Last year it was the third largest ever in global venture capital fundingbehind only the peaks of 2021 And 2022. It was also a surprisingly strong year for IPOs and we saw an uptick in startup M&A numbers.
All of this sets the stage for what industry insiders we spoke with expect to be another strong year in terms of early-stage investments, acquisitions and new public market listings. At the same time, there are growing concerns about the concentration of capital, as venture capital investments accumulate in a relatively small cohort of companies, many of them are based in the San Francisco Bay Area.
With that, here’s a closer look at six trends we expect to see develop in 2026.
1. Good performance of the IPO market
Even though the IPO window hasn’t stayed open all year, 2025 has proven to be surprisingly strong for new offerings. At least 23 US-based companies are listed worth more than $1 billion in 2025, up from nine in 2024. Total IPO price valuations of these billion-dollar listings have reached at least $125 billion, more than double year-over-year.
This year, the experts we spoke with expect that momentum to continue. In this market, “a profitable company – especially a company that is either an AI company or has a good story about how AI will be a tailwind for its business – are good candidates for an IPO in 2026,” Aman Singha partner company of Fenwick and West who was involved in the CoreWeave, Figma And Navan IPOs, said my colleague Gene Teare end of December.
Among the companies the most monitored potential deals this year are fintech unicorns such as Plaid And Revolutionand dynamic AI companies, including OpenAI, Data bricks And Join.
Yet over the first month of this year, that enthusiasm has waned somewhat. As a contributing journalist Joanna Glasner notes, even when open, the IPO window is still just a quick market reversal after another close.
So even if a new offering from a dynamic company like EspaceX or OpenAI would help keep the window open, more mundane IPOs from run-of-the-mill enterprise SaaS startups likely won’t be enough to fuel a new IPO boom.
2. A flurry of M&A activity
Startup acquisitions are also expected to become more common this year, especially if the IPO market gains momentum.
“A healthy IPO market tends to increase M&A activity rather than reduce it” Anuj Bahalleader in technology, media and telecoms consulting and strategy for KPMG United Statestold the journalist Mary Ann Azevedo. “Many companies are pursuing dual-track strategies, simultaneously preparing for an IPO while exploring mergers and acquisitions, which gives them greater flexibility and leverage in negotiations. The threat of a public offering can be used as a bargaining chip to drive up the sale price of a startup.”
Last year, there were about 2,300 M&A deals for venture-backed startups, according to data from Crunchbase. Industry insiders we spoke with said they expect negotiations to continue at a brisk pace in 2026in part as larger companies make strategic purchases for startup talent and startups last funded in the boom five years ago seek exit opportunities.
“On the one hand, large companies are snapping up Series A startups for talent and technology – we can call it the AI acquisition trend. Many teams with less than 100 employees have landed exits of over $100 million,” Lucas Hoebarth, EY-Parthenon Americas leader in the technology sector, told us. “On the other hand, a cohort of 3-6 year old unicorns that were stalled in their IPO plans are finally selling.”
3. Solid financing, particularly for these sectors
Four investors who spoke with Mary Ann all agreed that they expected a further increase in venture financing this year, with forecasts ranging from 10% to 25% year over year.
These investors expect funding in 2026 to continue to focus on AI-related companies and adjacent sectors such as robotics and defense technology, at the expense of areas like climate technology, cryptography and vertical AI that do not have strong differentiation or moat.
“Last year demonstrated how difficult it is to survive as an AI wrapper company” Georges Mathieugeneral director of Insight Partners » Mary Ann said last month. “Even vertical AI providers need to be deeply integrated into industry workflows to differentiate themselves from a base model performing more repetitive tasks in the market.”
Many investors also said they expected capital to focus on two ends of the startup spectrum: big growth cycles for established players to maintain their market lead, and larger seed and early-stage deals for promising startups that appear poised to disrupt.
“I expect net new dollars to focus more on seed and growth deals, primarily because seed rounds are becoming quite large thanks to fundraising led by neolabs, neoclouds and others. Additionally, the capital needs of existing high-growth companies will continue to grow due to their reliance on spending on labs and cutting-edge hardware.” Menlo Ventures partner Tim Tully told us.
We are already seeing these predictions regarding early-stage megaround increase comes to fruition.
4. Capital concentration and increased AI bubble fears
Last year, venture capital funding was disproportionately allocated to a select group of companies. OpenAI, Evolving AI, Anthropic, Prometheus Project And xAI each raised more than $5 billion in 2025. In total, these five companies raised $84 billion, or 20% of all venture capital funding last year – an unprecedented amount for the largest funding in a given year, according to an analysis of our data.
Last year was also defined by new startup records: the largest private funding round of all time ($40 billion for OpenAI), the largest private valuation ever recorded ($800 billion valuation for SpaceX), and the largest venture-backed acquisition ever recorded (Acethe purchase of 32 billion dollars by Google).
All this to say: Investors have been placing bigger, bolder, riskier bets on a smaller cohort of companies. This concentration of capital – as well as the circular nature of transactions between companies like OpenAI, Nvidia And Oracle — have increased concerns about an AI bubble This could have significant implications for private and public technology companies, as well as the global economy as a whole.
5. More tech layoffs due to AI
AI has also prompted massive layoffs. Last year we saw job cuts at companies including Sales force, Microsoft And Amazon attributed at least in part to artificial intelligence.
“I reduced it from 9,000 heads to about 5,000, because I need fewer heads,” Salesforce CEO Marc Benioff said last fall, explaining the San Francisco-based company’s decision to reduce its customer service workforce.
In total, around 55,000 layoffs in the United States in 2025 cited AI as a factor, according to recruitment firm Challenger, Gray and Christmas.
Unfortunately, we expect to see more tech employers take similar steps this year, as companies focus on cutting costs and replacing some of their human workers with cheaper AI substitutes.
6. The rebound of Fintech
One of the startup sectors that saw a particularly healthy rebound last year was fintech, with funding pouring into the sector. a 27% year-over-year jump to $51.8 billion. Investors in space are optimistic for 2026 Also.
Fintech venture capital firms told Mary Ann that they expect funding growth in 2026 to continue to focus on pre-IPO companies, that mergers and acquisitions will accelerate, and that they see robust investments in startups that add value to their Fintech offerings through AI.
Northwest vice-president Jordan Leites said it expects stablecoins, agent payments and AI-native tools to be particularly important areas for fintech investments this year.
The underlying growth and performance of businesses in the AI era is “staggering and unlike anything we’ve seen before,” even compared to 2020 and 2021, Amias Gerety, partner and head of US investments at QED Investorstold us.
“Absent a broader recession, we expect some pullback and a return to rationality in the financing market,” he said, “but we think financing in fintech and AI applications should remain quite strong.”
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Illustration: Dom Guzman
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