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Welcome back to the Collective. This week’s essay is going to strike a very different tone than last week’s, so buckle up. OpenAI’s improved image generation model is certainly newsworthy, but in the past week since we released that article, the entire global economic system has changed.

Welcome to The Tariff Economy.

The Tariff Economy represents a significant shift in the economic assumptions that have underpinned startup formation and venture funding for decades.

These policies aren't just technical adjustments to trade balances. Rather, they signal a change in how capital flows through innovation ecosystems.

As we all explore the implications, today we’ll examine how these policies are reconfiguring relationships between founders, investors, and markets: and how the best players in the ecosystem are preparing.

It’s a whole new game. The time is now to be prepared, ready, and able for what’s to come.

Let’s do it.

— By Antonio DiMeglio and Leon Li

A Convergence of Forces in VC