Trade War Crossfire: Markets Brace for Impact
Week of March 10th, 2025
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STARTUPS
ROUNDS AND UNICORNS
The Week’s Biggest Funding Rounds: AI And Defense Tech Lead With Massive Rounds (Crunchbase, 5 minute read)
Anthropic (AI): raised $3.5 billion in a funding round led by Lightspeed Venture Partners, valuing the AI startup at $61.5 billion. This is a significant increase from its $18.5 billion valuation in February 2024, though still behind OpenAI’s $260 billion valuation
Epirus (Defense): secured $250 million in a Series D round led by 8VC and Washington Harbour Partners. The defense tech startup, known for its microwave technology to counter drones, has now raised over $550 million
Shield AI (Defense): raised $240 million in a strategic funding round at a $5.3 billion valuation, nearly double its previous valuation. The company creates autonomous systems for defense
Peregrine Technologies (Law Enforcement): raised $190 million in a Series C round led by Sequoia Capital, achieving a $2.5 billion valuation. The company develops data analytics software for law enforcement agencies
Callio Therapeutics (Biotech): raised $187 million in a Series A round led by Frazier Life Sciences. The biotech startup is working on cancer therapies using antibody-drug conjugates
Unicorn Valuations Crest Higher (Crunchbase, 2 minute read)
The term "unicorn" has evolved since its introduction in 2013, when VC-backed private companies valued at over $1 billion were rare. Recently, however, unicorns have become more common, with generative AI leader Anthropic surpassing a $60 billion valuation after raising $3.5 billion at a $61.5 billion valuation. Several U.S. private companies now have valuations exceeding $45 billion, including SpaceX ($350 billion), OpenAI ($157 billion, with a potential $260 billion valuation in its next funding round), Stripe ($91.5 billion), and Databricks ($62 billion)
The momentum behind these high-valuation unicorns, especially in the artificial intelligence and space industries, continues to grow
Many of these startups have demonstrated the ability to raise consecutive rounds at escalating prices, often in quick succession
It's expected that many of these firms will eventually make their way to the public markets, either through IPOs or alternative methods like SPACs (Special Purpose Acquisition Companies)
INDUSTRY
Pandemic-era VC dry powder is still piling up (Pitchbook, 2 minute read)
The amount of dry powder (untapped capital) held by three- to five-year-old venture capital funds has reached levels not seen since the 2008 financial crisis. This surge in dry powder comes from the influx of capital during the venture boom of 2020 and 2021, but the subsequent market downturn has left VCs with excess funds and fewer investment opportunities. Of the $677 billion in global VC dry powder, 53% is in funds between three and five years old
The lack of IPOs has made LPs hesitant to commit to new funds, and VCs are now rationing their existing capital
Many VCs are turning to alternative liquidity options, such as continuation funds or flipping equity stakes into new vehicles
In 2024, VC fundraising worldwide dropped to $160 billion, just 39.8% of the record level seen in 2021
With longer gaps between funding rounds, GPs have fewer chances to use their dry powder, some are focusing more on follow-on investments or larger checks
Startup Funding Slows In February Amid Exit Uncertainty (Crunchbase, 3 minute read)
In February 2025, global venture funding totaled 19 billion dollars, marking one of the slowest months in the past year. The U.S. led the way with 10 billion dollars (54% of global funding). AI and healthcare sectors were the primary recipients, with 5.7 billion dollars (30%) directed toward AI and 22% going to healthcare and biotech. Hardware received 18%, and manufacturing attracted 15%
The largest round was a 600 million dollar investment in Saronic, a producer of unmanned maritime vehicles
Of the total funding, 9.7 billion dollars (50%) went to late-stage funding, 7 billion dollars to early-stage companies, and 2.3 billion dollars to seed-stage companies
Notably, 21 rounds were valued at 1 billion dollars or more, almost the same as in January (23 rounds), showing sustained large-scale investments despite the slower overall market
ECONOMIC SNAPSHOT
Stocks slide as Trump warns of US economy 'transition' (BBC, 5 minute read)
The US stock market saw a sharp sell-off on Monday due to growing concerns over the economic impact of escalating trade tensions. The S&P 500 dropped about 2%, the Nasdaq fell over 3.5%, and the Dow Jones declined 0.9%. Investors are worried that tariffs imposed by President Trump will lead to inflation and slow economic growth. Despite Trump's reassurances of a "period of transition," Commerce Secretary Howard Lutnick denied the possibility of a recession but admitted some prices may rise
Experts believe investors underestimated the trade war’s risks while focusing on deregulation and tax cuts
Global markets also felt the pressure, with European indices closing lower
Tesla shares fell 8%, and tech stocks like Nvidia and Meta saw declines of over 4%
China and Canada immediately retaliate against Trump’s tariffs. Mexico is next (CNN, 8 minute read)
