With Trump 2.0, the balance of power shifts from banks to Silicon Valley

January 20, 2025

Later today, President Donald Trump will be sworn back into office, the culmination of a comeback that seemed impossible just a few short years ago. Almost as improbable is the inner circle Trump has cultivated in his second tour of office: a coterie of Silicon Valley powerbrokers that seem ready to upend the longstanding balance of power in Washington, D.C.

Firebrand iconoclasts like Steve Bannon may have served as the face of Trump’s first term (or at least his ascent into office), but he still surrounded himself with members of the old guard. Figures like Gary Cohn and Steve Mnuchin kept the longstanding and bipartisan tradition of “Government Sachs”—top government officials coming from the venerated world of investment banking—alive.

That may be changing. Trump still has titans of traditional finance in top positions of power, albeit from institutions that are a little rougher around the edges than the big banks—people like Commerce Secretary nominee Howard Lutnick, the CEO of the Tether-affiliated Cantor Fitzgerald, and Treasury Secretary nominee Scott Bessent, a hedge fund manager who previously worked for George Soros.

And then there are the VCs. No one from Sand Hill Road has been elevated to the level of the cabinet, but you still have David Sacks as the nebulous crypto and AI czar, along with two fresh a16z alum—Scott Kupor and Sriram Krishnan—in senior positions. That’s not to mention the informal role that a score of VCs have taken on, including Marc Andreessen, who the Washington Post reported is “helping shape the Trump administration.”

I spoke with a policy head at a leading fintech company, who told me that the incoming regime is going to be deregulatory but not in the way that people expect. The essence of “Government Sachs” is that bankers shaped policy, whether it was tax cuts or deep financial reform—even Gary Gensler, an architect of Dodd-Frank and President Barack Obama’s Commodity Futures Trading Commission chair, had an illustrious career at Goldman before leaving for Washington.

But now, Goldman’s disruptors are at the reins. While it may be lost in wonky rule-making debates, fintechs and banks often spar on proposals at regulatory agencies like the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. Bank lobbyists have even stepped in to ask the CFPB to regulate more when it comes to fintechs, such as the American Bankers Association writing a letter earlier in January that it was “pleased” that the CFPB was establishing supervisory authority over certain digital payment apps. The ABA even worked with progressive Massachusetts Sen. Elizabeth Warren on a controversial anti-money laundering bill targeted at the crypto industry in late 2023.

If the VCs and Trump maintain their unlikely alliance, expect deregulation from all corners of government that will benefit the fintech sector, often at the expense of traditional banks—longstanding proposals like the OCC fintech charter, which circumvents the tricky state-by-state money transmitter license system for aspiring payment platforms. A16z, after all, is one of the top fintech boosters in Silicon Valley, from its crypto investment arm to bets on startups like Stripe and Jeeves.

I try to avoid this trope, but I was at a loss to come up with the equivalent of Government Sachs for this new era, and the best that ChatGPT could come up with was Gov-reessen Horowitz. Readers, let me know if you have anything better.

The czar and his ball…After securing a last-minute ticket, I scrambled to find a tux so I could attend Friday’s inaugural Crypto Ball in Washington. The glitzy black-tie affair, hosted just blocks from the White House, featured performances by Snoop Dogg and Rick Ross and appearances from figures like Speaker of the House Mike Johnson, Treasury nominee Scott Bessent, and Commerce nominee Howard Lutnick, along with crypto titans from Coinbase’s Brian Armstrong to the Winklevoss twins. The gala was presided over by David Sacks, who declared that the “reign of terror” against crypto was over.

Amid the celebration, Trump announced the launch of his memecoin on Truth Social and X. The move even confounded many in the audience with its naked attempt at self-enrichment—not to mention its ethics concerns. The cryptocurrency soared to a fully diluted market cap of over $70 billion by Sunday morning, though it has since dropped, with a Trump-owned entity owning 80% of the supply. You can read my full dispatch here.

Leo Schwartz
Twitter: @leomschwartz
Email: leo.schwartz@fortune.com
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VENTURE DEALS

- Phantom, a San Francisco-based crypto wallet, raised $150 million in Series C funding. Sequoia Capital and Paradigm led the round and were joined by existing investors a16z crypto, Variant, and others.

- Instabase, a San Francisco-based unstructured data management AI-powered platform, raised $100 million in Series D funding. QIA led the round and was joined by existing investors Greylock Partners, NEA, Andreessen Horowitz, and Index Ventures.

- Umoja Biopharma, a Seattle-based cell therapy biotech, raised $100 million in Series C funding. Double Point Ventures and DCVC Bio led the round and were joined by ARK Invest, Cormorant Asset Management, MPM Capital, and others.

