2026 US Venture Capital Outlook

1
Institutional Research Group
Kyle Stanford, CAIA Director of Research, US Venture kyle.stanford@pitchbook.com
Emily Zheng Senior Research Analyst, Venture Capital emily.zheng@pitchbook.com
Kaidi Gao Senior Research Analyst, Venture Capital kaidi.gao@pitchbook.com
Susan Hu Quantitative Research Analyst susan.hu@pitchbook.com
pbinstitutionalresearch@pitchbook.com
Published on December 1, 2025
2026 US Venture
Capital Outlook
Our analysts’ outlook on the venture market in 2026
PitchBook is a Morningstar company providing the most comprehensive, most
accurate, and hard-to-find data for professionals doing business in the private markets.
2026 outlooks
4 The early stages of the market will see a surge in deal activity.
9 Later-stage deal activity will remain strong.
13 Liquidity will return, though recovery will remain uneven.
16 Fundraising has bottomed out, and a gradual rebound awaits as distributions
and LP sentiment improve.
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Introduction
Optimism in the US venture market heading into 2026 may not differ much from that
at the start of 2025. Public markets had been trading at or near all-time highs, liquidity
is still a major concern for venture capital, and further rate cuts are expected as the
new year begins. Meanwhile, geopolitical tensions continue, though their impact on
markets has somewhat lessened, and inflation is back to where it was a year ago. US
GDP growth has returned to an annualized rate of 3.8% (as of Q2), aligning with the
3.6% rate from a year prior.
What is different is that the Trump administration has had nearly a year to implement
its policies, reducing the chances of legislative surprises in 2026. Now, the likelihood
of rapid regulatory change in the market is low, contrasting sharply with last year when
the changing administrations raised hopes of an M& A rebound and a more relaxed
regulatory environment. Overall, we maintain a cautiously optimistic outlook for 2026,
expecting tempered growth in IPOs, relatively improved market liquidity through
secondaries, and continued growth in the number of completed deals, especially at the
early stages.
Liquidity will remain the primary challenge for the VC market in 2026. Despite a
rebound in exit value in 2025, the year’s total is projected to fall below $300 billion,
trailing not only 2021 but also 2020 and 2019. Fourth place is not bad, except that
the net asset value (NAV) of VC has doubled since 2020, with the prior three years
also having relatively low exit values. However, both big-ticket M& A and the number
of unicorns going public noticeably increased in 2025. Exits of $500 million or more
accounted for 91% of total exit value through Q3.
We expect exit counts to continue to increase. Barring a major market event, public
market multiples will likely keep expanding. Although the Federal Trade Commission
has not explicitly commented on lowering M& A barriers, none of the year’s large deals
has faced as much scrutiny as it might have under the previous administration. This is
another positive sign for the market. With nearly half of unicorns being held for at least
nine years, liquidity for these companies cannot rely solely on the public market.
Despite these positive indicators, broad LP sentiment remains poor. Since 2022, net
cash flows to LPs have been negative by $169 billion. The time to close new funds has
increased sharply as LPs hesitate to commit more capital without any distributions.
This has led to a concentration of capital among established firms. We knew that
traditional venture mechanics would break with the extended liquidity timelines, and
we are starting to see that happen.
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On the dealmaking side, AI continues to foster optimism. It was a key driver of
the surge in billion-dollar funds, and the nature of the AI market has significant
implications for venture. AI startups have captured 65% of the total VC deal value in
the US Y TD, and more than half of new unicorns are AI companies. The market value of
AI startups exceeds $1 trillion. AI is often seen as a single sector, such as climate tech,
or a specific business model, such as software as a service; however, it is increasingly
becoming an essential part of a broader range of industries, including biotech,
enterprise productivity, and the previously mentioned climate tech.
There is an endless stream of new AI tools being developed and adopted by
corporations worldwide. It has been challenging for large companies to develop their
own AI tools, so many have turned to tools created by startups. Through the first
three quarters of 2025, first-time financings were nearing the all-time high set in 2021.
While this has led to a rally in the early stages of venture, it has also led to crowded
vertical segments that will bifurcate into a few winners and many losers. The pace of
investment in AI continues to increase despite the venture market’s slow liquidity and
low fundraising levels. Should those flip in 2026, deal counts could reach levels seen in
2020 and 2021.