President Trump imposed 25% tariffs on imports from Mexico and Canada, alongside a 20% tariff increase on Chinese goods, impacting over $1.4 trillion in goods traded between the US and its top trading partners. These measures, aimed at combating drug trafficking and strengthening domestic industries, risk exacerbating inflation and strain on the North American economy
China retaliated with 15% tariffs on chicken, wheat, and corn, and 10% tariffs on soybeans, pork, and other agricultural products
Canada announced 25% tariffs on $20.7 billion worth of US goods, with an additional $86.2 billion worth of goods to be taxed in 21 days. Mexico is expected to announce retaliatory measures soon
The tariffs come at a time when inflation remains high, with consumer spending falling by 0.2% in January, marking the first drop in nearly two years
The US economy faces growing uncertainty, as jobless claims have risen and federal layoffs have begun, potentially affecting local economies
Trump delays some tariffs on Mexico and Canada for one month (CNN, 9 minute read)
President Donald Trump has delayed tariffs on goods from Mexico and Canada under the USMCA trade agreement until April 2, following talks with Mexican President Claudia Sheinbaum and Canadian officials. This marks a reversal of his previous stance, which had sparked market volatility and concerns from businesses. Trump cited a strong working relationship with Sheinbaum, particularly on border security, as a key reason for the delay. However, tensions with Canada remain high, with Prime Minister Justin Trudeau maintaining retaliatory tariffs unless the U.S. fully removes its trade barriers
Ontario Premier Doug Ford also announced a 25% tariff on electricity exports to U.S. states in response
Markets initially plunged after Trump's tariff announcement but rebounded slightly after the delay
Investors remain wary of the administration’s unpredictable trade policies, which have created uncertainty for businesses and fueled stock market declines since Trump's return to office
US economy facing potential slowdown amid ‘heightened uncertainty’, says Fed chair (The Guardian, 2 minute read)
Federal Reserve Chair Jerome Powell highlighted concerns about a potential slowdown in consumer spending due to heightened uncertainty around the economic outlook, particularly amid significant policy changes from the new Trump administration in areas like trade, immigration, fiscal policy, and regulation. Powell emphasized that the Fed is in no rush to cut interest rates and will wait for more clarity on how these changes impact the economy
While Powell noted the economy remains in a "good place" with solid job growth, inflation expectations have moved higher in the short term, though long-term expectations are stable at the Fed's 2% target
Powell indicated the Fed is well-positioned to respond to changes, whether inflation slows faster or the economy weakens
The Fed is expected to maintain its current interest rate range of 4.25%-4.50% at its upcoming March meeting, with policymakers issuing new economic projections
Investors now anticipate that the Fed may approve three quarter-percentage-point rate cuts by the end of this year due to growing concerns about an economic slowdown
The US economy added 151,000 jobs in February in first full jobs report under Trump’s second term (CNN, 6 minute read)
The US economy added 151,000 jobs in February, showing a rebound in employment growth, although the unemployment rate edged up slightly to 4.1%. The February increase was below the expected 160,000 but improved from January's revised growth of 125,000. Despite solid job gains, the report highlights some concerns, including rising job cuts in the public sector, particularly due to federal government layoffs
The healthcare sector, a major job creator, continued to post strong growth, adding 52,000 jobs. However, changes in federal spending, including potential cuts to Medicaid, could impact future job growth in this sector
However, several signs of weakness emerged, including a slight dip in the labor force participation rate, a drop in workweek hours, and increased part-time workers
Economists warn that the economy may face challenges due to uncertainties, including federal worker layoffs and trade-related job losses, which could have broader implications for economic stability and inflation
IMPACT & CLIMATE RESILIENCE
US VC female founders dashboard (Pitchbook, 4 minute read)
Venture capital funding for female founders in the US has stabilized after a significant drop in 2021. While women-founded companies now receive a smaller share of deals, they are steadily increasing their share of capital raised. PitchBook's dashboard offers insights into funding trends for female founders over the last 16 years, with data on deals and capital raised by state, industry, and stage
So far in 2025, companies co-founded by women represent 18.3% of all VC deal counts, compared to 6.3% of companies founded solely by women
In terms of VC funding, only female-led companies received 1%, whereas those co-founded by both females and males garnered 17.7%
Major U.S. Companies Scale Back DEI Initiatives Amid Political Pressure (AP News, 4 minute read)