- Netradyne, a San Diego-based AI-powered fleet safety platform, raised $90 million in Series D funding. Point72 Private Investments led the round and was joined by Qualcomm Ventures and Pavilion Capital.

- Leap, a New York City-based physical retail platform, raised $20 million in funding. Tribeca Venture Partners and DNX Ventures led the round and were joined by existing investors.

- Coram AI, a Sunnyvale, Calif.-based AI-powered video security software, raised $13.8 million in Series A funding. Battery Ventures led the round and was joined by existing investors 8VC and Mosaic Ventures.

- Olé Life, a Miami-based insurance provider in Latin America, raised $13 million in Series B funding. PayPal Ventures led the round and was joined by Mundi Ventures, AV8, and Advent Morro.

- Merit Systems, a Brooklyn-based attribution provider for open-source software development, raised $10 million in seed funding. A16z crypto and Blockchain Capital led the round and were joined by angel investors.

- nexos.ai, a Vilnius, Lithuania-based AI models management platform, raised $8 million in funding. Index Ventures led the round and was joined by Creandum and Dig Ventures.

- Spikerz, a Tel Aviv-based social media security provider, raised $7 million in funding. Disruptive AI led the round and was joined by Horizon Capital, Wix Ventures, Storytime Capital, and BDMI.

- Tapestry, a New York City-based Solana ecosystem social infrastructure platform, raised $5.8 million in Series A funding. Union Square Ventures and Fabric Ventures led the round and were joined by Stellation Capital, Slow, and Foresight Ventures.

- Bolt.Earth, a Bangalore, India-based electric vehicle charging solutions provider, raised $5 million in Series A+ funding. Version One Ventures led the round and was joined by existing investors Union Square Ventures and Prime Venture Partners.

- Borderless AI, a Toronto-based HR AI-agent developer, raised $5 million in a seed funding extension from Aidan Gomez, Ivan Zhang, and others.

- EarnOS, a Perth, Australia-based brand engagement platform, raised $5 million in funding. EV3 led the round and was joined by Animoca Brands, Laser Digital, GD1, and others.

- NULS, a Singapore-based blockchain infrastructure provider, raised $3.4 million in funding from Ape Terminal.

- BPR Hub, a San Francisco and Bangalore, India-based compliance management platform for manufacturing companies, raised $2.6 million in seed funding. Accel and Kae Capital led the round and were joined by angel investors.

PRIVATE EQUITY

- PSG invested $80 million in Core Sound Imaging, a Raleigh, N.C.-based medical imaging platform provider.

- Cumming Group, backed by New Mountain Capital and Tailwind Capital, acquired Lafferty, a Dublin-based project management advisory firm. Financial terms were not disclosed.

- Presidio Investors acquired Hellas Verona Football Club, a Verona, Italy-based professional soccer club. Financial terms were not disclosed.

- Thesis Capital Partners recapitalized and Seacoast Capital acquired a minority stake in Cadillac Services, a Bayamón, Puerto Rico-based uniform rental and laundry services provider. Financial terms were not disclosed.

EXITS

- Leeds Equity Partners acquired Learnosity, a Dublin-based AI-powered assessment solutions provider, from Battery Ventures. Financial terms were not disclosed.

OTHER

- Pittco acquired a minority stake in Groups360, a Nashville-based group hotel and event booking platform. Financial terms were not disclosed.

IPOS

- Odyssey Therapeutics, a Boston-based autoimmune diseases therapies developer, filed to go public on the Nasdaq. The company posted $3 million in collaboration revenue for the year ending Sept. 30, 2024. SR One Capital Management, OrbiMed, FMR, Foresite Capital, Logos Capital, and General Catalyst back the company.

- Sionna Therapeutics, a Waltham, Mass.-based cystic fibrosis therapies developer, filed to go public on the Nasdaq. Atlas Venture, OrbiMed, RA Capital, Enavate Sciences, TPG Growth, and Viking Global back the company.

FUNDS + FUNDS OF FUNDS

- Insight Partners, a New York City-based investment firm, raised $12.5 billion collectively for its thirteenth fund and second opportunity fund focused on software companies.

- Good Springs Capital, a New York City-based private equity firm, raised $570 million for its first fund focused on the industrial and services sectors.

PEOPLE

- Bain Capital Ventures, a San Francisco-based venture capital firm, added Mark Fiorentino as a partner. Previously, he was at Index Ventures.

- Congruent Ventures, a San Francisco-based venture capital firm, added Kevin Kopczynski as a partner and promoted Eliza Cushman to partner. Previously, Kopczynski was at Plug Power.

- Partners Capital, a London-based investment firm, promoted Lenia Ascenso and Leslie Fitzgerald to partner and Sameer Bahl, Jonny Brooks, Lauren Kirby, Joe Mason, and Amar Patel to managing director.

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