AI & Mega-Deals Redefine Valuations: What VCs Must Focus On in 2026

The VC landscape as we approach 2026 is characterized by a powerful tension between concentration and expansion—capital is consolidating around star companies and domains with intrinsic defensibility while opportunity is emerging among founders who bring deep industry context or geographic advantage.

Value over volume: 2025 posted dramatic increases in total VC funding value in the U.S.—e.g., a 66–75% year-over-year jump from Jan–Nov 2025 versus Jan–Nov 2024, even as deal counts fell marginally. Mega rounds and foundation model backers received disproportionate funding, underlining a rhythm where fewer, larger checks are made into fewer, more mature or high-potential companies.

Domain leadership: AI, enterprise tools, defense tech: AI continues to dominate both in funding allocations (foundation model rounds, infrastructure, tooling) and valuation multiples. Finance, accounting, and enterprise stacks—verticals often lagging when compared with consumer or ‘vibe’ software—are now surging as key targets. Defense tech/Venture is returning briskly, reflecting geostrategic tailwinds.

Geographic shift and founder edge: While Silicon Valley and the U.S. still lead in aggregate capital, capital is more purposeful: founders outside traditional hubs—if they have local market insights, domain IP, or customer access—are being seen with fresh eyes. Remote equity and “forward-deployed” strategies are emerging among top VCs.

Liquidity is creeping back: IPOs, secondaries, and M&A exits are reemerging, helping alleviate years of pressure for founders and limited partners. However, these channels are still not as predictable as during peak VC years. Realistic valuation expectations, post-IPO performance, and deal structures (e.g., down rounds) are resetting norms.

Strategic implications for founders and investors:

1. Expect higher bar for raises: founders need proof of ROI, unit economics, and defensibility before vocation gets capital. Those relying only on vision must adjust.
2. Valuation discipline becomes survival: overpaid growth phases of 2021‐22 are being audited now; inflated expectations without business fundamentals lead to vulnerability.
3. Investor model evolution: secondaries, cross-market LP exposure, and diversified exit pathways will be essential for institutional investors.
4. Opportunity in legacy sectors: manufacturing, defense, healthcare infrastructure, finance—all of these sectors offer “moats” for those who understand them intimately and can integrate AI meaningfully.

Open questions include how governments regulate AI and cross-border capital flows, whether public market multiples for AI hold or contract in 2026, and the extent to which climate tech can rebound under shifting policy incentives and cost pressures.