We are more optimistic about early funding stages than we have been since 2021
because of AI, its rapid development cycles, and its growing demand from global
corporations. Still, continued improvement of liquidity markets is necessary. IPOs may
not be the most common exit path, but they will be crucial in expanding liquidity.
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OUTLOOK
The early stages of the market will see a surge in
deal activity.
Kyle Stanford, CAIA
Director of Research, US Venture
kyle.stanford@pitchbook.com
First-time financing VC deal activity
$9.9
$9.2
$10.0
$14.6
$15.0
$14.8
$23.6
$24.1
$16.3
$17.7
$16.6
3,939 3,548 3,678
3,6343,9114,008
5,722 5,392
4,6744,679
4,154
2015201620172018 20192020 2021202220232024 2025
Deal value ($B) Deal count Estimated deal count 2025 pace
5,539
Source: PitchBook • Geography: US • As of September 30, 2025
Rationale
It is counterintuitive to expect increased activity in the early stages of venture during
a liquidity slowdown and a sluggish fundraising market, yet the early stages have
already begun to defy expectations. Through Q3 of this year, venture funds closed
only $45 billion in new commitments, the lowest total since 2017. Additionally, many
small funds and emerging managers that raised capital in 2021 or even 2022 have
likely used most of their dry powder and are unable to be active investors, at least to
the extent needed to boost deal count. And yet, first-time financing activity through the
first three quarters of 2025 was just 200 deals behind where 2021 stood in the same
time frame, which has since become the high-water mark for first-financing deal count.
On top of that, early-stage deal count increased in each of the past three quarters, and
our estimated early-stage deal count for the full year is roughly on par with full-year
2023 and 2024 totals.
Since the 2022 slowdown, the idea of VC investment refocusing on early stages
has manifested in a thriving early-stage market; however, the 2024 seed deal count
was still 27% lower than in 2021. Clashing with the narrative of a refocused investor
base was the hesitancy of investors to continue working through dry powder without
meaningful markups in order to avoid returning to LPs without leverage for a new fund.
We believe this has begun to change. Down and flat rounds peaked several quarters
ago, and late-stage activity has picked up. As more managers see markups from
past investments and the rising value of funds, this should loosen their grip on their
remaining dry powder and boost activity as they look to capitalize on AI opportunities.
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Macroeconomic shocks will also have a relatively lower impact on the early stages
of VC in 2026. Even in 2025, macro challenges such as tariffs were unable to sway
activity outside of select verticals that were directly impacted by them. More broadly,
business starts in the US are near all-time highs. Though a large majority are not VC
investable, the uptick shows that the entrepreneurial spirit of the US has not dampened
with the uncertain markets of the past few years.
Two major trends directly point toward 2026 being a highly active year for the early
stages of the VC market. First, AI has driven investor focus and shrunk the cost of
building a company. This is not novel, as hype and costs are two directly relatable
trends that can impact investment. Second, multistage investors with unlimited
follow-on capital have increasingly invested in seed and Series A rounds, and the data
supports their recalibrated strategy. Andreessen Horowitz has invested in more than
300 seed and Series A deals since the beginning of 2024 (as of November 7, 2025),
and there is reason to believe more large firms will adopt this strategy.
AI
AI has become ubiquitous in VC, drawing 65% of capital invested through Q3. This
figure is skewed by the multibillion-dollar rounds that have occurred this year, but in
general, it illustrates the current interests of investors in AI. However, several other
data points speak more directly to the speed and development of AI in VC:
• 37.1% of non-life-sciences first financings in 2025 have been for AI companies
(up from 21% in 2022).
• The median age of AI startups receiving their first investment is 65% lower than
that of non-AI startups.
• The median time between rounds for AI companies is three months shorter and
falling, while it is growing for non-AI companies.
As mentioned before, first-time financings in 2025 are pacing to fall behind only 2021
in terms of completed deals. This is not a coincidence; AI is driving that growth.
No other emerging technology has accounted for a larger share of total deal activity.
