Getty Images; Rebecca Zisser/BI
- Washington, DC's tech scene is surging under the Trump administration.
- Local startups are gaining ground, with defense tech leading the charge.
- DMV investors think the district has all the makings of a new tech hub.
DC investors have long hoped to make the capital a tech startup hub. In Trump's second term, those ambitions are finally taking hold.
The new presidential administration has brought a number of Silicon Valley heavyweights to DC. Big names in tech and venture capital like Tesla's Elon Musk and Andreessen Horowitz's Scott Kupor now hold positions in the federal government, while other Big Tech billionaires like Mark Zuckerberg are spending more time in Washington, hoping to exert their influence on new tech policies.
DC is already seeing rising VC interest — top-tier venture firms Andreessen Horowitz and General Catalyst have opened offices in the area in the past year, and hot defense tech startups with significant DC footprints like Anduril are landing more checks and contracts. Just last week, A16z hosted an "American Dynamism" conference in DC, opened by Vice President JD Vance.
"It's time to align the interests of our technology firms with the interests of the United States of America writ large," Vance said at the summit.
Now, DC is welcoming a wave of tech elites, many with backgrounds in startups and VC, that are "startup-curious," said James Barlia, executive director of the startup incubator Station DC.
"There's a new power base that's forming in DC, and it's creating a real opportunity for founders," he said.
Paige Soya, a managing partner at local VC firm and angel syndicate K St Capital, said the arrival of the tech aristocracy, along with other affluent officials in Trump's administration, is driving a real estate rush for luxury, multimillion-dollar properties in the district — and bringing the potential for those elites to angel invest in local startups.
"A lot of these people would have never thought of DC as a place to find good deals. But because they're here, they're organically starting to see it. I think that's going to impact funding on its own," she said.
Barlia is optimistic that tech's elevated presence in the district will do more than bring money to the DC startup community: it could inject DC with a dose of Silicon Valley's culture of disruption.
"I feel like there's now deeper connectivity between Silicon Valley and DC, including ideologically and philosophically," he said.
Julia Demaree Nikhinson - Pool/Getty Images
Capital flows to the capital city
In the past year, as AI took over Silicon Valley and Trump effused a pro-tech, anti-AI-regulation stance during his presidential campaign, several powerful VCs emerged to support Trump's administration. Delian Asparouhov, a partner at Founder's Fund, posted on X after Trump chose Vance as his running mate, '"IT'S JD VANCE. WE HAVE A FORMER TECH VC IN THE WHITE HOUSE. GREATEST COUNTRY ON EARTH BABY."
Their exuberance brings new momentum to DC's tech ecosystem, which has been steadily growing as startups seek government contracts and influence on Capitol Hill.
The district now boasts the fifth-most developed VC ecosystem in the US, according to PitchBook, despite being the country's 23rd-largest city, per 2022 Census data.
Tech giants like Palantir, which runs an office in Georgetown, and Microsoft, which has offices in DC's Mt. Vernon Square and across the Potomac in Arlington, Virginia, have helped draw in tech and investment talent over time.
Now, VC firms like A16z and General Catalyst aren't the only ones interested in the DMV's startup scene — the district itself is now betting on area startups.
Mayor Muriel Bowser launched DC's first Venture Capital Program in December, with $26 million to invest in early-stage DC startups. Soya's K St Capital was picked to manage the funds. Every dollar of public funding has to be matched by private funding, Soya noted, so DC startups could receive up to $52 million through the program.
K St Capital has been building its DC firm for over a decade, alongside other early-stage investors such as Saas Ventures, founded in 2017. Newer projects such as District Angels launched last year to pool local angel investors to back DC startups.
However, while the Trump administration has forged a newfound alliance with the tech industry, the Department of Government Efficiency's slew of cuts to federal agencies could threaten the industry's growth in DC. The district's chief financial officer has estimated that the layoffs could cost DC more than 40,000 jobs over the next four years.
But Barlia said he thinks Elon Musk's much-criticized push to "trim the fat" in the federal government will make DC stronger.
"Elon's approach may make some people uncomfortable, but the underlying problem is undeniable. Yes, there's near-term disruption — RIFs and potential economic contraction — but in the long run, it should push DC to build a more resilient, opportunity-rich economy," he said.
"That won't come from more government or big corporate jobs, but by embracing new ideas, startups, and innovation."
