Your guide to AI regulation and startup uncertainty

The quick answer

Your startup faces uncertainty from shifting AI regulation and government shutdowns. Follow these four steps to protect your business:

1. Assess your exposure: Identify all visa-dependent employees, government contracts, and regulatory touchpoints.
2. Build a financial buffer: Create a contingency plan for delayed funding rounds and operational disruptions.
3. Support your team: Proactively manage immigration timelines and communicate transparently about visa risks.
4. Monitor AI policy: Track federal legislation to stay compliant and find strategic advantages.

Why startup uncertainty is high right now

The current environment for tech startups is volatile. A combination of political shifts, intense lobbying, and government operational failures creates a trio of risks you must manage.

Understanding these specific factors is the first step toward building a resilient company.

1. Rapidly shifting AI regulation

The U.S. regulatory landscape for artificial intelligence is unpredictable. The current administration revoked a previous executive order on AI safety and signed a new one instructing agencies to suspend certain AI policies.

This signals a deregulatory approach aimed at promoting U.S. dominance in AI. While this may sound good, the lack of clear rules creates confusion for startups trying to build compliant and ethical products. There is no clear appetite in Congress for comprehensive AI legislation, adding to the instability.

2. A surge in AI lobbying shows industry concern

The numbers show how seriously AI companies are taking this uncertainty. In 2024, 648 companies lobbied on AI issues, a 141% increase from the previous year. Leading AI labs are spending millions to influence policy.

OpenAI, Anthropic, and Cohere alone spent a combined $2.71 million on lobbying in 2024, more than four times their 2023 total. They are pushing for targeted legislation like the CREATE AI Act, which focuses on benchmarking AI systems. This spending signals that the industry's largest players expect significant regulatory changes.

3. Government shutdown freezes operations

The current U.S. government shutdown directly threatens startup operations. Key agencies like the Department of Labor are closed, freezing critical processes for hiring and retaining talent.

Investors and founders warn that if a shutdown lasts more than a week, it can stifle deal flow and delay funding. For startups, this means immediate risk to both your team and your cash flow.

Your action plan for navigating uncertainty

Facing these challenges requires a tactical plan. You cannot control government policy, but you can control how your business prepares and responds. Focus your efforts on these four areas.

Step 1: Conduct an immediate risk audit

You need a clear picture of your company's specific vulnerabilities. Do not assume; document everything. Your audit should cover three key areas.

• Immigration Status: Create a confidential list of all employees on visas (including founders). Note their visa type (H-1B, O-1, etc.), status expiration date, and current stage in any renewal or application process.
• Operational Dependencies: List all business processes that rely on federal agencies. This includes E-Verify for new hires, Small Business Administration (SBA) loan applications, or federal grant reporting.
• Contractual Obligations: Review any contracts with government agencies or large corporations whose funding depends on federal budgets. Identify potential delays or breaches caused by a shutdown.

Step 2: Build a financial and operational buffer

Cash is your best defense against unpredictability. If your deal flow is at risk and operations can freeze, you need a financial cushion.

Review your runway and model a worst-case scenario where funding is delayed by one quarter. Pause non-essential hiring and spending to extend your cash reserves. Most importantly, communicate proactively with your current investors about the risks and your plan to mitigate them. A strong website built to convert can serve as a powerful tool for stakeholder communication, ensuring your message is clear and consistent.

Step 3: Support your visa-dependent team members

Government shutdowns hit visa workers the hardest. As CEO Michael Scarpati noted, "When processes like E-Verify or labor certifications stop, workers risk falling out of status." This creates massive anxiety for your team and disruption for your business.

Take these actions now:

• Consult Immigration Counsel: Engage an immigration attorney immediately to review the status of every affected employee. Understand your options for extensions and contingency filings.
• Communicate Clearly: Hold one-on-one meetings with affected team members. Be transparent about the situation and the steps you are taking to support them. Do not make promises you cannot keep.
• Cover Legal Fees: If you do not already, offer to cover all legal costs associated with visa renewals or status adjustments. This is a critical investment in retaining your key talent.

Step 4: Engage with AI policy proactively

While lobbying may be for giants like OpenAI, you can still engage with policy. Monitor proposed legislation and understand how it impacts your product and market. Use this knowledge to your advantage.

Create internal guidelines for responsible AI use based on emerging best practices. A clear, ethical framework is a selling point. Your brand's digital presence, from your website to your social media management, should reflect this commitment to trust and transparency. This helps you build a reputation that is resilient to regulatory shifts.

Turning AI regulation into a startup advantage

Many founders see regulation only as a threat. But some experts argue that clear, well-designed rules can be an advantage. The EU's more structured approach, for example, provides a clearer roadmap for compliance than the fragmented U.S. system.

Instead of waiting for rules to be forced upon you, use proposed regulations as a checklist. Build your product with fairness, transparency, and accountability in mind. Documenting these practices gives you a competitive edge and builds trust with customers who are increasingly wary of AI.

When you can prove your AI is safe and reliable, you create a moat that less prepared competitors cannot cross.

Managing the H-1B visa challenge

The shutdown's freeze on the Department of Labor is a critical issue for tech startups that rely on high-skilled foreign talent. Initial approvals for H-1B visas and green cards are halted, breaking the talent pipeline.

This problem is made worse by the recent announcement of a $100,000 H-1B visa application fee, which has caused "sticker shock" across the industry. This high cost, combined with processing freezes, creates an existential threat for visa-dependent teams.

Your immediate action is to work with your legal team to explore every available option. For official updates and guidance on visa processing, always refer to authoritative sources like U.S. Citizenship and Immigration Services (USCIS). The uncertainty makes professional legal advice more valuable than ever.

Staying informed on the broader policy debate, such as analysis provided by institutions like the Brookings Institution, can also help you anticipate future challenges and opportunities in the AI and tech policy landscape.