Tomasz Tunguz Blog (Theory Ventures) · 2025-04-03 · 427d

Tariff Impact on Startup Economics and Growth: AI Acceleration as a Mitigating Factor

Tariffs pose dual threats to startups through input costs and revenue uncertainty, with tech companies facing 48% international revenue exposure. However, software companies' high gross margins (70%+) and accelerating AI adoption for cost reduction may offset near-term headwinds, supported by long-term IT spend growth forecasts reaching 4% of GDP by 2030.

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Metrics in this report

Current IT Spend as % of GDP

2.5%%

point estimate

United States IT spending

International Revenue Exposure - S&P 500

13%%

mean

European revenue for broad market

International Revenue Exposure - S&P 500

29%%

mean

Total abroad revenue for broad market

International Revenue Exposure - Technology

15%%

mean

European revenue for tech companies

International Revenue Exposure - Technology

48%%

mean

Total abroad revenue for tech companies

Nasdaq Decline YTD

11%%

point estimate

Since beginning of 2025

Projected IT Spend as % of GDP

4%%

point estimate

United States IT spending by 2030

Software Gross Margins

70%+%

median

Software company industry average