In fact, mobile made up about 20% of deal count in early 2013, the second-highest
proportion after AI’s current 35%. It may not be a direct comparison, but it still
demonstrates AI’s dominance. To compare AI more broadly with software, more than
40% of companies raising capital in 2025 have been software companies, and AI will
likely be adopted by a much wider range of companies. As AI continues to develop in
functionality and accuracy, its use cases will only increase.
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Share of first-time financing non-life-sciences VC deal count by
company type
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2015
201620172018201920202021202220232024 2025
AI Non-AI
34.7% 37.1%
65.3% 62.9%
Source: PitchBook • Geography: US • As of September 30, 2025
Multistage investors
Amid LP hesitance, multistage firms have captured pricing power and are acting more
like seed-stage investors with endless follow-on capital. These large investors can
deploy spray-and-pray tactics, with less weight on the “pray” because of the size of
their funds. The median seed deal size has nearly reached $4 million Y TD, and fewer
stakes are being acquired, placing the onus on managers to remain disciplined in
pricing while competing against market giants. This will continue in 2026 and likely be
a market standard beyond next year.
The data shows that paying up at the seed stage works. Top-decile seed and Series
A rounds by valuation exhibit higher annualized returns , with lower loss rates than
lower-valued rounds. Casting a wide net in early deals boosts return potential for
these firms, as long as they can identify and keep investing in winning companies. It
ensures access to follow-on rounds and strengthens their portfolio companies against
competitors that may not have as deep-pocketed of backers.
Five of the 20 most active seed and early-stage investors are multistage firms:
Andreessen Horowitz, General Catalyst, Khosla Ventures, Sequoia Capital, and
Lightspeed Venture Partners. Bessemer Venture Partners is not far behind. Together,
these funds have made over 400 seed and early-stage deals in 2025, pacing for their
second-highest combined total, behind 2021.
Bonus outlook: These trends will also drive geographic consolidation
During the COVID -19 pandemic, capital was more widely spread across the US, leading
to an increase in investment outside of the Bay Area, New York, Los Angeles, and
Boston. That has changed. Nearly 70% of the funds closed through Q3 have been
located in those four markets. While capital typically does not remain inside a specific
market, it does not tend to stay close in the early stages in particular. However, after a
significant spike at the onset of the pandemic, the median distance in miles between a
2026 US V ENT URE CA PITA L OU TLOOK

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seed lead investor and the target company has declined each of the past three years.
Of Andreessen Horowitz’s seed deals in 2025, 81.4% have been made in California or
New York, two markets where it has physical offices.
With the surge in AI, it is unsurprising that the Bay Area has held its highest share of
total deal count since 2018 during the past two years. More than 36% of completed
deals in 2025 have occurred in just the Bay Area and New York. With Y Combinator
running four batches in person, more capital will be pulled into the Bay Area, and deal
volume will increase. For fast-moving markets, in-person deals will always provide
investors with the best chance for access. For now, the Bay Area and New York lead
in company formation and investment opportunity. As long as AI continues to be the
focus, these markets will remain the leaders.
For AI first financings, the Bay Area leads the way by a wide margin. With its large
amount of local capital and high speed of financing, both outside investors and
founders will continue to be drawn into the Bay Area, further increasing its activity.
Deal value
Higher
Lower Deal count Higher
Lower
First-time financing AI VC deal activity by market
Source: PitchBook • Geography: US • As of October 31, 2025
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Risks
This outlook seems almost too optimistic. The liquidity market is not in much better
shape than it was at the end of 2024; market uncertainty may be slightly lower, but the
chances of a recession remain high; and the AI market appears a bit bloated from the
rush of investment, given that it is still very top-heavy. However, those risks have not
caused a widespread drop in activity before.
The biggest risk in early-stage investing is likely the ongoing difficulty for emerging
managers to raise new funds. While multistage managers may boost their activity,
and AI will keep channeling more money into VC, emerging managers invest in many
companies both inside and, importantly, outside major capital hubs. Emerging-
manager funds from 2021 and 2022 are probably running low on dry powder and need
new vehicles for fresh investments. Data shows that only 33% of first-time managers
in 2021 went on to raise a second fund, and just 12% of new managers in 2022 had
follow-on vehicles. The past two years have shown a significantly different market
for emerging-manager fundraising, with investors focusing on track record and
distributions, which few emerging managers can generate early on.
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OUTLOOK
Later-stage deal activity will remain strong.
