Editor’s note: Part of our 2026 forecast series including IPO market and startup M&A outlooks. In 2025, venture funding surged to the third highest on record, driven largely by AI, with $205 billion raised by midyear and the largest rounds ever, including $40 billion for OpenAI and $14.3 billion for Scale AI. Looking ahead to 2026, top venture capitalists expect a 10-25% increase in total venture dollars deployed, concentrated mainly on growth-stage AI companies with larger rounds while early stages hold steady or see some cooling. AI-related sectors—specifically foundation models, agentic infrastructure, and vertical AI—are projected to dominate investment share, while legacy SaaS and some climate tech sectors may decline. Capital will increasingly flow to ventures deeply embedded in AI technology rather than superficial AI wrappers. Liquidity events, including IPOs and M&A, are predicted to rise modestly as investors prioritize revenue growth and operational efficiency in funding decisions. Venture fundraising is expected to remain strong, with a preference for funds specializing in AI and domain expertise. Overall, 2026 is expected to reward startups with genuine AI innovation and robust fundamentals.
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