Each year, industry experts are asked for their predictions on the upcoming year. Last year, some investors anticipated a recovery in the IPO market (which did not fully materialize), while others correctly foresaw the accelerating momentum of AI. This year, five investors from diverse markets shared their preparations and expectations for 2026.
Here are their insights.
What will it take for a founder to raise next year, compared to last year?
James Norman, Managing Partner, Black Ops VC
Raising capital in 2025 demanded a shift from being a “visionary” to being “battle-tested.” Previously, capital often served as a primary competitive advantage. Now, investors are cautious of “pilot purgatory,” where businesses test AI solutions without an urgent need to purchase. In 2026, the standards are even higher. Founders must demonstrate more than just traction; they need a clear distribution advantage. Investors are scrutinizing repeatable sales engines, proprietary workflows and processes, and deep subject matter expertise that can withstand intense competition. The focus has moved beyond being first to market with a flashy demo; investors seek enduring, trustworthy, and scalable solutions.
Morgan Blumberg, Principal, M13
Funding will always be available for exceptional founders, but the criteria will become more stringent. For early-stage companies, particularly in AI application software, a reduction in mega seed rounds is expected due to intense competition and significant capital already deployed. Founders will need to differentiate themselves through unique distribution channels or perspectives, rather than solely relying on large market opportunities or strong backgrounds. Capital moats have already formed in crowded sectors. At the Series A and B stages, top-tier rounds will necessitate clear evidence of explosive momentum. The market has adjusted to these expectations, with increased scrutiny on revenue sustainability.
Allen Taylor, Managing Partner, Endeavor Catalyst
The demand is for bigger, faster, better: a larger total addressable market, quicker growth, and improved unit economics. With investments made across 25 countries last year, founders are observed at various stages and in diverse markets. The strongest founders not only showcase their current achievements but also effectively communicate the business’s future direction. While real revenue and customers remain important, they are no longer sufficient on their own. As an investor, the question is always: Where is this company today, and where could it realistically be in the next 12, 18, or 24 months? Founders who can answer this question clearly and credibly are the ones who will secure funding.
Dorothy Chang, Partner, Flybridge Capital
Many founders find it easy to develop new products today, thanks to advanced generative AI coding tools. However, these tools also level the playing field, intensifying competition. Therefore, founders aiming for venture scale must ensure they are (1) genuinely addressing a significant idea, not just something simple to code; (2) building in a problem area where they possess a unique advantage; and (3) offering something proprietary that is difficult to replicate. This could involve a contrarian approach with distinct insights, exclusive access to data, strong networks and relationships, or a technological edge. These concepts are not new, but the stakes and expectations are now higher than ever.
Shamillah Bankiya, Partner, Dawn Capital
For founders targeting enterprise clients, there is a global understanding of AI’s potential value. Consequently, demonstrating a clear line of sight to ROI will be more crucial than ever for investors. Founders who can prove their products deliver significantly higher value have the best chance at raising capital.
What areas are you looking to invest in and why?
Norman
As a fund, the approach remains industry-agnostic, but the focus is continually refined. Currently, the search is for “high-context founders.” In an era where AI has commoditized coding, lived experience is the winning differentiator. The aim is to invest in founders who have spent years navigating complex industries and possess specialized expertise that can be amplified tenfold by AI. The ideal investment combines deep subject matter expertise with a “day zero” distribution advantage, meaning founders not only know what to build but also precisely who will buy it.
Morgan Blumberg, Principal, M13
Particular interest lies in traditional or overlooked industries outside the typical tech founder’s focus, where AI can deliver substantial ROI, driving adoption. These markets often have less competition and competitive advantages stemming from complexity, which are common in less obvious sectors. Additionally, 2026 is expected to be a strong year for infrastructure supporting foundational model development, as well as frontier research areas like embodied AI and world models. Healthcare remains a significant focus due to clear buyer demand, with an emphasis on systems of record and platforms over point solutions.
Allen Taylor, Managing Partner, Endeavor Catalyst
Investment focus is shifting outside the United States. The most favorable risk-adjusted venture returns are no longer found solely in Silicon Valley but in markets such as Poland, Turkey, and Greece.
Investing across 25 countries in a single year changes the perception of venture capital as a localized phenomenon. Twenty years ago, approximately 90% of venture dollars went to the United States. This trend reversed in 2018. Today, over half of venture investment and more than half of the world’s unicorns are located outside the U.S.
This is evident daily. Founders in Latin America, Africa, the Middle East, and South Asia are building venture-scale companies, often serving vast markets from inception. It is common to see founders from Venezuela building in Iraq, or from Sudan creating global businesses.
Dorothy Chang, Partner, Flybridge Capital
The greatest interest is in founders tackling massive problems and utilizing technology for significant progress. There is less interest in the numerous startups focused on autonomously automating workflows for specific verticals. Instead, the focus is on larger platform shifts that will define this era of technological and societal advancement.