AP Photo/Matt Rourke
Defense tech at the forefront
DC is, first and foremost, a government town, with an inherent federal bureaucracy that's at odds with many startups' "move fast and break things" ethos, said John Doyle, a former Palantir executive and founder of defense startup Cape.
Still, Doyle and Barlia said they're seeing interest from federal agencies, particularly the Department of Defense, to work with startups and move fast — faster than is typical of the government, at least. Point72 Ventures defense tech partner Chris Morales, who's based in DC, pointed to Defense Secretary Pete Hegseth's March memo about the DoD's plans to modernize how it acquires software and contracts with companies. Morales said the memo is one of multiple signs his firm is seeing that the agency is getting more serious about tech innovation.
While Soya and Barlia said they're seeing startups across various industries gain traction in DC, defense tech easily remains the hottest among them.
Cape landed its first contract with the Department of Defense in 2023, a deal to provide its cybersecurity-focused mobile carrier services to Naval forces in Guam after a Chinese state-sponsored hacking group targeted the base's tech infrastructure.
Cape has since raised $61 million in financing rounds led by Andreessen Horowitz and A*, announced in April 2024.
Cape
Part of the reason Cape picked DC as its headquarters was to rub shoulders with the federal agencies it hoped to partner with, said Doyle. As he noted, "proximity matters."
It's no surprise then that a number of defense tech startups have opened offices in DC, including Anduril, which recently raised $1.5 billion at a $14 billion valuation in August 2024, and Shield AI, which raised $240 million this month in a funding round that valued the autonomous drone maker at $5.3 billion.
Startups in the DMV can also tap into the area's hard tech talent, which could help continue to boost the area's presence as a tech hub.
Northern Virginia hosts one of the world's largest concentrations of data centers. Amazon opened its second headquarters in Arlington, Virginia, in 2023. Other tech giants, including Microsoft and Google, have outposts in the area. And many of the country's largest aerospace and defense companies, including Lockheed Martin and Boeing, are headquartered in the DMV.
Doyle said the DMV's deep bench of technical expertise has helped Cape find numerous backend engineers in the area. He admitted, though, that DC has a smaller candidate pool than traditional tech hubs like San Francisco and New York City. Cape also has a New York office, for which Doyle said it's generally easier to source talent, especially front-end engineers and designers.
Opposing pressures
As some VCs flock to the DC area, others are fleeing. Sequoia Capital plans to shutter its DC office at the end of March and cut its policy team there, despite other major VC firms moving in.
A Sequoia spokesperson told BI that the firm built its policy team in DC to strengthen its connections, and its portfolio companies' connections, with policymakers and other experts. The policy team set Sequoia up favorably to carry those relationships forward in the US and Europe, the spokesperson said.
Khosla Ventures managing director Keith Rabois said at a conference in February that DC "definitely still is not where early-stage venture capitalists should be spending too much time," despite saying he'd recently run into Mark Zuckerberg and Nvidia CEO Jensen Huang in the city.
Rafael Suanes
DC's venture scene may not yet rival San Francisco's, but it's feeling fresh momentum nonetheless. A16z's American Dynamism Summit largely set out to connect San Francisco's VC ecosystem with DC policymakers, but DC-based investors were also in attendance this year, said Jonathan Lacoste, a general partner at Austin, Texas-based Space VC, who attended the conference.
"There were plenty of investors at the event, not just from the West Coast, but increasingly from DC's venture landscape too," he told BI.
As DC's tech community grows, so does its appetite for more networking opportunities. Catherine McMillan, an analyst at tech-focused consulting firm Booz Allen Hamilton, founded the DC chapter of the GenAI Collective, a generative AI networking nonprofit started in San Francisco in 2023. McMillan also helps run two other tech communities in the district: DC Tech Parties and She's In Tech.
McMillan's DC chapter of the GenAI collective now has 700 members, with each event bringing in fresh faces.
"It's an undervalued tech market because it doesn't have the same level of visibility that SF or New York have. That's part of what I'm trying to do, shed a light on the cool entrepreneurial things that are happening in the DMV," she said. "We have a Big Tech presence, but we also have an ecosystem in its own right."
from All Content from Business Insider https://www.businessinsider.com/tech-new-power-base-washington-trump-administration-dc-2025-3
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