Rationale
Late-stage VC deal activity has proven resilient in 2025. Annualized late-stage VC deal
value stands at $107.6 billion across an estimated 4,459 deals—on pace for the highest
total in a decade, second only to 2021. Deal value has steadily recovered since 2023.
Venture-growth deals are performing even better. Annualized deal count is tracking
for a record high, and the stage’s share of total US VC deal count has risen steadily
since 2022, notching 6.7% Y TD. This indicates continued strength among mature
startups nearing the end of the venture lifecycle due to sustained appetite and capital
availability allowing these companies to stay private.
With this in mind, we expect a modest YoY uptick in the combined deal activity of the
late and venture-growth stages in 2026 driven by the AI investment boom, as well as a
relatively strong exit market that should elicit an increase in crossover and corporate
investment. However, this will not come without hurdles for many companies that have
matured into the later stages without harnessing an AI story. A widening quality gap
will translate into top-tier startups continuing to raise outsized rounds to fuel growth
and potentially prepare for a near-term exit while mediocre ones struggle to meet
growth expectations and garner investor traction.
A tale of two markets
Kaidi Gao
Senior Research Analyst, Venture Capital
kaidi.gao@pitchbook.com
Unicorn count and aggregate VC post-money valuation
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
0
150
300
450
600
750
900
2015
2016201720182019202020212022202320242025
Aggregate VC post-money valuation ($B) Active unicorn count New unicorn count
Source: PitchBook • Geography: US • As of September 30, 2025
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Through the first three quarters of 2025, the number of active unicorns in the US grew
to 830, with their total post-money valuation reaching a record $3.9 trillion—a tenfold
increase over the past decade. However, this growth cannot continue indefinitely. A
large amount of capital remains tied up in these private companies. Many unicorns
have slowed their growth, which has increased liquidity constraints. These companies
face mounting survival challenges and struggle to attract investor interest for
follow-on funding.
The divide remains clear: AI-focused and rapidly growing startups continue to access
substantial capital from sources such as multistage funds and strategic investors.
Through Q3, AI accounted for more than 28% of late-stage deal count in 2025, up from
24% in 2024 and 21% in 2023. This trend makes sense, as the current AI boom largely
began in late 2022. The top-performing companies continue to raise private capital,
demonstrating sustained investor appetite for these deals.
This divergence is most evident in the later stages: Strong startups are raising funds
to support growth and prepare for an exit within the next year or two, while others,
including many that reached unicorn status during the 2021 market boom, may never
deliver outsized returns. Since 2023, the median pre-money valuation for Series C and
D+ deals has steadily increased, reaching $307 million for Series C—the highest in a
decade—and $838.8 million for Series D+ Y TD. Top-quartile pre-money valuations have
also risen consistently, reflecting high investor caution and capital selectivity. Again, AI
demonstrates its dominance and its influence on the late-stage divergence. Y TD, the
median deal value for AI startups has exceeded that of their non-AI counterparts by
25% at Series C and 26.7% at Series D+, indicating investor confidence and increased
investment in AI. Additionally, the share of Series C and D+ deals within all US AI & ML
VC rounds has grown steadily since 2023, increasing to 8.5% Y TD from 5.8% in 2023.
This growth suggests more AI startups are reaching maturity and raising capital to
compete in a crowded market.
Top 10 unicorns by most recent VC post-money valuation
Source: PitchBook • Geography: US • As of September 30, 2025
Company Post-money
valuation ($B)
Industry
sector Verticals HQ location
OpenAI $500.0 IT AI & ML, Big Data, SaaS San Francisco, CA
Anthropic $18 3.0 B2B AI & ML, Big Data, SaaS San Francisco, CA
Databricks $10 0.0 IT AI & ML, Big Data, SaaS San Francisco, CA
xAI $75.0 IT AI & ML, mobile, SaaS Palo Alto, CA
Rivian Automotive $ 6 7.1 B2C Autonomous cars, climate tech, cleantech, industrials, mobility tech Irvine, CA
Waymo $45.0 B2C AI & ML, autonomous cars, mobility tech, mobile Mountain View, CA
Gopuff $40.2 B2C E-commerce, foodtech, mobile Philadelphia, PA
Figure AI $39.0 IT Advanced manufacturing, AI & ML, manufacturing, robotics & drones San Jose, CA
Juul Labs $38.0 B2C E-commerce, LOHAS & wellness San Francisco, CA
Snowflake $33.7 IT Big Data, cloudtech & DevOps, SaaS, TMT Bozeman, MT
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We expect the AI investment boom to maintain momentum at later stages. The largest
deals in recent quarters have tended to be for select later-stage AI startups. Beyond
these high-profile names, there is a notable disparity in deal value between AI and
non-AI startups at later stages.