Several prominent U.S. companies, including Uber, Salesforce, Pepsi, Goldman Sachs, Google, Target, Meta Platforms, Amazon, McDonald’s, Walmart, Ford, Lowe’s, Harley-Davidson, Brown-Forman, John Deere, and Tractor Supply, have reduced their Diversity, Equity, and Inclusion (DEI) programs. This shift is partly attributed to conservative activism and executive orders from President Donald Trump targeting DEI practices
Changes include removing DEI sections from reports, ending goals for minority representation, and halting specific DEI programs
These developments have sparked debates over balancing diversity promotion with concerns about potential discrimination based on race or gender
IPO & EXITS
The Most-Active, Spendiest Startup Investors Are Lagging Greatly In Lucrative Exits (Crunchbase, 3 minute read)
Despite aggressive investment activity, top VC firms are experiencing a slowdown in exits, particularly IPOs. Andreessen Horowitz, Sequoia, Accel, Lightspeed, Insight Partners, and General Catalyst have led over 600 funding rounds worth $46 billion in the past nine quarters, yet only 10 of their portfolio companies have gone public since 2023, with none launching an IPO in 2024
M&A activity is also weak, with just 39 disclosed-price acquisitions, including notable deals like Mastercard’s $1.65 billion acquisition of Recorded Future
Many exits remain small or undisclosed, with 138 acquisitions lacking price details
Looking ahead, IPO activity remains stagnant despite a pipeline of private unicorns. Late-stage companies are opting for private fundraising, extending exit timelines
AI startup CoreWeave files for 2025’s first big tech IPO—and reveals it gets more than half its $1.9 billion in revenue from a single customer (Fortune, 4 minute read)
CoreWeave, an AI cloud provider backed by Nvidia, has filed for an IPO, marking the first major tech listing of 2025. The company has experienced explosive revenue growth, jumping from $16 million in 2022 to $1.92 billion in 2024, driven by high AI demand. However, CoreWeave also reported a net loss of $863 million in 2024 and relies heavily on a few key customers: Microsoft alone accounted for 62% of its revenue
The company, once a crypto-mining startup, has raised $12.9 billion in debt and is reportedly seeking a $35 billion valuation
Despite concerns over financial reporting weaknesses and customer concentration, CoreWeave expects continued expansion, citing nearly $8 billion in additional contracted spending
The IPO is seen as a test of investor appetite for AI-focused firms, especially in light of the tech IPO drought since 2021
With the Trump administration potentially easing regulatory restrictions on M&A, investors are watching closely to see if this signals a broader market rebound
AI8 VENTURES HIGHLIGHT
Trumponomics 2.0
Following President-elect Donald J. Trump’s victory over Kamala Harris, the financial world witnessed an immediate response. In just one week, the S&P 500’s value surged by $1.9 trillion, pushing stocks to record highs. The U.S. dollar strengthened globally and Bitcoin achieved unprecedented highs.
Wall Street is preparing for more government spending, lighter regulation, bigger deficits, and accelerating growth under a Trump administration and a Republican-led Congress.
Biden’s Economic Legacy
The Biden era was marked by headlines of massive layoffs and a cost of living crisis. The average worker faced double-digit increases in food, energy, housing, and other essential expenses that impacted middle-class families the most and consumed the bulk of household budgets. Despite record highs in the stock market, nearly half of Americans believed the nation was in a recession. Is this Biden’s fault? No. Global supply chain disruptions, stimulus checks, the aftermath of COVID-19 lockdowns, and the ripple effects of geopolitical tensions all contributed to soaring prices. Did Americans blame Biden? Election results suggest they did. Two-thirds of voters believed the economy was on the wrong track.
Hence, Trumponomics 2.0.
Trump’s campaign capitalized on promises of economic revival, pledging to deliver low taxes, low regulations, low energy costs, low interest rates, and low inflation -Trumponomics.
Alpha Insights: 2024 Venture Capital Report
Alpha Impact 8 Ventures is thrilled to share our latest insights into the dynamic world of investments with our 2024 Venture Capital Report.
Last year, Michael Burry, the legendary fund manager who famously profited from shorting the US housing market in 2008, bet more than $1.6 billion on a Wall Street crash by shorting the S&P 500 and Nasdaq-100. Nothing happened.
This year, Warren Buffett’s cash reserves reached a record $276.9 billion as Berkshire Hathaway trimmed its stock holdings in Apple. Some view it as a routine adjustment, while others speculate that Buffett perceives an overheated, overvalued market.
Everyone talks about a soft landing, but warning signs are flashing and the world seems to be teetering on a delicate balance. Is there something we’re missing? Is there an unseen factor at play?
Alpha Impact 8 Ventures is disrupting the industry, generating wealth, creating technology, providing access, leveling the play field, reducing systemic barriers, and building a resilient world.
Become part of our revolution.
Happy reading,
AI8 Ventures’ Research & Investment Team
