What’s ahead for startups and VCs in 2026? Investors weigh in

Each year, we ask some top investors what they think the next year will bring. Last year, some investors thought the IPO market would be back up and running by now (which didn’t quite happen), while others thought the momentum behind AI was poised to accelerate (and they were right). This year, TechCrunch did the same thing, talking to five investors from various markets about what they are preparing for in 2026.

Here is what they said.

What will it take for a founder to raise next year, compared to last year?

James Norman, Managing Partner, Black Ops VC

Raising in 2025 requires a shift from “visionary” to “battle-tested.” In previous years, capital has been a primary moat; now investors are wary of “pilot purgatory,” where enterprises test AI solutions without an urgent need to buy. In 2026, the bar is rising. Founders must prove to VCs they have more than just traction; they need a distribution advantage. Investors are digging deeper into repeatable sales engines, proprietary workflow/processes, and deep subject matter expertise that holds up against the “capital arms race.” VCs no longer care about who’s first to market with a flashy demo. They want to know who’s building something that can last, earn trust, and scale long-term.

Morgan Blumberg, Principal, M13

We believe the funding markets will always be available for the best founders, but the bar will rise. At the earliest stages, especially in AI application software, I do expect fewer mega seed rounds given intense competition and capital already deployed across many categories. Founders will need to stand out with unique distribution channels or perspectives, not just by relying on a large market opportunity and strong backgrounds. Capital moats have already formed around crowded sectors. At the Series A and B stages, top-quartile rounds will require clear evidence of explosive momentum. The market has now adjusted to these expectations with increased scrutiny on the sustainability of revenue.

Allen Taylor, Managing Partner, Endeavor Catalyst

Bigger, faster, better: bigger total addressable market, faster growth, better unit economics. We made 50 investments last year across 25 countries, and we expect to do more this year, so we’re seeing founders at very different stages and in very different markets. The strongest founders aren’t just showing what they’ve built so far — they’re helping investors understand where the business is going next. Real revenue and real customers still matter, but they’re not sufficient on their own. As an investor, I’m always asking: Where is this company today, and where could it realistically be in the next 12, 18, or 24 months? The founders who raise are the ones who can answer that question clearly and credibly.

Dorothy Chang, Partner, Flybridge Capital

A lot of founders are finding it easy to build new things because generative AI coding tools are so advanced today. But in truth, those tools are leveling the playing field for everyone, and competition is more fierce than ever. So founders building for venture scale need to make sure that they are (1) truly tackling a big idea, not just something that’s easy to vibe code; (2) building in a problem area that they are uniquely positioned to win; and (3) bringing something proprietary that can’t easily be replicated. This could be a contrarian approach with unique insights, proprietary access to data, deep networks/relationships, a technological advantage, etc. These aren’t new concepts, but the stakes and expectations are higher than ever.

Shamillah Bankiya, Partner, Dawn Capital

For founders selling to enterprises, I think the entire world has gotten smarter on the value that AI can deliver, and as such, proving — showing line of sight to ROI — will be more important than ever to investors. Founders who can prove that their products offer much higher value have the best shot at raising capital.

What areas are you looking to invest in and why?

Norman

As a fund, we remain industry-agnostic generalists, but we are always sharpening our lens. Today we’re looking for “high-context founders.” In a world where AI has commoditized the ability to write code, the winning edge is now lived experience. We want to invest in the founder who has spent years in the trenches of a complex industry and possesses the bespoke expertise that can be 10x’d by AI. For us, the ideal investment is a marriage of deep subject matter expertise and a “day zero” distribution advantage, meaning founders don’t just know what to build but already know exactly who is going to buy it.

Blumberg

We are particularly interested in sleepy or legacy industries that sit outside core tech founder appetite, where AI can offer step-change ROI that drives adoption. These markets have lower competition and moats driven by complexity that often come with less obvious sectors. We also believe 2026 will be a great year for infrastructure supporting foundational model development, as well as frontier research categories like embodied AI and world models. Healthcare remains a major focus given clear signs of buyer demand; we focus on systems of record and platforms rather than point solutions.

Taylor

Outside the United States! The best risk-adjusted venture returns are not in Silicon Valley anymore. They are in markets like Poland, Turkey, and Greece.

When you invest across 25 countries in a single year, you stop thinking of venture as something that happens in one place and then spreads outward. Twenty years ago, roughly 90% of venture dollars went to the United States. That flipped in 2018. Today, more than half of venture investment — and more than half of the world’s unicorns — are outside the U.S.

We see this every day. Founders in Latin America, Africa, the Middle East, and South Asia are building venture-scale companies — often serving massive markets from the start. In our pipeline, it’s normal to see founders from Venezuela building in Iraq, or from Sudan building global businesses.

Chang

I’m most interested in founders who are tackling massive problems and leveraging technology for forward progress. I’m rather unmoved by the plethora of startups focused on agentically automating workflows for specific verticals. I’m much more interested in the larger platform shifts that will define this era of technological and societal progress.

Bankiya

We’ve seen tremendous impact on software from AI. I think the next frontier is at the intersection of software and hardware. Most of the world’s GDP is locked up in physical industries, and software-only solutions aren’t enough to fully unlock the world’s growth potential.

Do you think the IPO market will thaw? Why or why not?

Norman

Yes, the IPO market is likely to thaw, not because conditions are suddenly ideal, but because the system is running out of viable alternatives. We’re approaching a tipping point where the private market’s ability to sustain multibillion-dollar valuations, often disconnected from profitability or liquidity, is wearing thin. Years of “paper markups” have postponed reality, but they haven’t eliminated it. Companies, boards, and late-stage investors increasingly...