IPOs are being pulled and the market is yo-yoing. What’s next?

Calling this a chaotic week on Wall Street might be underselling the situation. We’ve seen drops of more than 2,000 points in the Dow and then gains of even more. In the past five days, the Dow has swung almost 3,300 points.

That volatility has pushed more than a dozen companies to shelve their IPO plans, including some of the year’s most-highly anticipated debuts. StubHub and Klarna, both of which have already filed their prospectuses with the Securities and Exchange Commission (SEC), have delayed their plans. Fintech company Chime, which reportedly was on the verge of revealing its SEC filing, changed its mind at the last minute last week.

Mergers and acquisitions? Things aren’t much better there. The first quarter of this year saw fewer than 80 M&A announcements—the lowest quarterly total since Q2 2020—and things aren’t looking much sunnier for Q2.

But it’s not just Donald Trump’s tariffs—or the global response—that’s spooking markets. The real problem is the complete lack of predictability about what happens next.

What will the U.S. reciprocal tariff rate—most of which Trump paused on Wednesday for 90 days—end up being for affected countries? Will the disruption be temporary, or will Trump keep these in place for the rest of his term? How will all of this ripple through global supply chains?

There are, unfortunately, no hard answers to any of these questions.

The Venture Capital conundrum

That’s not only making it confusing for consumers, economists, and business owners, it’s making startup owners worry about their odds of finding venture capital funding.

That’s understandable, but it’s worth remembering that the disorder surrounding tariffs and the market has been going on for just one week—and that’s hardly enough time to have any real impact on the funding space.

Still, venture firms that back companies approaching an IPO or exit are the most likely to feel the squeeze, investors say.

“Investors are trying to figure out ‘how is this going to shake out?'” says Matt Murphy, a partner at Menlo Ventures. “I think that has a bigger impact for the later versus the early stage market. Your valuations are higher and you’re betting on the P&L and the financials of the company; whereas early on, you’re betting on product, team, and market.”

Many of Menlo’s portfolio companies are digital-based—meaning tariffs, as currently structured, won’t directly affect them since they don’t sell physical goods. The bigger worry is whether potential customers will hoard cash and delay or skip new software purchases altogether.

“It’s not the direct impact of the tariffs [for them], it’s the indirect,” says Murphy.

And looming over all this, of course, is the threat of a recession.

Moody’s economist Mark Zandi is still pegging the odds of a recession this year at 60%, even with Trump’s 90-day tariff pause. Users of the prediction market Kalshi put the odds even higher, at 70%—up from just 40% a week ago. JPMorgan says the Russell 2000 Index is now pricing in a 79% chance of an economic downturn.

A recession would not only impact consumers, it would also potentially dampen investments, again because businesses would have a harder time selling their product. It would not, however, be devastating for funding companies, says Murphy.

“Ultimately, we’ll figure out some new equilibrium around these tariffs,” he says. “Venture will find its normal footing, and the value and impact of the technology will trump [a possible] recession.” 

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