2026 Startup & VC Forecast: Investors Predict the Future
As we approach 2026, the startup and venture capital landscape is poised for significant shifts. Each year, we consult with leading investors to gain insights into the upcoming trends and challenges. Last year, predictions about a swift IPO market recovery proved optimistic, while the accelerating momentum of Artificial Intelligence (AI) was accurately foreseen. This year, GearTech spoke with five prominent investors across diverse markets to understand their preparations for 2026. This article delves into their predictions, offering a comprehensive forecast for founders and investors alike. We’ll explore fundraising strategies, investment areas, the potential for an IPO market thaw, and unexpected developments that could reshape the venture ecosystem.
What Will It Take to Raise Funding in 2026?
The bar for securing funding is undeniably rising. Investors are shifting their focus from purely visionary ideas to ventures demonstrating tangible results and sustainable growth. Here’s what the experts predict:
James Norman, Managing Partner, Black Ops VC
Norman emphasizes a move from “visionary” to “battle-tested” startups. Capital is no longer a primary competitive advantage. Investors are wary of “pilot purgatory” – situations where companies test AI solutions without a clear path to purchase. In 2026, founders must demonstrate not just traction, but a distinct distribution advantage. Investors are scrutinizing repeatable sales engines, proprietary workflows, and deep subject matter expertise that can withstand the intense competition. The focus is shifting towards building lasting, trustworthy, and scalable businesses, rather than simply being first to market with a flashy demo.
Morgan Blumberg, Principal, M13
Blumberg believes funding will remain accessible for exceptional founders, but the criteria will become more stringent. Mega seed rounds, particularly in AI application software, are expected to decrease due to increased competition and existing capital deployment. Founders will need to differentiate themselves through unique distribution channels or perspectives, moving beyond simply relying on market size and strong backgrounds. At Series A and B stages, explosive momentum and revenue sustainability will be crucial for securing top-quartile funding rounds.
Allen Taylor, Managing Partner, Endeavor Catalyst
Taylor highlights the importance of demonstrating significant growth and strong unit economics. Founders need to articulate a clear vision for the future, beyond their current achievements. Real revenue and customers are essential, but insufficient on their own. Investors are asking: “Where can this company realistically be in the next 12, 18, or 24 months?” Those who can answer this question convincingly are most likely to succeed.
Dorothy Chang, Partner, Flybridge Capital
Chang points out that the ease of building with genAI coding tools is leveling the playing field, intensifying competition. Founders seeking venture scale must focus on tackling genuinely large problems, building in areas where they have a unique advantage, and developing proprietary assets that are difficult to replicate. This could include contrarian approaches, exclusive data access, strong networks, or technological superiority.
Shamillah Bankiya, Partner, Dawn Capital
For enterprise-focused startups, Bankiya stresses the need to demonstrate a clear return on investment (ROI) for AI solutions. Proving the value proposition and showing a direct line of sight to ROI will be paramount for attracting investment.
Investment Areas for 2026
Investors are refining their focus, identifying sectors with high potential for growth and disruption. Here’s a breakdown of key areas:
Norman
Black Ops VC remains industry-agnostic but is prioritizing “high-context founders” – individuals with deep, lived experience in complex industries. The winning edge lies in leveraging AI to amplify existing expertise and establish a “day zero” distribution advantage, meaning the founder already knows who will buy the product.
Blumberg
M13 is particularly interested in “sleepy” or legacy industries where AI can deliver substantial ROI. These markets often have lower competition and inherent moats due to complexity. They also see opportunities in infrastructure supporting foundational model development, embodied AI, and world models. Healthcare, particularly systems of record and platforms, remains a major focus.
Taylor
Taylor advocates for looking beyond Silicon Valley, identifying strong opportunities in emerging markets like Poland, Turkey, and Greece. He notes a significant shift in venture capital distribution, with more than half of global investment and unicorns now located outside the U.S. Founders in Latin America, Africa, the Middle East, and South Asia are building venture-scale companies serving massive markets.