Median AI versus non-AI VC deal value ($M) by series
$35.0$70.0$100.0
$28.7 $52.5$73.3
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
B
CD+
AI Non-AI
Source: PitchBook • Geography: US • As of September 30, 2025
Slow liquidity growth as a bull-case driver for venture growth
Venture-growth deal activity by quarter
0
50
100
150
200
250
300
$0
$10
$20
$30
$40
$50
$60
Q1
Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
2020 20212022202320242025
Deal value ($B) Deal count
Source: PitchBook • Geography: US • As of September 30, 2025
Venture-growth deal activity in 2025 is on track for a record year. Annualized deal
value has surged to $150.2 billion, surpassing the 2021 record of $91.6 billion. The
annualized deal count matches 2021 levels, but the total value is boosted by several
large AI rounds: $40 billion, $14.8 billion, $13 billion, and $3.5 billion. Growth at this
stage of VC indicates a key trend: Companies are staying private longer.
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VC-backed exits showed signs of recovery in 2025 but fell short of expectations for a
widespread IPO wave. Some prominent tech listings such as Figma and CoreWeave
highlighted public appetite for high-quality companies, yet few IPOs in 2025 have
matched their private valuations. The IPO window remains open—though not
wide open.
While we expect increased liquidity, we are less certain that it will be driven by an
expanded IPO market. This may lead companies to raise more funds in private
markets, creating more opportunities for investment and, somewhat artificially,
boosting venture-growth investments as companies seek capital to sustain
growth. These rounds will likely account for a significant share of late-stage VC and
venture-growth deal value over the coming quarters.
Participation from nontraditional investors in large, later-stage deals will be essential
to maintaining momentum in the final stages of the venture lifecycle. So far in 2025,
these investors have participated in approximately 3,930 VC deals totaling $194.7
billion—the second-highest deal value in a decade, behind only 2021. Although deal
count with nontraditional investor participation has steadily declined since 2021,
deal value has increased since 2022. This divergence suggests that nontraditional
investors—especially corporate venture firms, PE funds, and sovereign wealth funds—
continue to support select large transactions even as overall activity moderates. What
has been missing is hedge funds, which injected money into VC during the 2021 cycle.
These investors might see an opportunistic market if rates fall enough during 2026.
Risks
Much of the recent strength in late-stage VC and venture-growth deal activity is tied
directly to the AI boom. Many mature AI startups are trading at elevated valuations,
supported by expanding revenue multiples in the public AI sector. If public AI
valuations contract meaningfully, private AI startups will likely face similar markdowns.
That would weaken investor confidence and reduce the capacity or willingness to
deploy large amounts of capital into this category.
In addition, a weak exit environment in 2026 would add pressure. The rebound in exits
during 2025 helped hold up later-stage activity by improving expected returns. Any
reversal in that trend would dampen investor appetite for startups approaching an exit
and slow the pace of large later-stage investments.
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OUTLOOK
Liquidity will return, though recovery will remain uneven.
Rationale
The IPO window creaks open for select sectors
With valuations stabilizing, interest rate cuts likely to continue, and renewed investor
appetite, the groundwork laid in 2025 suggests that 2026 will mark the beginning of
a sustained recovery in liquidity. More startups are realigning their valuations with
fundamentals, and investors are growing comfortable with down rounds, both of
which should encourage more IPO filings. Valuation compression remains a persistent
hurdle, as the median US IPO valuation for unicorns relative to their last VC valuation is
0.9x Y TD. However, down round IPOs are no longer stigmatized but now the norm, with
two-thirds of 2025 unicorns going public at a valuation lower than their private market
peak. Though painful in the short term, this recalibration is a welcome and essential
step toward a healthier, more durable recovery of exits, allowing startups to move past
the golden handcuffs of their peak pricing.
