As artificial intelligence (AI) continues to shape industries worldwide, the regulatory landscape surrounding its use and development is becoming increasingly fragmented in the United States. This division manifests as a showdown between federal authorities, which seek uniform national policies, and state governments, many of which are actively enacting their own AI laws. As a serial entrepreneur operating within the European regulatory framework, I, Violetta Bonenkamp, offer a unique perspective on this federal vs. state faceoff, and the lessons entrepreneurs and startups can draw from it.
The AI Regulatory Battle: Federal vs. State
The rapid adoption of AI calls for a regulatory framework that protects consumers without stifling innovation. However, in the U.S., the lack of swift federal action has left states scrambling to establish their own rules. According to the National Conference of State Legislatures (NCSL), more than 700 AI-related bills were debated across all 50 states in 2024 alone, addressing issues like deepfakes, algorithmic transparency, consumer protection, and AI ethics.
By 2025, states such as California, Texas, and Colorado had passed comprehensive AI laws, while others adopted issue-specific regulations. California, for example, has positioned itself as a leader in AI oversight with laws like SB-53, placing stringent safety and transparency requirements on developers. On the other hand, Republican-led states, including Texas, favor a lighter regulatory touch more aligned with industry interests.
Federal legislators are alarmed by this developing “patchwork” regulatory environment. Big Tech representatives argue that differing state laws hinder innovation and burden companies as they navigate compliance in multiple jurisdictions. Efforts to create a uniform federal AI policy, including the introduction of national preemption laws, have gained momentum in Capitol Hill, though they face stiff resistance from state lawmakers.
Why This Matters for Entrepreneurs
From my experience as an entrepreneur navigating Europe’s General Data Protection Regulation (GDPR), I can assure you that regulatory uncertainty is one of the greatest threats to scaling a tech startup. Policies that vary from state to state, or even country to country, create operational inefficiencies, pose risks of non-compliance, and introduce uncertainty about market access. What’s happening in America’s AI regulatory clash should serve as a cautionary tale for startups worldwide.
Challenges and Lessons:
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Patchwork Compliance Costs: Companies catering to multiple U.S. states must invest heavily in legal counsel. For startups, substantial compliance costs could mean cutting critical investments in growth. For example, compliance with California's SB-53 might require additional resources to meet its stringent requirements, whereas Texas laws might barely apply similar pressures. Look to harmonized frameworks like the EU’s AI Act to understand how compliance can be streamlined.
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Missed Opportunities Due to Inaction: Companies hesitant to enter certain regulatory-heavy markets risk losing a share of those state economies. For instance, avoiding California because of its stringent AI oversight could forfeit access to Silicon Valley, a global tech hub. Entrepreneurs should plan for segmented go-to-market strategies rather than avoiding these markets.
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Innovation Speed vs. Compliance: Entrepreneurs worry that lengthy compliance reviews mandated by state laws could slow product development. However, this very compliance could be an asset, showcasing AI safety as a competitive differentiator to attract investors and customers.
A Brief How-To Guide for Navigating AI Compliance
For startups and entrepreneurs striving to balance innovation and compliance, here’s a practical strategy:
- Understand the Regulatory Landscape: Subscribe to platforms like the NCSL AI tracker and regulatory blogs for updated AI policies in U.S. states.
- Build for Transparency: Adopt open-source or transparent systems to align with regulations requiring disclosure, such as California’s and Colorado’s AI initiatives. AI platforms that log decisions and allow audits will win long-term trust.
- Invest in Governance: Establish an internal Compliance and Ethics Board (CEB) to stay ahead of new rules. For inspiration, consider emulating Dutch companies, which rely on proactive internal boards to navigate the stringent GDPR.
- Explore Overseas Markets: If the U.S. situation feels too unpredictable, look towards markets with clearer frameworks, like the European Union's AI ecosystem. While not perfect, the EU favors harmonized frameworks that minimize the patchwork issue.
- Leverage AI for AI Compliance: Ironically, there are tools to help monitor AI compliance. Tools like Edraw.AI or Supercharged AI Generators can assist in crafting compliance strategies while also boosting your overall processes.