Chang
Chang is focused on founders tackling massive problems and leveraging technology for significant progress. She’s less interested in automating workflows and more focused on platform shifts that will define the future of technology and society.
Bankiya
Bankiya sees the intersection of software and hardware as the next frontier. Most of the world’s GDP is tied to physical industries, and software-only solutions are insufficient to unlock full growth potential.
Will the IPO Market Thaw?
The prospect of an IPO market recovery is a key question for 2026. Here’s what the investors predict:
Norman
Norman believes the IPO market will likely thaw not because conditions are ideal, but because the private market is running out of viable alternatives. Years of “paper markups” have delayed reality, but haven’t eliminated it. Companies, boards, and investors need a mechanism for liquidity and price discovery. Private credit has provided a temporary solution, but it’s unsustainable. Public markets remain the only place capable of providing capital at scale, and category-defining leaders will create the “air cover” needed to reopen the window.
Blumberg
Blumberg anticipates a reopening of the IPO markets driven by a backlog of companies planning to list, including major tech players like Anthropic and OpenAI. A successful mega IPO could generate significant momentum for others.
Taylor
Taylor predicts a strong year for IPOs in New York and, surprisingly, in international markets like Saudi Arabia. He emphasizes that the thaw will be global, with companies from Latin America and other emerging markets also participating.
Chang
Chang’s firm is adopting a more concentrated investment strategy, focusing on fewer, higher-conviction bets with larger check sizes and increased ownership.
Bankiya
Bankiya suggests a hard catalyst, such as a significant increase in energy prices impacting AI compute costs, could be required to reset the IPO markets.
Fund Manager Outlook for 2026
Here’s how fund managers are positioning themselves for the year ahead:
Norman
Norman describes 2026 as a “clearing event” for the venture market, separating durable platforms from transient ones. Fund I managers without a strong track record and Fund II managers facing distribution challenges will struggle. Family offices are becoming increasingly active, filling the void left by retreating institutional investors.
Blumberg
Blumberg believes we are in the early innings of the AI transformation and expects 2026 to be a strong vintage year. They are focusing on selective investments and providing operational support to their portfolio companies.
Taylor
Taylor is optimistic about backing bold founders building for the long term. He anticipates strong deployment and liquidity in 2026, with a more complete liquidity toolkit including M&A, secondaries, and IPOs.
Bankiya
Dawn Capital continues to seek out exceptional European founders building groundbreaking companies.
The Future of AI Investment
The intense interest in AI is expected to continue, but with a shift in focus:
Norman
Norman predicts the end of the “ChatGPT-first” era, as no single model will remain dominant. The focus will shift towards specialization and orchestrating multiple models to solve domain-specific problems.
Blumberg
Blumberg expects continued high interest in AI, but anticipates tuck-in acquisitions and wind-downs in highly concentrated sectors like coding automation. Enterprises will prioritize explainability, cost, and reliability, potentially leading to increased use of smaller, deterministic models.
Taylor
Taylor believes AI will become integrated into all new technology companies, ceasing to be a separate category. The opportunity lies in understanding where AI meaningfully changes cost structures, speed, or decision-making.
Chang
Chang anticipates more investment translating into enterprise value at the application level.
Bankiya
Bankiya believes AI investment will remain strong unless disrupted by negative catalysts like an energy crisis or rising default rates.
Unexpected Developments in 2026
Here are some potential surprises to watch for:
Norman
The quiet end of the “ChatGPT-first” era, with a shift towards multi-model architectures and proprietary workflows.
Blumberg
Successful startups built with only one or two rounds of capital, enabled by AI tooling and increased efficiency.
Taylor
A renaissance of investing in Ukrainian founders, the emergence of international companies going public in New York, and major technology IPOs from the Middle East.
2026 promises to be a pivotal year for the startup and venture capital ecosystem. By understanding the predictions of leading investors, founders and investors can navigate the evolving landscape and position themselves for success.