H1 2026 VC Market Update: The 5 Trends Defining Startup Fundraising

If you're a growing company, you know how all-consuming fundraising can be, particularly in today's market.

As fractional CFOs, we help clients from pre-seed to Series B+/M&A navigate an incredibly challenging fundraising landscape. From when to fundraise, how much to fundraise, and the decision whether to raise equity or debt, we use data to help guide our clients to the best decisions for their business. Today, we're sharing some of our key insights, including proprietary analysis you can't get anywhere else.

Below, we share our top 5 trends from our latest H1 2026 VC Market Insights Report, including analysis of VC activity and industry trends. Read the full report from Pilot's CFO Services Team.

CFO Services VC Market Update: What We're Seeing in H1 2026

At Pilot, our CFO Services team works with hundreds of venture-backed startups, providing real-time insight into how companies are operating and how the market is responding. Based on proprietary data and broader VC market trends, here are the key takeaways from the first half of 2026.

The Key Trends of H1 2026: Summary

1. Capital is concentrating among fewer companies at the very top of the market. Pilot's proprietary data shows nearly half of VC-backed technology startups now have less than 12 months of runway, reflecting growing liquidity pressure as ~87% of H1 capital was deployed across mega deals.
2. AI investment is broadening across foundation model, application-layer, and infrastructure companies. AI accounted for ~86% of H1 deal value and ~43% of deal count. Outside AI, defense tech and cybersecurity also drew investor interest amid elevated geopolitical tensions.
3. Round sizes at Series A have risen sharply. Half of all early-stage deals in Q1 exceeded $10M, the highest share in a decade, and the median Series A deal reached $19.4M in H1 2026, nearly triple 2020's $7.5M.
4. Valuations have surpassed their 2021 peaks across every stage. Median pre-money valuations rose more than 80% across Series A-C and more than doubled at pre-seed, seed, and Series D+. Valuation step-ups are even stronger for AI companies, averaging 2.2x compared with 1.6x for non-AI companies.
5. Capital raised is increasingly flowing into a handful of megafunds. The average VC fund size rose to $188M (vs. $98M in 2025), with established managers capturing 89% of all capital raised. Three firms alone - Andreessen Horowitz, Thrive Capital, and Founders Fund - accounted for 48%.

1. Pilot Proprietary Data Trend: Rising Runway Pressure

According to Pilot proprietary data, runway pressure is rising as capital concentrates in the top AI winners.

Pilot proprietary data shows the share of unprofitable, venture-backed companies with less than 12 months of runway rose from 41% in June 2024 to 47% in June 2026. This signals tighter cash positions among cash-burning companies as capital concentrates at the top of the market. Follow-on funding is harder to land without a top-tier AI or category-leader story.

At the same time, capital efficiency is improving. Pilot's Capital Efficiency Index shows burn-to-growth ratios have fallen sharply over the past two years as leaner, AI-enabled teams do more with less. Efficient growth is becoming a more viable path for some companies as they weigh whether and when to raise.

For our clients, we're leaning in: running vendor-spend audits, tracking department-level burn, and extending runway through disciplined cost management.

2. VC Market Trend: Deal Value Hits Record Highs, Driven by AI Mega-Rounds

Deal value increased ~135% between H1 2025 and H1 2026.

H1 2026 saw a record ~$412.7Bn in total deal value, powered by OpenAI's $122Bn financing in Q1 ($268.9Bn) and Anthropic's $65Bn round in Q2 ($143.8Bn). The ~47% QoQ decline was concentrated in the largest rounds - deal value below $100M held roughly flat QoQ - pointing to the timing of megadeals rather than a broader pullback.

Venture Growth deal value surged 230% YoY to $280.3Bn, accounting for two-thirds of total H1 dollars. Pre-Seed/Seed and Series A/B stages grew far more modestly (+3% and +100%, respectively) off a much smaller base.

Round sizes and valuations have climbed alongside deal value. Half of all early-stage deals in Q1 2026 exceeded $10M, the highest share in a decade, and the median Series A deal reached $19.4M, nearly triple 2020's $7.5M, as founders raise larger rounds upfront to extend runway. Valuations have surpassed their 2021 peaks across every stage, with median pre-money valuations up more than 80% across Series A-C and more than doubled at pre-seed, seed, and Series D+. Step-ups are even stronger for AI companies, averaging 2.2x compared with 1.6x for non-AI companies.

Outlook: AI mega-rounds are expected to keep anchoring headline totals. Capital remains available, but it is increasingly concentrated among a small group of category-defining AI companies.

3. VC Market Trend: Deal Count Falls as Capital Concentrates

Deal count fell ~6% from H1 2025 to H1 2026, even as deal value more than doubled.

Deal count declined across the market, with the steepest drops at later stages. Series C+ and Venture Growth deal counts fell 13% and 14% YoY, while Pre-Seed/Seed and Series A/B were down just 3% and 1%.

A few mega deals drove the surge in deal value despite lower activity. The median-to-average gap shows the concentration: in Q1 2026, the median Series C round was $75M, compared with an average of $124.6M.

In total, 7,541 deals closed in H1 2026, down 6% YoY, even as overall deal value more than doubled. The market isn't funding more companies. Capital is concentrating in fewer, much larger rounds.

4. VC Market Trend: Tech and AI Dominate VC Activity

Technology (including AI) reached 77% of total H1 2026 deal value.

Technology's share of deal value climbed 10 points YoY. Q1's five largest rounds - OpenAI, Anthropic, xAI, Waymo, and Databricks - accounted for ~73% of quarterly value. Q2 added seven more $1Bn+ rounds, including Anthropic, Anduril, and Cognition, totaling $87.2Bn.

As a percentage of total deal value, here's the breakdown of VC deals by industry in H1 2026:

• Technology (including AI) = 77% (+10 pts YoY)
• Healthcare = 6% (-7 pts YoY)
• B2B/B2C = 9% (-4 pts YoY)

AI, specifically, now accounts for 86% of VC deal value, underscoring its central role in where capital is flowing. Defense tech and cybersecurity also gained interest amid elevated geopolitical tensions.

5. VC Market Trend: Capital Raised Flows Into a Handful of Megafunds

Capital raised is increasingly concentrating in a small group of established managers.

The concentration playing out at the deal level is mirrored in fundraising. The average VC fund size rose to $188M in H1 2026, up from $98M in 2025, as limited-partner capital consolidated into fewer, larger vehicles.

Established managers captured 89% of all capital raised, the greatest share in a decade. Three firms alone - Andreessen Horowitz, Thrive Capital, and Founders Fund - accounted for 48% of the total. For founders, that means the firms writing the biggest checks are increasingly the same well-capitalized names, raising the bar for standing out.

Source: Pitchbook / NVCA Venture Monitor Q2 2026.

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