Shamillah Bankiya, Partner, Dawn Capital
AI has profoundly impacted software. The next frontier is believed to be at the intersection of software and hardware. Most of the world’s GDP is tied to physical industries, and software-only solutions are insufficient to fully unlock global growth potential.
Do you think the IPO market will thaw? Why or why not?
James Norman, Managing Partner, Black Ops VC
Yes, the IPO market is likely to recover, not because conditions are suddenly ideal, but because viable alternatives are diminishing. The private market’s capacity to sustain multi-billion-dollar valuations, often detached from profitability or liquidity, is nearing its limit. Years of “paper markups” have delayed facing reality but have not eliminated it. Companies, boards, and late-stage investors increasingly require a mechanism to reset expectations, generate genuine liquidity, and re-establish price discovery.
Private credit has served as a temporary solution, extending runways without enforcing valuation discipline. However, this approach is becoming unsustainable. Debt can postpone decisions but cannot resolve structural capital needs, especially for companies designed for equity-style growth. Eventually, fresh capital becomes essential, and public markets remain the only source capable of providing it at scale. Their growth narratives and strategic importance can create the necessary “air cover” to reopen the IPO window. Once investors re-engage with category-defining leaders, it will pave the way for the broader high-growth software sector to follow.
Morgan Blumberg, Principal, M13
The IPO markets are expected to reopen, driven by a backlog of companies preparing to list. Many large tech IPOs are anticipated, including prominent names like Anthropic and OpenAI. It is believed that one of these major IPOs will generate significant momentum for others.
Allen Taylor, Managing Partner, Endeavor Catalyst
Yes, 2026 will be a significant year for IPOs in New York, as numerous top companies simply decide it is time. It will also be a landmark year for tech IPOs in unexpected locations, such as the stock market in Saudi Arabia.
The global extent of the thaw is often underestimated. Nearly four years of subdued IPO activity have created a backlog of high-quality companies ready to go public. When the window opens, it will not be limited to U.S. companies. A cohort of major U.S.-listed technology companies from Latin America, including MercadoLibre and Nubank, already exists, with another wave following that public-market investors have not yet fully priced in. While not all these companies will list in 2026, several are expected to.
Even more surprising will be local developments. Significant technology IPOs are anticipated in places like Saudi Arabia, listed on the Saudi Stock Exchange (Tadawul). When companies such as Tabby (a buy now, pay later firm) go public locally, it will challenge conventional assumptions about where global tech leadership emerges.
Shamillah Bankiya, Partner, Dawn Capital
A strong catalyst would be necessary to reset the IPO markets, such as mega AI players facing unprecedented cost increases or sharp revenue declines. For instance, a dramatic rise in energy prices could make compute for AI training and inference unaffordable.
How are you looking at the venture market for next year as a fund manager?
James Norman, Managing Partner, Black Ops VC
The venture market is entering what can be described as a clearing event, and the coming year will distinguish durable platforms from transient ones. The impact will be felt by Fund I managers who have not yet established themselves, and active Fund II managers struggling with a distributions-paid-in-capital (DPI) drought from 2021 vintages. Traditional institutional anchors, particularly university endowments, are essentially in repair mode. Having been constrained by the lack of liquidity in 2021 and 2022, many are relying on secondaries, pacing adjustments, and portfolio-smoothing strategies simply to maintain existing commitments.
This implies fewer new relationships and significantly less tolerance for emerging or undifferentiated managers. Family offices are stepping in, transitioning from passive LP roles to active market forces. They are not merely filling the “LP oxygen” left by retreating institutions; they are seeking direct mandates and utilizing registered investment advisors (RIAs) to identify unique, high-conviction strategies.
In 2026, there is no viable middle ground. Fund managers will need a clinical, defensible track record and/or truly exceptional access to differentiated deal flow. Lightly grounded generalist positioning, weak networks, and “good enough” performance will not survive this cycle.
Morgan Blumberg, Principal, M13
The belief is that the AI transformation is still in its early stages, suggesting that next year will be a strong vintage. Capital continues to concentrate in a select number of successful companies, so the focus is on being selective and providing operational support to portfolio companies to justify this concentration. Portfolio companies are being advised to strengthen their balance sheets in anticipation of a potential downturn in 2026, while prioritizing long-term building over optimizing for quick funding.
Allen Taylor, Managing Partner, Endeavor Catalyst
This is an excellent time to support ambitious founders building for the next decade and beyond. From a fund manager’s perspective, 2026 appears strong for both deployment and liquidity. Last year saw 12 liquidity events, all through M&A and secondaries. This is significant because venture capital has grown dramatically over the past two decades, while paths to liquidity have not kept pace. What is changing now is that venture is developing a more comprehensive liquidity toolkit, with M&A, secondaries, and IPOs working in conjunction.
