Venture Capital Intelligence Report
February 19, 2026 • Synthesizing insights from top-tier VCs
VCs see a bifurcated market: AI infrastructure winners pulling ahead while many application-layer companies face monetization challenges. Flight to quality continues with emphasis on unit economics over growth-at-all-costs.
Selective funding with higher bars for Series A/B. Seed remains active for exceptional teams. Growth capital concentrated in proven AI infrastructure and vertical SaaS leaders.
AI infrastructure maintaining premium multiples (15-25x revenue), while SaaS multiples compressed to 8-12x. Correction from 2024-2025 peaks creating entry opportunities for patient capital.
Model training costs dropping 10x annually, but inference infrastructure becoming the new bottleneck. Edge AI and specialized chips creating massive opportunities.
Generic AI tools failing to gain enterprise traction. Success requires deep domain expertise and workflow integration in specific industries.
IRA and global climate policies creating sustained tailwinds. Focus shifting from R&D to deployment and scaling proven technologies.
AI attack vectors and zero-trust architecture driving new security needs. Identity and data protection critical as AI proliferates.
Embedded finance maturing beyond payments. Real-time treasury, compliance automation, and cross-border infrastructure seeing renewed interest.
Defense tech, manufacturing automation, and critical infrastructure software represent generational opportunities as geopolitical competition intensifies
Horizontal AI tools will commoditize, but vertical solutions with deep workflow integration will capture value
Climate technologies are reaching deployment scale, creating massive infrastructure opportunities beyond early-stage R&D
AI commoditizes many features, so platform businesses need stronger network effects and switching costs than ever
AI safety and governance will become competitive advantages as enterprises adopt AI at scale
Software-first approach to manufacturing using AI for design, production optimization, and quality control
Convergence of AI, robotics, and new materials making software-defined manufacturing viable
$2T+ global manufacturing software market
Early signals from: Lux Capital, Founders Fund, DCVC
Companies to watch: Desktop Metal, Voxel8, Hadrian
Platform technologies enabling drug discovery, clinical trials, and personalized medicine for aging
AI accelerating drug discovery timelines while aging population creates massive market demand
$600B+ global pharmaceutical R&D market
Early signals from: Kleiner Perkins, GV, Obvious Ventures
Companies to watch: Altos Labs, Calico, BioAge
AI agents handling entire business workflows with minimal human oversight
LLMs achieving reliability threshold for business-critical tasks, labor shortage driving adoption
$500B+ knowledge worker automation market
Early signals from: Sequoia, Greylock, Index
Companies to watch: Adept, Multi-on, Sierra
AR/VR applications for retail, real estate, and industrial commerce
Apple Vision Pro and Meta Quest creating viable consumer platforms, 5G enabling mobile AR
$100B+ AR/VR commerce market by 2030
Early signals from: Lightspeed, NEA, Bessemer
Companies to watch: Niantic, Magic Leap, Varjo
Previous: Red hot in 2021-2022 → Now: Significantly cooled
User acquisition costs skyrocketed, platform risk from iOS changes, difficulty monetizing Gen Z users
What Changed: Realization that social networks require network effects at massive scale to succeed
VCs Cautious: Benchmark, General Catalyst, Lightspeed
Previous: Extremely hot in 2023-2024 → Now: Significantly oversupplied
Market flooded with similar products, difficulty differentiating from ChatGPT, low switching costs
What Changed: Enterprise buyers want specialized solutions, not another general assistant
VCs Cautious: a16z, Sequoia, Index
Previous: Peak hype 2021-2022 → Now: Minimal VC interest
Gaming adoption failed to materialize, regulatory uncertainty, user experience still poor
What Changed: Focus shifted to infrastructure and real-world crypto applications
VCs Cautious: Paradigm, a16z crypto, Variant
Don't build AI for AI's sake - solve real workflow problems that happen to use AI
💡 Start with the workflow, not the technology. Interview 50+ potential users before building.
— Sequoia Capital
Show path to profitability in pitch deck - growth without unit economics won't get funded
💡 Include detailed unit economics and path to 20%+ net margins in Series A materials.
— Benchmark
Enterprise sales cycles for AI products are 2x longer than traditional software
💡 Plan 18-24 month enterprise sales cycles and budget accordingly for pilot programs.
— Bessemer Venture Partners
Hire domain experts before AI experts - context beats algorithms in most applications
💡 For vertical AI, hire industry veterans as founding team members, not just technical talent.
— General Catalyst
Build on open-source models where possible to avoid single-vendor dependence
💡 Evaluate model portability from day one; avoid architecture locked to single LLM provider.
— Index Ventures
Deal volume down 30% YoY but average deal size up 45%. Flight to quality continues with top-tier companies commanding premium valuations while struggling companies face down rounds.
Series C • Lead: Menlo Ventures • Others: Google, Spark Capital, Salesforce Ventures
Largest AI round of 2026, validates constitutional AI approach and enterprise focus
Foundation ModelsSeries C • Lead: Breakthrough Energy Ventures • Others: The Engine, Khosla Ventures, Eni Next
Record climate tech round signals confidence in fusion commercialization timeline
Fusion EnergySeries B • Lead: Bezos Expeditions • Others: OpenAI, Microsoft, NVIDIA
Massive validation of humanoid robotics for manufacturing applications
RoboticsAcquisition by Microsoft • Key investors: Accel, CapitalG, Dragoneer
Enterprise automation platforms with strong moats can command premium valuations even post-AI
IPO • Key investors: Sequoia, General Catalyst, Thrive
Patient capital thesis vindicated - infrastructure platforms mature into massive public companies
AI will plateau sooner than expected, creating opportunities for non-AI innovations
Most VCs betting AI capabilities will continue exponential improvement
Reasoning: Current AI scaling hitting physical and economic limits; next breakthroughs will be in other domains
Their Bet: Heavy investment in biotech, space tech, and advanced manufacturing
Consumer social is due for renaissance as Gen Alpha reaches smartphone age
Consumer social is oversaturated and difficult to monetize
Reasoning: New cohort with different privacy expectations and content preferences
Their Bet: Backing early-stage consumer social platforms targeting 13-16 demographic