VC IPO activity
$31.5$13.4$52.6
$62.6
$181.2
$177.9
$516.2
$6.7
$26.0 $41.4
$87.4
85 47 69
95 90114
197
42
43 44
35
2015 2016201720182019202020212022202320242025
Deal value ($B) Deal count
Source: PitchBook • Geography: US • As of September 30, 2025
Our favorable outlook predicts 68 IPOs in 2026: the decade average excluding 2021.
This average is 44.7% higher than 2025’s projected total IPO count, so reaching that level
hinges on a set of favorable macro conditions, such as decreasing interest rates, market
volatility, and valuation compression. In the absence of these tailwinds, our unfavorable
scenario assumes IPO activity remains at 2025 levels of 47 offerings, only slightly above
the post-pandemic years. This modest level of liquidity could still offer meaningful relief
to VC if a handful of high-value listings generate significant distributions. Realistically,
2026 is shaping up to be a measured continuation of the IPO recovery, not a breakout.
The IPO window is expected to reopen slightly but remain highly selective , favoring
companies with exposure to sectors with regulatory support, similar to 2025.
Excluding healthcare and life sciences, 90% of Y TD IPOs have occurred in AI, crypto,
fintech, defense, and space, which are sectors that have benefited from favorable
Emily Zheng
Senior Research Analyst, Venture Capital
emily.zheng@pitchbook.com
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policies. For example, the IPO of stablecoin issuer Circle coincided with the passage
of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS)
Act and was soon followed by crypto exchange Gemini’s listing. A month after the
government increased its investment in transformative space technology, defense and
space technology firm Voyager completed an oversubscribed IPO, followed by space
transportation firm Firefly Aerospace’s IPO two months later.
Overall, the recent wave of IPOs appears to be opportunistic rather than a systemic
reopening. Barring a macro shock or renewed volatility, IPO counts are expected to rise
incrementally throughout 2026, but the window will remain narrow and biased toward
select sectors.
2025 unicorn IPO valuations to last VC valuations
62.9%
28.7%4.3%2.6%-2.1% -3.2%-10.4% -19.3%-39.0%-53.8%-58.4%-60.6%
Figure Technology
Solutions
Figma
Via Transportation Omada
HeartFlow Netskope Circle
CoreWeave MNTN
Gemini
Hinge Health
Chime Financial
Source: PitchBook • Geography: US • As of September 30, 2025
Venture secondaries: The best of both worlds
Venture secondaries are set to play an even larger role in 2026. For investors,
secondaries offer a mechanism to realize returns without IPOs or M& A; for startups,
they provide flexibility to extend private lifecycles while reorganizing cap tables,
replacing early investors with long-term shareholders less constrained by the typical
10-year fund horizon.
2025 marked a turning point in institutional and retail engagement in secondaries.
Wall Street’s wave of consolidation—including Goldman Sachs’ acquisition of Industry
Ventures, Morgan Stanley’s purchase of EquityZen, and Charles Schwab’s move for Forge
Global—signals that venture secondaries are maturing into a growth engine for advisory,
underwriting, and wealth management. More large financial institutions are expected to
follow suit in 2026, highlighting how secondaries are becoming a valuable bridge between
private and public markets. Special purpose vehicles (SPVs) have become the market’s
fastest-growing access channel for retail engagement, granting exposure to coveted
late-stage startups once reserved for institutional investors. Compared with 2023 levels,
the number of secondary SPVs is up 682% and capital raised has surged 1,340% Y TD. 1
1: “S ydecar,” S ydecar, n.d., accessed November 6, 2025.
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A sustained rebound in primary dealmaking and exit activity would provide
much-needed pricing benchmarks and significantly increase secondary participation.
Without that momentum, the market will likely continue its gradual expansion,
supported by rising valuations and the normalization of secondaries, whether through
company-sponsored tender offers, institutional acquisitions, or retail demand. For
many investors, a combination of policy tailwinds, pricing opacity, and restrictive
transfer controls will continue to limit transaction volume to a narrow set of elite
companies, particularly those with recent primary rounds or ties to sectors such
as AI, defense, and fintech. Most opportunities will remain concentrated among
established secondary investors with the scale and access needed to secure full
information rights.
