Trump's University Endowment Tax: VC Warns of Funding Impact

Potential Impact of Endowment Tax Increase on Venture Capital Funding

Ann Miura-Ko, co-founder of Floodgate Partners, has expressed concern regarding a potential substantial tax hike on university endowments proposed by the Trump administration.

Currently, the endowment tax stands at 1.4 percent. The proposed change would increase this to 35 percent.

Why the Increase Matters to VCs

While endowments are often perceived as financially secure, their significant role as limited partners in private equity – including venture capital – is often overlooked.

This proposed tax increase could, therefore, have a considerable effect on the availability of funding within the venture capital ecosystem.

Miura-Ko highlighted this potential impact during an Axios Dealmakers event on Wednesday.

Previous Attempts and Current Outlook

A similar bill was previously introduced by J.D. Vance, now Vice President-elect, during his time as a senator. However, it faced opposition and was ultimately blocked by Democrats.

The enactment of this tax increase remains uncertain.

Many individuals appointed to positions within the new administration, as well as numerous donors, have direct ties to the venture capital industry.

This presents a potential obstacle to the implementation of the proposed tax policy.

University endowments play a critical role in the financial landscape of venture capital, and changes to their tax status could ripple through the industry.