Common Mistakes Startups Should Avoid
Although navigating AI regulation is tricky, failing to adhere to basic best practices can erode trust and stunt growth. Startups must pay attention to these common mistakes:
- Ignoring State-Level Rules: Many entrepreneurs wrongly assume federal rules are forthcoming and fail to comply with existing state legislation. This not only risks litigation but also reputational damage.
- Failing to Invest in Data Governance: If your AI is data-intensive, ignoring proper data storage and management protocols can lead to fines under laws like GDPR or its future U.S. counterparts.
- Underestimating Consumer Trust: Transparency is no longer a luxury, it’s expected. More than 80% of consumers prefer purchasing from companies known for responsible AI governance. Underestimating this trend can cost customers.
- Waiting for Federal Guidelines: Entrepreneurs who delay efforts to comply, hoping for a uniform federal framework, will likely fall behind competitors who already meet state standards.
Deep Insights: Europe vs. U.S. Regulatory Landscape
Europe provides valuable insights for U.S. entrepreneurs grappling with regulatory fragmentation. For instance, while the EU has already drafted the AI Act to harmonize regulations, member states still have room to introduce localized nuances. I’ve participated in forums with the OECD, where we discussed how such harmonization can simultaneously enhance trust and limit excessive compliance burdens for startups.
For instance, in my work with CADChain's blockchain and AI partnerships, we found that operating in jurisdictions with transparent legal frameworks, like the Dutch tech ecosystem, not only simplified compliance but also became a strategic advantage when pitching to grant bodies or investors. The U.S. could benefit from emulating such models rather than perpetuating the current state-federal divide.
Conclusion
The ongoing federal vs. state regulatory showdown over AI in the U.S. illustrates the challenges of governing emerging technologies while trying to balance innovation with consumer protection. Entrepreneurs, especially those looking to scale globally, must pay close attention to this dynamic because their strategies need to be both market-sensitive and regulation-smart.
For startups, there’s no one-size-fits-all solution, but transparent governance, segmentation strategies, and adoption of compliance tools can ease the regulatory burden. And remember, while regulatory challenges may slow you down, aligning your operations with evolving standards will ultimately build credibility, attract investment, and foster long-term growth.
The U.S. has much to learn from Europe’s approach to harmonized governance. As someone deeply embedded in both European and global ecosystems, I encourage entrepreneurs to take an active role in shaping the narrative. After all, with the speed at which AI is evolving, the only certainty is that regulatory landscapes won’t settle down anytime soon, so take the lead, stay informed, and keep innovating responsibly.
FAQ
1. What is causing the AI regulatory conflict in the U.S.?
The primary issue is the lack of a uniform federal AI framework, which has led individual states to create their own AI laws, resulting in a fragmented regulatory environment. Learn more about the AI regulatory conflict
2. How many state-level AI laws were passed in 2025?
As of 2025, over 100 AI-related laws have been adopted by 38 states, covering areas like deepfakes, transparency, and AI ethics. Explore the NCSL AI tracker
3. Which states are leading in AI regulation?
California, Colorado, and Texas are at the forefront. California emphasizes safety and transparency, while Texas adopts an industry-friendly, less stringent approach. Read about state-level AI legislation
4. Why are federal lawmakers concerned about state-level AI regulations?
Federal lawmakers are worried that the "patchwork" of state laws creates compliance challenges for companies and stifles innovation. Discover insights from TechCrunch
5. What is SB-53 in California?
SB-53 is a California law imposing strict requirements on AI transparency and safety measures for developers. It represents one of the most robust state-level AI regulations. Learn more about California SB-53
6. How are AI industry leaders responding to the patchwork regulations?
Big Tech and startup representatives argue that these fragmented state laws hinder U.S. innovation and global competitiveness. Many are advocating for a federal AI policy to standardize regulations. Explore their position here
7. Is the federal government attempting to override state AI laws?
Yes, efforts include proposals such as a federal AI preemption law and a draft executive order to establish national standards that would override state regulations. Learn about the White House’s draft executive order