Trailing 12-month VC exit value ($B) by type
Direct
secondaries: $80.3 $104.7$107.1
GP-led
secondaries: $14.6
$0
$20
$40
$60
$80
$100
$120
Secondary Public listing Acquisition
Source: PitchBook • Geography: US • As of September 30, 2025
Risks
Venture’s biggest startups are expected to remain private, buoyed by substantial
capital reserves and tender offers, which would limit the upside in IPO exit
value in 2026.
An increasing number of private companies are restricting secondary transactions, led
by OpenAI’s decision to void any share transfers without written consent. The move
signals a broader intent among top-tier startups to centralize and control liquidity,
favoring company-led tender offers over third-party transactions. As a result, retail
platforms such as EquityZen and Forge Global are competing for a shrinking pool
of tradable assets, and this mounting pressure likely led to their recent acquisitions.
Without an increase in primary dealmaking and exit activity, well-capitalized investors
will continue to dominate while others become sidelined, restricting the secondary
market’s growth.
The explosive rise in SPVs has widened access to private companies but also
introduced new layers of complexity. The mid-2025 collapse of fintech platform Linqto,
which allegedly misrepresented investor ownership in more than 500 SPVs, illustrates
the potential risks for less sophisticated investors.
2026 US V ENT URE CA PITA L OU TLOOK

16
OUTLOOK
Fundraising has bottomed out, and a gradual rebound
awaits as distributions and LP sentiment improve.
Susan Hu
Quantitative Research Analyst
susan.hu@pitchbook.com
VC cash flows ($B)
-$200
-$150
-$100
-$50 $0
$50
$100
$150
$200
2015
2016201720182019202020212022202320242025
Contributions Distributions Net cash flow
Source: PitchBook • Geography: US • As of March 31, 2025
Rationale
We expect fundraising to increase in 2026, supported by improving liquidity and
gradually recovering LP sentiment. The exit environment is strengthening, helping
restart the venture flywheel and restore the flow of capital back into the ecosystem.
Fundraising in 2025 remains subdued, with about $55 billion raised across 451 funds
Y TD, well below the 2021-2022 peak. The main constraint has been the persistent
lack of liquidity, which has kept LPs cautious and concentrated commitments among
established firms. Despite roughly $169 billion in cumulative negative cash flows
since 2022, recent data through early 2025 suggests conditions are bottoming out,
aided by more active exit and secondary activity. If momentum continues, fundraising
could reach $100 billion to $130 billion in 2026, based on the historical link between
distribution yields and fundraising trends.
2026 US V ENT URE CA PITA L OU TLOOK

17
Capital flywheel and shifts in the fundraising regime
Venture capital raised ($B) with 2026 estimates
$0
$50
$100
$150
$200
$250
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025 2026E
Upside
Base case
Downside
Source: PitchBook • Geography: US • As of October 31, 2025
Fundraising in venture has always followed a cyclical pattern, rising and falling
with distributions and LP risk appetite. Periods of strong exit activity, such as the
pre-global-financial-crisis (GFC) boom and the pandemic cycle, have historically
fueled surges in fundraising as both new interest and recycled capital flowed into the
ecosystem. In both instances, optimism and abundant liquidity shortened investment
cycles—until valuations overheated and LPs became overexposed.
Distributions and liquidity are the key drivers of fundraising activity. When liquidity
improves, LPs tend to redeploy a significant share of returned capital into new
funds, creating a self-sustaining cycle that fuels future commitments. Historically,
fundraising peaks and troughs have followed shifts in distribution yields by roughly
a year, 2 the time it takes for realized gains to be reinvested. While the relationship is
not perfectly linear, prior-year yields have consistently explained a substantial portion
of fundraising in subsequent periods. The capital flywheel underscores that tight link
between liquidity, sentiment, and fundraising growth.
Building on that relationship, the upper end of our 2026 fundraising estimate stands
at around $130 billion. 3 However, it also reflects lingering momentum from the
2021-2022 fundraising boom, when more than $390 billion was raised over two years
amid extraordinary liquidity and rapid recycling. Those conditions remain outliers and
are unlikely to repeat in the near term. Instead, we expect a more measured recovery
supported by improving distributions and steadier deployment.
