Monday, July 7, 2025

The fireworks between D.C. and Silicon Valley are just starting

Happy Monday, Fortune Tech Editor Alexei Oreskovic here today, pinch-hitting for Leo. As Americans celebrated a long Independence Day weekend, they were treated to a few noteworthy displays of festivity and fireworks in the ever-fascinating relationship between Silicon Valley and Washington, D.C.

On the festive side, venture investors and startup founders cheered a provision in the Trump tax and spending bill that broadens capital gains tax exemptions for stock sales at certain small businesses. The changes to the Qualified Small Business Stock program mean that owners and investors in a domestic “C” corporation with assets up to $75 million (up from the previous $50 million threshold) will get more ways to take advantage of the benefit. A wealth planning advisor told CNBC that an investor could now put “$74.9 million into a small business and have up to $749 million exempt from capital gains if it sold for more than 10 times the original basis.”

“We’re going to see a lot more founders / early employees selling secondary, but hopefully we see a lot more people wanting to join startups!” posted Menlo Ventures’ Deedy Das.

One entrepreneur who is not impressed: Elon Musk, who declared over the weekend that he is launching the America Party, a new political party to “fight the Republican/Democrat uniparty” in the wake of the bill’s passage through Congress. “What the heck was the point of @DOGE if he’s just going to increase the debt by $5 trillion??” Musk posted on Sunday.

As expected, Trump responded with vitriol, calling Musk a “TRAIN WRECK” who has gone “off the rails.”

It’s unclear if Musk has yet taken any concrete steps to certify the America Party (as of Saturday evening no paperwork had been filed, according to the New York Times). But the real question is what kind of concrete retribution Trump could try to exact on his erstwhile political ally and campaign donor. Trump has previously threatened to cut federal contracts and subsidies to Musk’s various businesses, which include SpaceX and Tesla (Tesla’s stock often tracks the ups and downs of Musk’s political fortunes), and has even mused about potentially having Musk deported.

In short, this super-sized donnybrook does not seem likely to quiet down anytime soon.

One more thing. Speaking of Trump and Silicon Valley, it’s not secret that the President would like Apple to make iPhones on American soil. I highly recommend this piece by my colleague Verne Kopytoff, who looked at what happened the last time a major tech company (Google) tried to build smartphones in the U.S.

Back to regular Term Sheet programming with Allie tomorrow,

Alexei Oreskovic
X: @lexnfx
Email: alexei.oreskovic@fortune.com
Submit a deal for the Term Sheet newsletter here.

Allie Garfinkle curated the deals section of today’s newsletter.

Venture Deals

- Nordic Air Defence, a Stockholm-based defense tech startup, has raised $3 million in strategic funding. Inflection led the round.

Exits

- THI Investments agreed to acquire a majority stake in Empowering Learning Group, a U.K.-based school services provider, from Graphite Capital. Financial terms were not disclosed.

Other

- DENSO acquired Netherland’s-based Axia vegetable seeds, developer of a wide range of high-performing tomato seeds known for their high disease resistance, good taste, quality and high yield. Investors include Kleiner Perkins, Temasek, and WP Global Partners.

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Off the rails