This is crucial as founders commit 10, 15, or even 20 years to building companies. Simultaneously, real structural shifts are observed in core sectors. Financial technology, especially stablecoins, transitioned from experimentation to mainstream adoption in 2025, particularly in markets like Latin America and Africa. In these regions, this is not speculative technology but essential infrastructure. This combination indicates that 2026 will be a strong year for deploying capital.
Dorothy Chang, Partner, Flybridge Capital
The strategy involves making slightly fewer, more concentrated bets. With a high volume of startup activity, when founders truly stand out, the aim is to support high conviction with larger check sizes and higher ownership percentages.
Shamillah Bankiya, Partner, Dawn Capital
The search continues for exceptional European founders building innovative companies. Great companies are formed regardless of market cycles.
What will happen to all the investor and startup interest in AI next year?
James Norman, Managing Partner, Black Ops VC
In 2026, the “AI curiosity” that drove the past two years is being replaced by a demand for practical application and scale. The industry is transitioning from building models to building businesses. The fastest and most innovative companies are not those with the largest LLMs, but rather those using AI to solve high-value, domain-specific problems that were previously too complex or manual to scale. Investors are no longer seeking “AI startups” but exceptional tech founders who have discovered how to leverage this intelligence to tenfold the efficiency of massive, traditional markets.
Morgan Blumberg, Principal, M13
Investor and startup interest is expected to remain at all-time highs. However, tuck-in acquisitions, acquihires, and wind-downs are anticipated in highly concentrated sectors such as coding automation, sales automation, marketing, and advertising, as market share begins to consolidate among select assets.
Allen Taylor, Managing Partner, Endeavor Catalyst
Interest will persist. However, by the end of 2026, AI is predicted to cease being a distinct category, instead becoming an inherent component of all new technology companies. There is much fervent discussion about AI currently, which is understandable. Understanding the full extent of this technology’s impact is still in its early stages. In such moments, excitement often outpaces clarity. Some companies will be transformative, many will not, and pricing will take time to adjust as genuine use cases emerge. The opportunity lies not in labeling everything as “AI,” but in discerning where AI significantly alters cost structures, speed, or decision-making within real businesses. That is where lasting value is created.
This period is characterized by significant uncertainty, which is when outcomes diverge most dramatically.
Dorothy Chang, Partner, Flybridge Capital
The interest is not expected to slow down anytime soon. While significant capital has gone into infrastructure and theory, this year will see more of that investment clearly translate into enterprise value at the application level.
Shamillah Bankiya, Partner, Dawn Capital
AI will remain a prominent topic, unless negative hard catalysts, such as an energy crisis or a rise in default rates, dramatically alter conditions.
What is something unexpected that could happen in 2026 in the world of venture and startups?
James Norman, Managing Partner, Black Ops VC
One of the most unexpected shifts in 2026 will be the quiet conclusion of the “ChatGPT-first” era in startups. This is not because generative AI loses importance, but because no single model will remain the default starting point. GPT is no longer consistently best-in-class for search, image generation, or video, fundamentally altering how tech companies design their products. Savvy founders in 2026 have already transitioned to a multi-model environment, shifting their focus to specialization.
For example, Anthropic has effectively captured developer mindshare because Claude Code excels at collaborative building, and Google has finally leveraged its structural advantages. With Gemini 3, it combines top-tier image and video generation with deep multimodal capabilities and native access to Google’s search and data ecosystem. This combination is proving highly competitive. Model choice becomes an infrastructure decision, not a competitive moat. The successful companies in 2026 will not be those that simply “use GPT,” but rather those that seamlessly orchestrate multiple models, abstract complexity for users, and build proprietary workflows on top.
Morgan Blumberg, Principal, M13
Many successful startups are expected to emerge with only one or two funding rounds. AI tooling, particularly coding automation, enables many early-stage companies to achieve profitability without excessive burn. From a technology standpoint, while LLMs are anticipated to be ubiquitous, companies will begin to scale back their usage in favor of more controlled applications as enterprises prioritize explainability, cost, and reliability. This could lead to increased use of small models, deterministic and probabilistic hybrid models, world models, or simulation modeling.
Allen Taylor, Managing Partner, Endeavor Catalyst
The conclusion of the Russia-Ukraine war will usher in a resurgence of investment in Ukrainian founders, who are recognized as some of the world’s best. Two additional developments will genuinely surprise people. First, international companies, especially from Latin America, will go public in New York at a significant scale. Second, major technology IPOs will emerge from the Middle East, listed locally. When companies like Tabby go public on the Saudi Stock Exchange (Tadawul), it will redefine expectations about where global tech leadership resides.