2: We define distribution yields as distributions as a share of beginning NAV. 3: To reach our estimate, we employed a quantitative time series model on trailing 12- month distribution yields on total capital raised over the nex t year. We ex tended current distribution yields as of March 31, 2025, to forecast 2026 capital raised.
2026 US V ENT URE CA PITA L OU TLOOK

18
Prior-year VC distribution as a share of venture capital raised
0%
20%
40%
60%
80%
100%
120%
$0
$50
$100
$150
$200
$250
2015
201620172018201920202021 202220232024 2025
Capital raised ($B) Prior-year distribution ($B) Prior-year distribution/capital raised
Source: PitchBook • Geography: US • Capital raised as of October 31, 2025. Distributions as of March 31, 2025
Simplifying the relationship, we assume all capital distributed by traditional VC
funds flows back into new commitments. Periods when fundraising outpaces
distributions—such as the dot-com boom, the run-up to the GFC, and again in 2020
and 2021—tend to coincide with surging NAVs and strong paper gains that encourage
LPs to add new capital even before liquidity returns. When those expectations reset,
fundraising becomes driven primarily by recycled dollars. After the GFC, from 2011 to
2016, prior-year distributions made up more than 90% of total fundraising as realized
liquidity, instead of LP sentiment, powered the recovery.
As the market normalizes, we expect distributions to remain the main source of
fundraising, accounting for roughly 70% of total capital raised, with the remainder
coming from new capital inflows. In a downside scenario, if 2025 distributions hold
near 2024 levels of about $70 billion, fundraising could settle around $100 billion
in 2026. But given the stronger exit activity through 2025, the base case appears
more likely, pointing to a gradual recovery in fundraising to between $100 billion and
$130 billion.
When liquidity gets creative
Outside of traditional exits, GP-led continuation vehicles and strip sales—once used
mainly as a last resort—have become a practical tool for extending fund lives and
returning capital to investors. The US GP-led venture secondary market remains small,
about $14.6 billion compared with more than $80 billion in direct secondaries, but it
continues to grow as firms seek flexibility and new liquidity options. Broader interest
in private market liquidity has also drawn in new participants, with major financial
institutions expanding into venture secondaries. These moves, including acquisitions
by Goldman Sachs, Morgan Stanley, and Charles Schwab, signal growing institutional
conviction that secondaries will become a long-term growth driver across advisory,
underwriting, and wealth management.
2026 US V ENT URE CA PITA L OU TLOOK

19
Signs of renewed fundraising momentum are already emerging alongside improving
liquidity. Major firms have returned to the market, such as Andreessen Horowitz, which
is reportedly raising a $10 billion fund focused on AI and defense technology. That
vehicle would rank among the top five largest venture funds raised in the past decade.
Because established managers typically take about 12 months to close, that fund will
likely close in 2026, setting the stage for a stronger fundraising cycle.
Risks
The most immediate risk to our outlook is a reversal in liquidity conditions. If exit
activity weakens or the IPO window closes again, LPs could quickly turn more
cautious, extending the funding drought. Renewed fears of a recession could further
weigh on sentiment and slow deployment.
Another risk is if 2026 relies almost entirely on recycled 2025 distributions, with little
new capital entering the market. Such dependence could keep total commitments well
below $100 billion. Recent vintages have yet to show meaningful markups, dampening
sentiment—particularly among newer LPs exposed to the pandemic-era surge. If
performance remains muted, LPs may retrench further. Finally, much of the current
optimism rests on strong AI valuations and large managers’ continued fundraising
success; any correction or slowdown at the top end could stall the recovery.
2026 US V ENT URE CA PITA L OU TLOOK

20
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2026 US V ENT URE CA PITA L OU TLOOK

Report created by:
Kyle Stanford, CAIA
Director of Research, US Venture
Emily Zheng
Senior Research Analyst, Venture Capital
Kaidi Gao
Senior Research Analyst, Venture Capital
Susan Hu
Quantitative Research Analyst
Caleb Wilkins
Data Analyst
Josie Doan
Graphic Designer
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Executive Vice President of Research and
Market Intelligence
Paul Condra
Global Head of Private Markets Research
Kyle Stanford, CAIA
Director of Research, US Venture
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