe Camberato: CEO and Founder of National Business Capital
• Mark Valentino: Head of Business Banking at Citizens
• Dr. Supachai Kid Parchariyanon: Founder and Managing Partner of SeaX Ventures
• Wayne Elsey: Founder of Funds2Orgs

Dr Keith Arundale, Senior Visiting Fellow at Henley Business School

“One of the most publicised impacts of the US federal government shut-down is the cancellation of thousands of flights to and from and internally in the USA due to shortage of air traffic controllers who are currently not getting paid. Clearly this will affect travel to the US by UK start-ups seeking to do business or raise finance there, where face-to-face meeting is essential at least in the initial stages of a transaction. Visas for highly-skilled workers are delayed with consequent uncertainty around hiring and retention and detrimental impact on scale-ups which need the talent to grow. Supply chains may also be impacted.

“The shut-down adds to the already tumultuous geopolitical climate around the world and in the US in particular; investors such as private equity and venture capital firms, are already suffering from slow fundraising and a lack of exits; this will only add to the lack of confidence and the cautious approach to investing going forward. IPOs are delayed because the SEC has furloughed many staff. Start-ups may find their procurement contracts with US agencies delayed impacting on cash flow. Customers may lack confidence to place orders.

“If the US shut-down continues for the longer term there could be some beneficial knock-on effects for UK start-ups as US VCs may seek more opportunities outside the US for investment; already some 1 in 5 UK deals have a US investor, this proportion could increase. High skilled talent may seek work opportunities in the UK where there is less disruption.

“The overall effect of the US shut-down is one of uncertainty with delays to funding, regulatory approvals, and procurement all with a detrimental impact on cashflow, which is the lifeblood of start-ups and scale-ups.

Rajive Jain, Investor and Coach

“Extended government shutdowns can result in scattered consequences. Many startups rely on private venture money. So those not relying on government funding may trudge along.

“Some startups rely on government contracts. Delayed payments is a risk to their cash flow and cash-conversion cycle. Since many startups aim for cashflow positivity, those not well capitalized may face a liquidity crunch. That could have a ripple effect on investor portfolios.

“An adjacent effect is in the labor market where startups vie for foreign talent. Delays in permit processing, project approvals, patent grants or research funding affects the timely ability of incoming talent to be productive or startups to increase intrinsic value.

“In the short term, this may have an indirect consequence of lowering valuations when seeking capital since investors are cautious when there is a dependence on the government as a client. “

Joe Camberato, CEO and Founder of National Business Capital

“Every day during the government’s shut down, about $170 million in SBA funding just disappears. That means roughly $7 billion lost – money that was supposed to help small businesses grow, hire or just stay afloat.

It’s not just about loans either. Flights are being canceled, which means products miss delivery deadlines, and startups miss investor meetings that could have changed everything for them.

And for companies with government contracts, delayed payments can be brutal. Some of these businesses live or die by cash flow – one missed payroll can be the difference between survival and shutting the doors.”

Mark Valentino, Head of Business Banking at Citizens

The government shutdown has created real challenges for small businesses, but there are ways to stay ahead. Here’s what you need to know:

• SBA lending is paused, but preparation isn’t. While new SBA approvals are stalled, lenders can still accept applications and complete internal underwriting. Smart business owners are using this time to assemble documentation so they’re ready to move fast when operations resume.

• Delays are driving demand. A recent uptick in loan applications shows businesses aren’t waiting around; they’re planning capital projects and growth initiatives despite rate uncertainty.

• Government contractors face payment delays. If you rely on federal contracts, expect potential disruptions to cash flow.

• Operational hiccups are spreading. From permit delays to passport processing backlogs, federal agency closures are slowing business operations across industries.

The key is staying connected with your financial partners. Your banking team can help you navigate these disruptions and position your business for success when things return to normal.

Ismet Bekirov, CEO and Founder of Greenice

“We are Greenice — a software development company from Poland. We’re in a pre-launch phase of a crowdfunding platform for our US client. His basic plan was to launch the startup in October to be ready for Black Friday. He needed approval from the SEC, which is currently blocked due to the government shutdown. So, the launch and following plans are postponed.”

Dr. Supachai Kid Parchariyanon, Founder and Managing Partner of SeaX Ventures

“For U.S. startups, the shutdown isn’t just a policy pause, it’s a signal. It reveals how dependent innovation still is on predictable systems, from grant disbursements to procurement and regulatory timelines. When those stall, founders don’t panic, they reprioritize. They start thinking about sustainable runway, stronger private partnerships, and alternative capital sources. It’s a stress test for how adaptable the ecosystem really is.

“Outside the U.S., investors and founders are watching closely. When Washington stalls, confidence wavers, and that ripples through global capital flows. But it also creates opportunity: founders in emerging markets who can move faster and operate with less reliance on government systems may attract more attention and investment. The best startups are learning from this moment, building resilience and independence into their models so they can keep growing, no matter what’s happening in D.C.”

Wayne Elsey, Founder of Funds2Orgs

“This U.S. government shutdown has definitely had ripple effects on lives everywhere. In the case of businesses, especially startups relying on federal grants or contracts, a shutdown means interruptions and increased uncertainty. Money being one of the most valuable assets. You have limited access to your full potential and investor confidence. As a business owner, that’s one of the worst feelings. So when the world’s largest economy shows instability, it can limit access to venture capital and slow international collaboration.

“However, uncertainties like this can spark creativity and a glimmer of hope. Entrepreneurs, especially those in a similar field, can begin asking, “How can we build solutions that don’t rely on unstable systems?” That’s how I began my idea for Funds2Orgs. Our shoe drive fundraiser model, for example, empowers communities to raise opportunities and make a global difference without waiting for institutional support. In hindsight, shutdowns can remind us that wherever you are, the power of self-sustaining, mission-driven business solutions can thrive even when governments pause their operations.”