8. What challenges do startups face due to fragmented regulations?
Startups struggle with compliance costs, operational inefficiencies, and the complexity of navigating differing state laws, threatening their growth and market access. Discover insights for startups
9. What alternative regulatory models could the U.S. follow?
The European Union's harmonized AI Act offers a unified approach to regulation, reducing operational burdens for companies working across borders. Learn more about the EU’s AI Act
10. Why is AI regulation significant for consumer protection?
Without proper regulation, consumers may face risks such as misuse of personal data, algorithmic discrimination, and the harmful impacts of AI-based decisions like deepfakes or erroneous surveillance. Learn about state efforts in AI transparency
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta Bonenkamp's expertise in CAD sector, IP protection and blockchain
Violetta Bonenkamp is recognized as a multidisciplinary expert with significant achievements in the CAD sector, intellectual property (IP) protection, and blockchain technology.
CAD Sector:
- Violetta is the CEO and co-founder of CADChain, a deep tech startup focused on developing IP management software specifically for CAD (Computer-Aided Design) data. CADChain addresses the lack of industry standards for CAD data protection and sharing, using innovative technology to secure and manage design data.
- She has led the company since its inception in 2018, overseeing R&D, PR, and business development, and driving the creation of products for platforms such as Autodesk Inventor, Blender, and SolidWorks.
- Her leadership has been instrumental in scaling CADChain from a small team to a significant player in the deeptech space, with a diverse, international team.
IP Protection:
- Violetta has built deep expertise in intellectual property, combining academic training with practical startup experience. She has taken specialized courses in IP from institutions like WIPO and the EU IPO.
- She is known for sharing actionable strategies for startup IP protection, leveraging both legal and technological approaches, and has published guides and content on this topic for the entrepreneurial community.
- Her work at CADChain directly addresses the need for robust IP protection in the engineering and design industries, integrating cybersecurity and compliance measures to safeguard digital assets.
Blockchain:
- Violetta’s entry into the blockchain sector began with the founding of CADChain, which uses blockchain as a core technology for securing and managing CAD data.
- She holds several certifications in blockchain and has participated in major hackathons and policy forums, such as the OECD Global Blockchain Policy Forum.
- Her expertise extends to applying blockchain for IP management, ensuring data integrity, traceability, and secure sharing in the CAD industry.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the "gamepreneurship" methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the POV of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.
About the Publication
Fe/male Switch is an innovative startup platform designed to empower women entrepreneurs through an immersive, game-like experience. Founded in 2020 during the pandemic "without any funding and without any code," this non-profit initiative has evolved into a comprehensive educational tool for aspiring female entrepreneurs.The platform was co-founded by Violetta Shishkina-Bonenkamp, who serves as CEO and one of the lead authors of the Startup News branch.
Mission and Purpose
Fe/male Switch Foundation was created to address the gender gap in the tech and entrepreneurship space. The platform aims to skill-up future female tech leaders and empower them to create resilient and innovative tech startups through what they call "gamepreneurship". By putting players in a virtual startup village where they must survive and thrive, the startup game allows women to test their entrepreneurial abilities without financial risk.
Key Features
The platform offers a unique blend of news, resources,learning, networking, and practical application within a supportive, female-focused environment:
- Skill Lab: Micro-modules covering essential startup skills
- Virtual Startup Building: Create or join startups and tackle real-world challenges
- AI Co-founder (PlayPal): Guides users through the startup process
- SANDBOX: A testing environment for idea validation before launch
- Wellness Integration: Virtual activities to balance work and self-care
- Marketplace: Buy or sell expert sessions and tutorials
Impact and Growth
Since its inception, Fe/male Switch has shown impressive growth:
- 5,000+ female entrepreneurs in the community
- 100+ startup tools built
- 5,000+ pieces of articles and news written
- 1,000 unique business ideas for women created
Partnerships
Fe/male Switch has formed strategic partnerships to enhance its offerings. In January 2022, it teamed up with global website builder Tilda to provide free access to website building tools and mentorship services for Fe/male Switch participants.
Recognition
Fe/male Switch has received media attention for its innovative approach to closing the gender gap in tech entrepreneurship. The platform has been featured in various publications highlighting its unique "play to learn and earn" model.